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THE INVESTOR
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Income
Portfolios
PORTFOLIO OVERVIEWS
T
heAdventurous Portfolio
achieved positive returns
over the quarter.
Global equities
performed strongly over the period,
and the MSCIWorld rose by 3.5%,
maintaining its momentum from the
start of the year.The longevity of the
recovery since the global financial
crisis has also pushed investors to seek
out returns beyond more traditional
markets.Thus emerging markets
significantly outperformed developed
markets, and small-cap companies
outperformed large-caps.
The Global Smaller Companies fund,
managed by Kevin Beck of Paradice,
was a strong performer over the period.
While the fund benefited from real
estate holdings in the first half of the
year, industrial companies provided
the strongest support in the third
quarter. Renewi (formerly Shanks
Group), a European waste management
company, was a particularly strong
performer.The fund also benefited from
its emerging market exposure, and
specifically its holdings in Brazil.
In Europe, economic growth
continued to gain ground, and business
sentiment across both the services and
industrial sectors stayed at multi-year
highs. European stocks performed
strongly over the quarter – the
Eurofirst 300 rose by 2.24%.The rise
in the broader index reflected the
strength of financial and cyclical stocks.
The Greater European fund suffered
a little as a result. Burgundy, one of
the co-managers of the fund, is
underweight in both financial and
cyclical stocks – its overweighting to
consumer discretionary stocks also
weighed on performance.
In the US, the dollar continued to
lose ground against major currencies,
including the euro and the pound.
Meanwhile, positive corporate
earnings helped push the S&P 500 up
by 3.96% over the period.Technology
stocks performed strongly over the
quarter, buoying the NorthAmerican
fund, managed by Jim Gleichner of
Aristotle.While he remained marginally
underweight in the IT sector, PayPal
was the fund’s strongest performer,
returning 16% over the quarter.
The UK & General Progressive
fund finished the period broadly flat,
dipping 0.1%.Majedie, co-managers
of the fund, suffered due to a holding
in real estate company Purple Bricks –
the stock suffered over the quarter
amid ongoing complaints about some
of its advertising.
T
he Immediate Income fund
posted another consecutive
quarter of positive growth.
Sovereign bond yields
remained low through the quarter,
reflecting both the support provided by
leading central banks since the global
financial crisis, and growing investor
confidence in major economies around
the world. Even in peripheral eurozone
countries such as Greece and Portugal,
where sovereign bond yields struck
dangerous levels in the years following
the crisis, yields were much improved
– Portugal recorded its lowest bond
yields in 18 months following a ratings
upgrade by S&P.
High yield corporate bonds also
enjoyed a strong quarter, as investors
showed a willingness to take on
more risk. Both the Corporate Bond
and Investment Grade Bond funds
performed well over the quarter, as
falling yields saw capital values rise.
IMMEDIATE INCOME
ADVENTUROUS
company’s share price has yet to recover
from an announcement in May that it
had put a £2.8 billion electricity cables
project in Cumbria on hold.