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two separate speeches delivered during
the period, the Governor of the Bank of
England said that a rise in UK interest
rates might be needed in the near term
to tame inflation.The shift in inflation
caused yields on gilts (UK government
bonds) to rise.As in the second quarter,
the Gilts fund detracted most heavily
from Portfolio performance.
Global equity markets continued to
rise, as volatility remained subdued –
the S&P 500 in the US crested above
2,500 for the first time while the MSCI
World rose by 3.5%.This momentum
contributed to the positive performance
of the MultiAsset fund, which carries
a high weighting within the Portfolio
and is divided between three strategies.
The volatility-controlled equity element
of the fund, managed by Schroders,
particularly benefited from the
performance of global stocks.
THE PORTFOLIO REVIEW
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THE INVESTOR
Portfoliooverviews
THE INVESTOR CENTRE
T
he Conservative Portfolio
achieved a small positive
return over the quarter.
However, the Global
Equity fund was a strong contributor
to Portfolio performance.The Sands
Capital element of the fund was a
notable driver of returns, thanks in
great part to its investment inAlibaba.
Momentum investors continued to pay
a premium for the Chinese e-commerce
giant through the third quarter, as
the online shopping habits of Chinese
consumers helped push revenues at
the world’s largest and most valuable
retailer up 56% in June, while profits
nearly doubled.
CONSERVATIVE
Autumn 2017
T
he Defensive Portfolio
delivered a positive return
over the third quarter of
2017, despite its lower risk-
positioning.
Investors continued to buy risk assets
over the period, but at a slower rate than
over the first half of the year.Moreover,
concern over valuations led many
investors to look beyond equities.The
Diversified Bond fund performed well
over the period, while theAlternative
Assets fund was the best-performing
fund within the Portfolio.The latter
benefited from its 54% exposure to
bonds – mostly in the investment
grade category. Oil and commodities
performed strongly over the quarter,
due in part to supply chain delays for
fuel in the US and aluminium in China.
In the UK, inflation struck a five-
year high of 2.9% inAugust, despite a
decline in the rate of headline economic
growth over the course of the year. In
DEFENSIVE
Growth
Portfolios
The volatility-
controlled equity
element of the fund
particularly benefited
from the performance
of global stocks
TheWorldwide Opportunities fund
detracted from Portfolio performance.
The Select Equity element of the
multi-manager fund struggled as a result
of its high exposure to consumer staples.
LG Household and Healthcare, which
operates across electronics, chemicals
and telecoms, was the largest detractor
among the Select Equity holdings, falling
by 8.7% – the South Korean company
missed its profit forecasts and clocked a
ninth straight quarter of losses for its
mobile division.Worldpay was one of
Select Equity’s best performers, reflecting
the positive performance of IT stocks.