Quarterly Range Report

Transcription

1 Quarterly Range Report MyFolio Market Range - Q Pension Insured Funds S4 Retail MyFolio Market MyFolio is a flexible solution consisting of 25 multi-asset funds of funds, split into five ranges (three growth and two income) and including active and passive options. In all the ranges, we offer five funds, each targeting a different level of risk. There are five MyFolio Market Funds, ranging from lower through to higher risk (I to V). Each fund invests mostly in tracker funds that aim to replicate the performance of an index such as the FTSE All-Share Index or the S&P 500 Index. Performance (as at 31/03/2019) 100% 50% 0% Apr 14 Jul 15 Oct 16 Jan 18 Apr 19 Stan Life MyFolio Market I Pn S4 Stan Life MyFolio Market III Pn S4 Stan Life MyFolio Market V Pn S4 Stan Life MyFolio Market II Pn S4 Stan Life MyFolio Market IV Pn S4 Cumulative performance (as at 31/03/2019) 1 month 1.27% 1.32% 1.21% 1.19% 1.44% 3 months 3.84% 4.55% 5.48% 6.47% 7.46% 6 months 0.91% -0.19% -1.07% -2.19% -3.52% 1 year 3.02% 3.67% 4.54% 5.33% 5.79% 3 years 11.68% 17.70% 23.57% 29.65% 34.01% 5 years 20.20% 28.41% 35.53% 42.99% 48.76% Since launch 40.86% 58.06% 70.33% 84.10% 94.48% Year on year (as at 31/03/2019) 0-12m 3.02% 3.67% 4.54% 5.33% 5.79% 12-24m 0.22% 0.91% 1.45% 1.60% 1.03% 24-36m 8.18% 12.51% 16.51% 21.15% 25.39% 36-48m -0.54% -1.16% -1.73% -2.43% -3.16% 48-60m 8.21% 10.38% 11.61% 13.03% 14.62% Gross income reinvested, net of fund charges, GBP, sourced from FE 2019 The chart shows the performance of the fund over the period shown. Past performance is not a guide to future returns. The value of this investment and the income from it may go down as well as up and cannot be guaranteed. An investor may receive back less than their original investment. This document is intended for use by individuals who are familiar with investment terminology. Please contact your financial adviser if you need an explanation of the terms used or refer to our website - 1

2 Market review After a gruelling fourth quarter, optimism prevailed during the first quarter of 2019 driving strong gains in global equities. Worries over slowing global growth, the US/China trade war and the impact of rising US interest rates caused the previous rout. These concerns subsequently abated. In particular, the US Federal Reserve s (Fed) adoption of a more patient approach to further rate hikes reassured investors. Indeed, bond markets expect the Fed s next move will be to cut rates. The US administration s decision not to impose further tariffs on Chinese goods was also encouraging. Investors are now hopeful both sides can strike a deal. Global corporate bonds also bounced back strongly following a poor final quarter of In large part, this reflected the Fed s unexpected shift to a dovish stance. This led to investors pricing out any further US interest rate hikes for the remainder of The main factors influencing global government bonds were the outlook for world economic growth and US monetary policy. Unease as the Brexit deadline grew closer was also a key theme. In March, this played a significant part in driving German bund and UK gilt yields to their lowest points since 2016 and 2017 respectively. It was a weak start to the year for UK commercial real estate. Monthly total returns continued to slow and were barely positive during February (the latest data available). As property values were reassessed, capital growth turned negative at an all-property level. This was largely a result of weakening values for large-scale retail assets (e.g. retail warehouses and shopping centres). Industrials in the South East remained the strongest sector and capital values continued to rise for these assets. Central London offices continued to slow having defied the odds in the face of heightened levels of Brexit uncertainty. Range commentary We review the Strategic Asset Allocation (SAA) for each of the funds every quarter, with the aim of ensuring that we continue to meet investors long-term investment expectations. At the most recent review, we made no changes to the SAA model. Within Tactical Asset Allocation (TAA), we made the following changes (where applicable within each risk level). Reduced our holding in global real estate investment trusts (REITs) to neutral versus the SAA Increased our allocation to short-dated corporate bonds and corporate bonds (while remaining underweight versus the SAA) Increased our holding in cash and money markets During the first quarter, we made a further small reduction to our allocation to growth assets, while remaining overweight versus the SAA. This involved taking some profits on global REITs given their recent strength. Meanwhile, we bought UK corporate bonds. This allowed us to replace some of the yield that global REITs brought to the portfolios. Despite the increased allocation, UK corporate bonds remain our largest underweight position and are a source of funding for higher-growth assets. We also increased our allocation to cash. This provides us with the flexibility to re-invest in growth assets should an attractive opportunity arise. In terms of the underlying holdings, we bought the Aberdeen Short Dated Global Index Linked Bond Tracker Fund and sold the Fidelity Global Inflation Linked Bond Fund (please note transactions may not apply at all risk levels). Market outlook Global equity markets have made a strong start to However, given the drivers of this performance, we remain cautious. The initial boost came after the US Federal Reserve said it was putting interest rate-rises on hold. While good for asset prices, this also acknowledges that the US and global economies face challenges. Similarly, central bankers in China and Europe have sought to support their struggling economies. Meanwhile, European politics remain a source of tension, while Brexit is going down to the wire. On the upside, hopes of an eventual trade deal between the US and China have grown. This would provide a boost for markets. US and Japanese government bonds look expensive. US Treasury yields have fallen significantly recently, pushing them to unattractive levels. Yields on Japanese government bonds are very low compared with other markets. We are neutral on gilts and Eurozone bonds; while the UK economy is growing slowly, the Bank of England is still warning about future interest rate increases. In Europe, recent economic weakness has further delayed policymakers' plans to tighten monetary policy. With government bond yields down sharply, the hunt for yield has supported corporate bonds. This should provide support for the rest of Within UK commercial real estate, political uncertainty is contributing to greatly reduced market liquidity. We expect values to continue to fall during the second quarter of Our base case sees only marginally positive returns over the next three years. Uncertainty around Brexit adds further downside risk to those numbers in the short term. Additional information Fund Management Charge 0.800% 0.800% 0.800% 0.800% 0.800% Total Annual Fund Charge* 1.00% 1.01% 1.04% 1.02% 0.98% Citicode KOU2 KOU4 KOU6 KOU8 KOV0 Fund size in m as at 31/03/ m m m m m *The Total Annual Fund Charge is the total of the Fund Management Charge (FMC) and additional expenses. Source:

3 Annualised risk and return (as at 31/03/2019) Performance 12% 10% 8% 6% 4% 2% 0% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Volatility Gross income reinvested, net of fund charges, GBP, Sourced from FE 2019 The chart shows the annualised volatility (risk) and annualised performance based on fund returns over the past three years to the date shown. Key Name Performance Volatility Stan Life MyFolio Market I Pn S4 3.75% 3.51% Stan Life MyFolio Market II Pn S4 5.58% 4.75% Stan Life MyFolio Market III Pn S4 7.31% 6.09% Stan Life MyFolio Market IV Pn S4 9.04% 7.74% Stan Life MyFolio Market V Pn S % 9.44% The table shows the annualised volatility (risk) and annualised performance based on fund returns over the past three years to the date shown. Past performance is not a guide to future returns. The value of this investment and the income from it may go down as well as up and cannot be guaranteed. An investor may receive back less than their original investment. Current asset allocation (as at 31/03/2019) Defensive assets Money Market including Cash 7.45% 2.25% 2.25% 2.25% 1.50% Global Index Linked Bonds 1.90% 5.20% Short Dated Global IL Bonds 6.25% 6.10% 2.90% - - Sterling Corporate Bonds 15.35% 9.55% 3.35% 0.25% - Short Dtd Sterling Corp Bonds 20.70% 11.45% 3.85% 1.25% - Global Corporate Bonds 11.30% 9.50% 7.40% 2.60% - Short Dated Global Corp Bonds 3.80% 3.20% 2.50% 0.90% - Total 66.75% 47.25% 22.25% 7.25% 1.50% Growth assets UK Equities 10.90% 16.70% 21.90% 28.40% 36.30% US Equities 3.10% 5.30% 10.40% 15.70% 23.00% European Equities 1.00% 3.00% 7.20% 7.50% 10.20% Japanese Equities 2.50% 5.30% 5.90% 8.70% 10.85% Asia Pacific Equities 1.60% 2.80% 4.10% 5.40% 7.20% Emerging Market Equities 2.35% 3.55% 4.85% 6.15% 7.95% Global High Yield Bonds 4.00% 4.00% 5.20% 6.00% 0.50% Emerging Market Debt 3.00% 4.60% 7.50% 4.80% 2.50% UK Real Estate 3.60% 5.60% 8.00% 7.60% - Global REITs 1.20% 1.90% 2.70% 2.50% - Total 33.25% 52.75% 77.75% 92.75% 98.50% Source:

4 Holdings (as at 31/03/2019) Defensive assets Asset class Aberdeen SD Global Index Linked Bond Tracker Short Dated Global Index Linked Bonds 3.60% 3.28% 0.81% - - ishares Corporate Bond Index Sterling Corporate Bonds 3.35% L&G Global Inflation Linked Bond Index Global Index Linked Bonds 1.34% 3.54% L&G Short Dated Corporate Bond Index Short Dated Sterling Corporate Bonds 10.45% 6.04% 3.51% 1.19% - Royal London Short Duration Global Index Short Dated Global Index Linked Bonds 2.44% 3.00% 2.15% - - Vanguard Global Corporate Bond Index Global Corporate Bonds 11.32% 9.54% 7.45% 2.77% - Vanguard Global Short-Term Corporate Bond Short Dated Global Corporate Bonds 3.77% 2.99% 2.62% 0.88% - Index Vanguard UK Inflation-Linked Gilt Index Global Index Linked Bonds 0.58% 1.60% Vanguard UK Investment Grade Bond Index Sterling Corporate Bonds 11.90% 9.34% 3.39% 0.27% - Vanguard UK Short-Term Investment Grade Bond Short Dated Sterling Corporate Bonds 9.85% 5.10% Cash and Other Money Market including Cash 7.67% 2.72% 2.56% 2.60% 2.02% Total 66.27% 47.15% 22.49% 7.71% 2.02% Growth assets Asset class Aberdeen EM Local Currency Bond Tracker Emerging Market Local Currency Bonds 0.12% 0.19% 0.31% 0.21% 0.10% Amundi Index FTSE EPRA NAREIT Global Global REITs 1.71% 2.46% 3.23% 2.99% - ishares Continental European Equity Index European Equities 1.32% 3.00% 7.52% 7.64% 10.16% ishares Japan Equity Index Japanese Equities 2.53% 5.21% 5.91% 8.69% 10.90% ishares Pacific ex-japan Equity Index Asia Pacific Equities 1.49% 2.88% 4.18% 5.17% 7.03% ishares UK Equity Index UK Equities 1.13% 2.58% 3.57% 4.54% 4.77% L&G Emerging Markets Government Bond Index Emerging Market Local Currency Bonds 2.58% 4.06% 6.47% 4.33% 2.18% L&G UK Index Trust UK Equities 4.91% 7.13% 8.95% 11.80% 15.55% L&G US Index US Equities 1.17% 2.15% 4.18% 6.25% 9.24% M&G Property Portfolio UK Real Estate 1.75% 2.61% 3.07% 3.24% - PIMCO Global High Yield Bond Global High Yield Bonds 3.10% 2.54% 3.61% 4.29% 0.61% Putnam World Trust-Global High Yield Global High Yield Bonds 1.03% 1.23% 1.42% 1.73% - SLI UK Real Estate UK Real Estate 1.96% 2.93% SLI UK Real Estate Fund UK Real Estate % 3.96% - Vanguard Emerging Markets Stock Index Emerging Market Equities 2.46% 3.46% 4.78% 6.19% 7.92% Vanguard FTSE UK All Share Index Unit Trust UK Equities 4.70% 7.16% 9.00% 11.89% 15.60% Vanguard US Equity Index US Equities 1.77% 3.26% 6.35% 9.37% 13.92% Total 33.73% 52.85% 77.51% 92.29% 97.98% Source:

5 Important information The value of a fund can go down as well as up, and is not guaranteed. You may receive back less than the amount originally invested. Past performance is not a guide to the future. Any data contained herein which is attributed to a third party ( Third Party Data ) is the property of (a) third party supplier(s) (the Owner ) and is licensed for use by Standard Life Aberdeen*. Third Party Data may not be copied or distributed. Third Party Data is provided as is and is not warranted to be accurate, complete or timely. To the extent permitted by applicable law, none of the Owner, Standard Life Aberdeen* or any other third party (including any third party involved in providing and/or compiling Third Party Data) shall have any liability for Third Party Data or for any use made of Third Party Data. Past performance is no guarantee of future results. Neither the Owner nor any other third party sponsors, endorses or promotes the fund(s) or product(s) to which Third Party Data relates. *Standard Life Aberdeen means the relevant member of the Standard Life Aberdeen group, being Standard Life Aberdeen plc (SC286832) together with its subsidiaries, subsidiary undertakings and associated companies (whether direct or indirect) from time to time. This document is provided by Limited, registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Authorised and regulated in the UK by the Financial Conduct Authority Standard Life Aberdeen. Images reproduced under licence. 5