We have seen another outstanding set of return profiles this week across all the OBI portfolios (Fantastic!!!).
Just two weeks ago our two lowest risk portfolios (OBI Active 3 and 4) had posted negative returns in the year to date, however we can now see all the portfolios going up in unison which is good.
With all but the lowest risk portfolio (OBI Active 3) having a better week of returns than their respective benchmark, we can infer a key point. That point is that both equity and non-equity assets in the portfolios have had a good couple of weeks. Breaking this down further for you, OBI Active 3 has almost doubled its year-to-date return profile from last week, showing that the low-risk exposure, which often creates a drag on performance at this stage of the cycle, is starting to pick up. The positive narrative simply continues for the folks in the higher risk portfolios, as the little exposure allocated to non-equity assets minimises any drag on performance for those who like to target high single digit annualised returns. For those of you who get excited seeing the sector performance breakdown like we do, the following paragraph provides a bit more context to where your returns have come from this week.
Our low-risk portfolios have the highest non-equity weighting, so by looking at the non-equity sector performance over the week, we can see there has been only a slight uptick in performance for most of the indices. We therefore draw your attention to the performance of the equity indices to find the answer for the much stronger OBI Active 3 performance. The key contributions for these lower risk portfolios have come from the multi-asset exposure, primarily comprising of US equities as well as the technology and consumer product sectors. This is further substantiated by the performance of the S&P 500 and the Nasdaq over the week, two US exchanges that have a large allocation to technology firms. Now flipping to the punchier OBI 8 portfolio, the main contributors to performance were European firms, smaller companies, and active UK funds. These three areas are areas that we had identified back in the second half of 2020 as being heavily discounted, but well positioned for the economic upturn, and the performance we expected is now beginning to materialise.
Past performance cannot be used as a guide to future performance and the value of your investment will fall as well as rise in value. You may not get back all of your investment and the final value of your investment will depend on the performance of your portfolio. The actual performance of an individual client’s portfolio may differ due to different funds being used and being restricted in relation to certain asset allocations. Performance figures quoted include fund manager charges but exclude adviser, discretionary, custodian and switch charges and trading spreads. Unless stated, income is reinvested into the portfolio. The information contained in in this document is for information purposes only. It does not constitute advice or a recommendation or an offer or solicitation for investment.
After reading the above, you may be questioning whether this performance over the last couple of weeks will continue. We are not even going to try to entertain attempts to forecast what will happen and when it will happen accurately, and we believe anyone trying to do so will most likely be wrong. However, we want you to know that we see no reason for the positive weekly performance not to continue. Yes, performance may not be as strong as this week’s going forward, however we see money flows into markets continuing to surge as the outlook becomes clearer, and company earnings typically appear to be moving in a very positive direction. It is weeks like these that get the asset team more excited than usual, as we get to see the conviction we have for investments pay off after strenuous analysis of the best opportunities that aim to give you the returns you expect. We remain cautiously optimistic, and so we hope for more of the same through Q2 and Q3 (even if there is some volatility along the way!).
We remain devoted to serving you as best as we can, so every quarter we have an investment committee meeting (ICM) to analyse the performance of assets, markets and the portfolios. The upcoming ICM will revaluate the existing portfolio composition as a result, and we will be on the look out for attractive opportunities that we seek to have more exposure to. Weaker areas of the portfolios can therefore be trimmed, and we will do our best to give you the portfolio composition that both meets your expectations and aligns to our OBI strategy.
Key Events We Are Watching This Week:
- Friday: China GDP Growth Rate for Q1.
- Tuesday: UK Unemployment Rate.
This Day in History
On this day in 1912, the British luxury passenger liner Titanic sank en route to New York City from Southampton, England, after striking an iceberg during its maiden voyage.
Have a great week, if you have any questions that we have not answered this week, please feel free to send them across to us.
Jason, Gina & Ben