Forward Glance

Strategy Report – Medium Portfolio

December 2019

1st November 2011 – 30th November 2019 – gross return since inception


Our investment committee met later than usual in December so that we had the UK election results ahead of the meeting. 

There are differences of opinion in the press about whether Boris Johnson’s government will now lean further to the right because they have achieved enough of a majority in Westminster to do so, or lean further left to appease those Labour voters who have “lent” their votes to the Tories. Either way, we are expecting some changes to the tax system because the government need to raise more money and also because by simplifying the tax system, they will be able to use civil servants’ time for other things. The direction that the government takes will have a big impact on the sort of Brexit deal that we will get; we expect Brexit to be a long process but UK economic activity is likely to pick up when uncertainty is reduced, probably towards the end of January.

So, what is the impact on your investments? At the moment your portfolios comprise approximately 80% overseas assets, so the strength of sterling has an impact; a weakening sterling reflects well on overseas asset values and vice versa. To reflect our cautious optimism about the British economy we slightly increased our exposure to the UK a few months ago, which has paid off, and we may look to do so again in the New Year.

In other news, certain UK property funds have been hitting the headlines recently due to liquidity problems. These problems can be attributed to the changing nature of the property market, for example in retail; high streets and shopping centres are not getting the footfall that they used to, whereas warehouses for online shopping businesses are more in demand than ever before.  

I hope you have seen the update on our website which explains that we have been monitoring liquidity within property funds for many years and that as a result our models do not contain either of the afflicted property funds because we spotted the issues some time ago. 

We do retain a small exposure to certain property funds which contain assets that are still relevant in our current economic environment, like those online shopping warehouses mentioned above. This provides valuable diversification within your portfolios as well as a good source of income. We continue to monitor the situation and will be ready to make changes if the time comes when these funds are no longer suitable. 

Like all of our investment choices, the type of property fund that we are prepared to invest in is underpinned by our main investment themes of technology, climate change and demographic change. The shift from shopping on high streets to shopping online is just one example of technological development; faster WiFi, mobile internet, robotic warehouse management and global supply chains are all modern phenomenon’s which make our online shopping possible. Our investment committee continues to regularly discuss these global themes and look out for future investment opportunity.

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 this portfolio will vary between 40% – 65%.

Portfolio details

Inception date1/11/2011
Number of holdings30
Estimate yield2.04%
BenchmarkBoE Base Rate +2%
Total expense ratio0.51% (net – clean)
Volatility target range6% – 10%
Minimum investment time horizonFive years

Contribution to performance by fund – 1 year

1st June 2019 – 30th November 2019 – gross return (six months)

Gross statistics – 1st November 2011 – 30th November 2019