Model Portfolio Update March 2012 Portfolio Commentary In absolute terms the model portfolios have all performed well. They have lagged behind the markets over the last month, but this is to be expected as they are built with an element of protection that will hold them back during bull markets. The volatility of all portfolios is much reduced from their benchmarks suggesting a smoother ride for investors has been achieved. Equally the respective downside risk scores are way below peer-groups, confirming that the portfolios are taking less risk than their respective benchmarks. We have made some changes to the ‘Cautious’ & ‘Cautious to Moderate’ portfolios and these seem to have bedded in well over the last month. It is also worth noting that our ‘Income’ portfolio currently has a yield of 4.68% (net of charges, gross of tax), a valuable asset for those seeking income in the current economic environment. Performance Analysis Discrete annual performance (%) year ending
FTSE All Share
Cautious Model Portfolio
Income Model Portfolio
Moderate Model Portfolio
Adventurous Model Portfolio
Performance since inception month end* (%)
*Performance since data started for the Cautious portfolio (08/05/2008). Source for all performance data: FE Analytics. Basis: Bid to Bid, net income reinvested and net of all fees in UK sterling terms.
Asian markets surge as sentiment picks up Investor sentiment showed signs of picking up during February, with many Asian markets performing particularly strongly during the month as investors drew confidence from better-than-expected factory production in Japan, encouraging jobs data from the US and signs of improving confidence in the eurozone. The Nikkei 225 index surged 10.5% during February and has increased by 15% since the beginning of the year. In the UK meanwhile, the FTSE 100 index rose 3.3% over the month, having risen 5.4% since 2012 began. February also saw ratings agency Moody’s place the UK’s AAA credit rating on “negative outlook” and warn that further economic or fiscal deterioration would call into question the government’s ability to reduce the nation’s debt burden. Elsewhere, the ratings of several European countries were cut or placed on “negative outlook”. US consumer confidence exceeded expectations during February, rising to a 12-month high and boosting hopes consumer spending will provide valuable support for the country’s economy. Meanwhile, better-than-expected US jobs data provided a lift for share prices around the world. The Dow Jones Industrial Average index breached 13,000 points towards the end of the month, reflecting a renewed sense of optimism among investors. In all, the market index increased by 2.5% during February and has risen by 6% since the start of the year. Another bailout for Greece – this time equivalent to some £108bn – was finally agreed towards the end of the month. As part of the deal, Greece has to cut its deficit to 120.5% of GDP within the next eight years and must also allow a permanent European Union presence in the country to monitor developments. Even so, ratings agency Standard & Poor’s subsequently announced that it had downgraded Greece’s debt to the status of “selective default” following the news of the agreement. During February, the DAX index in Germany and France’s CAC 40 index rose 6.1% and 4.7% respectively. Meanwhile, the Athens General Index fell by 6.6% during the month although it has increased 9.3% since the start of the year. According to the Investment Management Association, net retail sales of equity funds more than halved last year – from £6.9bn in 2010 to £3bn during 2011 as a whole. Although equities has remained the most popular asset class overall, their share of funds under management has declined significantly over the last decade, falling from 71% at the end of 2002 to just 53% at the end of 2011. Important information Past performance is not a guide to future returns and the value of investments and income from them may go down as well as up and an investor may not get back the amount invested. No responsibility can be accepted for any action taken as a result of information contained in this brochure. We therefore strongly recommend that no action should be taken before obtaining detailed professional advice.
For more information about our services, please contact us on 0845 643 4564 Exeter | Plymouth | Salisbury | Taunton | Tavistock | Torquay | Truro www.fcfp.co.uk Francis Clark Financial Planning is a trading style for Francis Clark Financial Planning Ltd.