Ins and outs - model portfolios annual review
14th January 2015 11:19
When building our 12 Model Portfolios we took in a variety of factors. We divided them into two different levels of risk - medium and high risk.
To avoid any misunderstanding we did not include low-risk options, mainly because people often interpret "low risk" as "no risk".
Our income portfolios are divided into three categories (immediate income, growing income and balanced income) to reflect investors' initial income requirements as well as their risk profiles.
Meanwhile the growth portfolios are divided into three categories (short term, medium term and long term) to reflect investors' different time horizons as well as attitudes to risk.
Below, Helen Pridham reviews the changes made to each portfolio, giving reasons for each funds' inclusion or exclusion.
Income portfolios
Out
(Juliet portfolio): It has provided a good, high income but we are concerned about its narrow focus on high yield bonds.
In
: Slightly lower yielding but broader focus gives manager more flexibility.
Out
(Hotel and India portfolios): Disappointing performance since converting to global mandate.
In
(Hotel) and (India): Both funds are already included in our other income portfolios and have produced good performance.
Out
(Kilo and Lima portfolios): Concern over manager change, though performance impacted by exposure to out-of-favour small and mid cap stocks.
In
: Also exposed to small and mid cap stocks but performance has held up better. Tried and tested managers.
Growth portfolios
Out
(Charlie and Echo portfolios): Reasonable three-year return but performance more erratic than we expected.
In
: Newish fund but has made good start and managers have good long term record.
Out
(Alpha and Delta portfolios): Disappointing returns. Contrarian approach has not paid off for this fund over the period.
In
(Alpha) and (Delta): The former fund focuses on strong, cash generative businesses in order to achieve long term growth. Rathbone Income (accumulation units) invests relatively defensively and should also provide a steady return.
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