Forward Glance

Strategy report – Medium Portfolio

March 2020

1st November 2011 – 29th February 2020 – gross return (since inception)


In these uncertain times our Investment Committee are meeting more regularly than usual. We met on 10th March, shortly after a sharp drop in oil prices and amid continuing panic around COVID-19.

The huge negative impact on equity values has been seen broadly across the world, almost indiscriminately and without exception. Leading indices in the UK, US and Europe are down 20-25% since they hit their peak in January.

Looking to the future, the lockdowns or reduction in mobility that we have seen in China, South Korea and more recently Italy have not been replicated in the UK or the US, but that does not mean it will not happen. We have different health systems and a different culture, but the difficulty in stopping the spread of the disease should not be underestimated. The Budget on 11th March and the surprised reduction in the UK base rate of 0.5% to 0.25%, all demonstrate that the UK government are geared to do what it takes to get us through the current situation.

In China, a reduction in cases has been reported over the last week. Unfortunately, we suspect that we will see a re-occurrence of cases as normal daily business returns. The likelihood is that we will see several more aftershocks before we are really through the impact of this infection.

Whilst this forward glance shows returns against the FTSE 100, it is important to recognise that this is an equity-only index focussed on companies with UK head offices which can have global earnings but is only a partial representation of the globe. We have produced a fuller briefing this month on our website which shows comparisons to the MSCI World Index that you might like to view as a more accurate reflection of what is happening in the world.

The economic situation changes dramatically in just a few days, and we considered the opportunity to remove equity but agreed that now is the time to hold position and simply wait for recovery which will come at some point in the coming months.

To that end, we take the opportunity to remind you of the importance of holding emergency cash. If you have sufficient cash deposits you might consider reducing or stopping income from your portfolio for a number of months, allowing markets to recover rather than withdrawing while markets are low.

Portfolio analysis

Investment objectives

The medium portfolio offers a diverse fund range with the aim of achieving capital growth over the longer term. The portfolio has the ability to invest in a broad range of investments on a wide geographical basis. Equity exposure within the portfolio will vary between 40% – 65%.

Portfolio details

Inception date1/11/2011
Number of holdings31
Estimate yield2.07%
BenchmarkBoE Base Rate +2%
Total expense ratio0.50% (net – clean)
Volatility target rate6% – 10%
Minimum investment time horizonFive years

Contribution to performance by fund – 1 year

1st September 2019 – 29th February 2020 – gross return (six-months)

Gross statistics – 1st November 2011 – 29th February 2020