The average of portfolio data included in the ARC Sterling Cautious PCI shows a return of 1.16% to the end of June. This rises slowly through its Balanced PCI returning 0.99%, 1.02% for Growth and 1.23% for the Equity Risk PCI.
The average Q2 performance of those portfolios in the Balanced category was -0.21% in June following -0.18% in May. It gave a positive return, of 1.02, in April.
The Cautious index was positive in two of the three months with only June (-0.2%) in negative territory.
The performances were not a surprise, given the economic and market hostility the portfolio managers are working against.
“As expected, managers chose to protect capital rather than chase performance,” commented Steve McMahon, a director at ARC.
“I doubt anyone had any significant exposure to sovereign debt, certainly without duration, so understandably they would have missed any uplift because of the flight to safety.”
He added that in terms of asset allocation, most portfolio managers had the situation flagged, erring on the side of caution, with most sticking to neutral weightings. Of those who took active asset allocation bets, as many were well-timed as were not.
Investors have, for example, been worried about bonds for so long that they have already made the relevant portfolio changes – typically they were one of the asset classes that went up just as portfolios were looking for safety.
"The period was good for defensive equities,” McMAhon added, “but investors have to be prepared to take the volatility. They were a good investment but they have to take the beta element so will sometimes perform against what their fundamentals say”.
