In September, weaker equity markets drove a small negative performance for all Rosecut model portfolios, and the benchmark industry indices published by ARC.
You should be aware that past performance is no guarantee of future performance.
Please note: all numbers listed above are sourced from Financial Express Analytics and stated in GBP net of fees.
* The ARC PCI indices are based on the returns being generated by investment managers in the private client industry for discretionary run portfolios. More information can be found on their website at: https://www.suggestus.com/
** The Rosecut models have an inception date of 28th February 2019. In the above table UK government bonds are represented by the FTSE All-Stocks Gilts index and UK corporate bonds by the Bloomberg Barclays Sterling Aggregate Corporate index.
The main detractors to performance were positions we hold as hedges against a better than expected Brexit.
We have mentioned these in the past, but the FTSE 250 ETF and UK Property ETF are the biggest beneficiaries of a smoother than expected Brexit.
They were extremely useful portfolio positions in December 2019 when most other positions sold off – September 2020 has been the reverse. We believe they are still useful hedges, so continue to hold them.
Asset Class (i.e. bonds, equities, and alternatives) Performance
As is often the case…last month’s worst performer is this month’s best. Step forward UK government bonds. Almost as soon as August ended, investors risk appetite evaporated, and stocks fell as people herded towards perceived safe havens – such as government bonds.
All the short-dated bonds – be they government bonds or corporate bonds – made small amounts of money. Their less volatile nature means they tend to make smaller losses or gains than other assets.
As previously mentioned, the UK domestic holdings, such as the FTSE 250 and UK Property ETFs had the toughest month – but many global equity markets fell.
A stronger dollar, meant portfolio positions denominated in this currency had some of their losses offset by the currency impact – once returns are converted back to GBP terms.
The below table shows the Asset Class Returns to the end of September 2020 in GBP.
The value of an investment and the income from it can go down as well as up and investors may not get back the amount invested. This may be partly the result of exchange rate fluctuations in investments which have an exposure to foreign currencies.