October 2017 Performance
As anticipated, ECB President Mario Draghi announced plans to reduce the size of its monthly bond purchases from 60bn to 30bn Euros, and extended the life of the programme to at least September 2018. The long-awaited announcement comes on the back of stronger economic data throughout the region. However, the lack of a clear end date to the 2.3 trillion Euro programme was arguably more dovish than many had anticipated. Draghi categorised the changes as a ‘downsizing’ rather than a ‘tapering’ of QE. As a result, European interest rates will likely remain at all-time lows until at least 2019. The news sent the Euro and regional bond yields lower, with the German 10-year yield down -10bps to 0.36%. The weaker Euro boosted Eurozone equities, including Spain where the IBEX 35 index finished up 1.37%, despite the ongoing turmoil in Catalonia.
In October, US equities continued to rally with the S&P 500, Nasdaq and Dow Jones Industrial Average indices reaching all-time highs. The risk-on mood was supported by underlying economic data, including a rise in 3rd quarter GDP to 3% and excellent earnings results from some of the large technology companies. Gains were further bolstered by progress on President Trump’s proposed corporate tax cut from 35% to 20%, which was passed in the Senate by a vote of 51 to 49. US inflation figures rose in September, sending the yearly rate up to 2.2% from 1.9% previously. The Dollar Index climbed 1.59% and Treasury bond yields rose across the curve, led by the short end with 2-year rates rising 12bps to 1.60%.
In Japan, equities surged higher with the Nikkei 225 climbing 8.13% to a 21 year high. Shinzo Abe’s landslide electoral victory was a clear mandate for “Abenomics” and the continuation of ultra-loose monetary policy.
We believe the portfolios are well placed to benefit from the ongoing shift towards the new reflationary environment. We remain cautiously optimistic on equities, with a preference for Europe and Japan, whilst in bonds we are underweight duration risk, favouring short-dated credit and emerging market local currency debt.
ACUMEN Bond Portfolio
The ACUMEN Bond Portfolio (GBP) returned -0.38% in October. The Market Composite Benchmark and the IA’s Global Bond sector returned 0.32% and 0.49% respectively.
ACUMEN Conservative Portfolio
The ACUMEN Conservative Portfolio (GBP) returned 0.58% in October. The Market Composite Benchmark and the IA Mixed Investment 20-60% Shares sector returned 1.16% and 1.46% respectively. The portfolio has a rolling 1-year return of 3.69%.
ACUMEN Income Portfolio
The ACUMEN Income Portfolio (GBP) returned 0.42% in October. The Market Composite Benchmark and the IA Mixed Investment 20-60% Shares sector returned 1.37% and 1.46% respectively. The portfolio has a rolling 1-year return of 4.86%.
ACUMEN Progressive Portfolio
The ACUMEN Progressive Portfolio (GBP) returned 1.64% in October. The Market Composite Benchmark and the IA Mixed Investment 40-85% Shares sector returned 1.79% and 2.24% respectively. The portfolio has a rolling 1-year return of 10.18%.
ACUMEN Adventurous Portfolio
The ACUMEN Adventurous Portfolio (GBP) returned 1.70% in October. The Market Composite Benchmark and the IA Flexible Investment sector returned 2.00% and 2.62% respectively. The portfolio has a rolling 1-year return of 9.99%.
ACUMEN Equity Portfolio
The ACUMEN Equity Portfolio (GBP) returned 2.64% in October. The Market Composite Benchmark and the IA’s Global sector returned 2.42% and 3.26% respectively..
ACUMEN Strategic Portfolio
The ACUMEN Strategic Portfolio (GBP) returned 2.29% in October. The Market Composite Benchmark and the IA’s Global sector returned 2.42% and 1.53% respectively.
The value of an investment in the Protection Portfolios, ACUMEN Portfolios or Tavistock PROFILES may fall as well as rise. Past performance should not be seen as an indication of future performance. Source of data: Tavistock Wealth Limited, Thomson Reuters and Lipper for Investment Management unless otherwise stated.