It hurts to look at the performance of a portfolio amid a brutal bear market, and it is no different looking at Money Observer’s model portfolios. Despite a few relatively bright spots – primarily among funds geared to capital preservation – the picture is an ugly one. The 12 portfolios shed between 8.7% and 26% during the first quarter of 2020.
Money Observer Model Portfolios
The climax to 2019 couldn’t have been more different from 2018. In the closing weeks of last year, the UK stock market soared, having taken comfort in the Conservative party’s landslide victory and Prime Minister Boris Johnson’s pledge to “get Brexit done”.
Further afield, the prospect of a US-China trade agreement assuaged stock markets that had been derailed at times – most notably in May and August – by the threat of increased US trade tariffs on China.
Fears of a global recession and Brexit uncertainty gave investors lots to fret about and posed fierce headwinds for Money Observer’s model portfolios in the third quarter.
The US-China trade war stoked fears of an imminent recession. The latest raft of tariffs – 15% tax on $112 billion ( £91 billion) of Chinese imports, including clothing and consumer electronics, from 1 September – contributed to a volatile period for stockmarkets.
A strong rebound in stockmarkets from the pounding shares received at the end of 2018 catapulted the Money Observer model portfolios firmly back into profitability during the first quarter of 2019.
Constructing a diversified portfolio that is well-placed to weather storms and take advantage of future bright spots is no mean feat. That is where Money Observer’s 12 model portfolios aim to help investors reach their financial goals.
Last year was a difficult one for investors. The UK stock market felt the heat of the Brexit burn as politicians failed to agree on a strategy to exit the European Union.
The UK equity market lagged international stock markets in the first half of 2018, and it was the same story in the third quarter, with the FTSE All-Share index posting a loss of 0.8 per cent. In contrast, the FTSE World index returned 6.2 per cent in sterling terms.
While the underperformance of UK equities may whet the appetite of more contrarian-minded investors, as far as our model portfolios are concerned, it was a big factor behind eight of the 12 falling short of their relevant FTSE UK Private Investor index benchmark in the three months to 1 October.
Markets shook off a rocky start to 2018 to return to form during the second quarter – and propel the Money Observer model portfolios firmly back into the black.
All 12 of our portfolios beat the relevant FTSE UK Private Investor index benchmark during the three months to the end of June – some by as much as 3.5 per cent. That saw them recoup losses incurred during the volatility that pervaded investment markets in the first quarter of the year – and then some.
Money Observer's growth portfolios offer opportunities over three timeframes. Here's how each has performed.