Quarterly Review Q3 2024 - Cautious - Flipbook - Page 4
Performance commentary
Market
Equity markets were modestly positive over the quarter, with the MSCI All Country World Index of global
equities up +0.6% in GBP. Any hopes of a quiet summer were scuppered by some weaker US economic data
released over August that coincided with a poorly communicated interest rate hike in Japan and which sent
equity markets into a short, sharp tailspin. However, markets quickly rebounded as investors took solace in
greater con昀椀dence that the weaker economic data in the US would result in a more aggressive path of interest
rate cuts by the Federal Reserve.
The quarter ended on a positive note as the People’s Bank of China announced a series of measures to
support their economy and China’s ailing property market. Their goal was to also boost consumer con昀椀dence
and help achieve their ambitious target of 5% annual GDP growth in 2024. In one fell swoop, this helped the
MSCI China Index to an astonishing +16.5% return for the quarter, taking it to +23.2% for the year in GBP
terms. China went from being one of the year’s worst performing major equity markets globally to the best
performer, boosting Emerging Market indices and Commodities in the process.
Fixed Income returns were also positive over the quarter, with the Bloomberg Global Aggregate Index of high
quality global bonds returning +4.1% in GBP hedged terms. The increased expectations for lower interest
rates in the US was a positive for bonds (when yields fall bond prices go up) and particularly for longer dated
bonds which bene昀椀t most from interest rate reductions.
Equities
Our Tactical Asset Allocation in equities was positive for the quarter as the strong performance from our
overweight to the UK equity market was supplemented by our underweight to weaker performing Continental
European equities. This was partially offset by our overweight to Japanese equities which detracted as Japanese
equities posted marginally negative returns over the quarter.
Within the Fund’s equity component, it was notable that after a prolonged period of a narrow group of large
AI and technology related companies leading markets higher, markets broadened out and cheaper value
stocks were back in favour this quarter. In this regard, the Pzena Global Value Fund and the Polar UK Value
Opportunities Fund outperformed their respective benchmarks over the quarter. We also observed strong
performance from one of our Japanese equity managers, the GSAM Japan Equity Partners Fund, which was
up +5.8% over the quarter, aided by continued corporate governance improvements in a number of their key
holdings.
Conversely, managers like the Lindsell Train UK Equity Fund, the Baillie Gifford Paci昀椀c Fund and the BlackRock
Continental European Fund, that are more focused on high growth companies in their respective geographies,
lagged. Once again, this demonstrated the bene昀椀t of retaining a balance of different investment styles within
the equity portfolio.
Total fund
The Multi-Asset Blend Cautious Fund (“the Fund”) was up +1.7% over the third quarter, trailing the +2.5%
return of its IA Mixed Investment 0-35% Shares performance comparator. The Fund’s +5.4% return over the
year-to-date remains comfortably ahead of the IA comparator. Since the Fund’s inception on 17th October
2022, the Fund is up +14.6%.
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