Presentation Transcript

1. Platform based Discretionary Model Portfolios 18th April 2013 Managed by Managed by Model Portfolio Update At the beginning of this week we took action to remove any remaining exposure to gold and to bring down the overall risk exposures of each of the portfolios, except Defensive and Income, by around 10%. We thought that it was a sensible point at which to bring portfolios back towards a more neutral defensive/growth stance after significantly increasing risk exposures in the last quarter of 2012 and early in 2013. The increased risk asset exposures worked well and the portfolios benefitted from strong moves upward in the US and other equities. A general weakening of sterling against the major currencies led to currency gains across the board. There are a number of factors which make us think that the bullish mood for equities may subside for a while including some signs that US corporate earnings may fall short in the first quarter of 2013. Alongside that is slightly disappointing growth data for China, signs of a deepening recession in Euroland with no recovery in the UK and significant global tensions in the Middle East and Southeast Asia. Taking all these factors into account it seemed prudent to reduce risk a little. We achieved this by selling the gold producers ETF and reducing exposures to both US and Far East equities. The proceeds have been held in short term UK government bonds (gilts) and cash. The portfolios’ investment in gold has turned out to be very expensive insurance. The position was taken out at the height of the Eurozone crisis when there seemed to be a very real risk of systemic failure in the European banking system. The gold producers offered a proxy whereby exposure to gold could be achieved at a discount, with major upside if the European banks (and the Euro) collapsed and some upside if the Eurozone sorted itself out and markets rallied. It became clear last week that the case for investing in gold has faltered for the time being. There is little fundamental logic for gold to be out of favour as money-printing continues apace around the world and rogue countries threaten to fire nuclear missiles at allies of Western states. In addition, it has become evident that bank depositors can lose up to 40% of their cash if they deposit it in a bank in the wrong country. Rationality may well return to the gold market, but as JM Keynes said: “Markets can remain irrational for longer than investors can remain solvent” and we do not think it wise to test that thesis. We made the following changes to the model portfolios: Defensive No change as the portfolio is mainly invested in defensive assets and any growth assets are yield-based and can be more resilient in the face of market weakness. Cautious We sold a small amount of the HSBC S&P 500 ETF and the HSBC Far East ETF. The proceeds were invested into an iShares 0-5 years gilt ETF with a small balance held in cash. This reduced growth exposures from 40% to 35% of portfolio value. Evercore Pan-Asset Capital Management Limited is Authorised and Regulated by the Financial Services Authority
2. Platform based Discretionary Model Portfolios Managed by 18th April 2013 Balanced We sold a small amount of the HSBC S&P 500 ETF and the HSBC Far East ETF. We also disposed of the small amount remaining in the iShares gold producers ETF. The proceeds were invested into an iShares 0-5 years gilt ETF with a small balance held in cash. This reduced growth exposures from 59% to 53% of portfolio value. Growth We sold a small amount of the HSBC S&P 500 ETF and the iShares Far East ex Japan ETF. We also disposed of the small amount remaining in the iShares gold producers ETF. The proceeds were invested into an iShares 0-5 years gilt ETF with a small balance held in cash. This reduced growth exposures from 75% to 68% of portfolio value. Adventurous We sold a small amount of the HSBC S&P 500 ETF, the Credit Suisse Nasdaq ETF and the iShares Far East ex Japan ETF. We also disposed of the small amount remaining in the iShares gold producers ETF. The proceeds were invested into an iShares 0-5 years gilt ETF with a small balance held in cash. This reduced growth exposures from 89% to 83% of portfolio value. Income We made no changes to the Income portfolio as the underlying exposures are all either fixed income based or yield-orientated, which tend to be more resilient during market setbacks. As always, please don’t hesitate to contact us if you have any questions about the above. The Pan-Asset Investment Committee Important Notices and Risk Warnings:This document does not constitute professional advice and does not constitute an offer to sell or a solicitation of an offer to purchase any security or any other investment or product. The information in this document is for private circulation and is believed to be correct but cannot be guaranteed. No representation or warranty (express or otherwise) is given as to the accuracy or completeness of the information contained in this document and Evercore Pan-Asset Capital Management Limited and its employees accept no liability for the consequences of acting or not acting upon the information contained in this document. Opinions expressed in this publication are solely the opinions of Evercore Pan-Asset Capital Management Limited. All expressions of opinion are subject to change without notice. This document may not be reproduced or distributed in any format without the prior written consent of Evercore Pan-Asset Capital Management Limited. Investing in Exchange Traded Funds may expose the investor to a number of risks, some of which are specific to Exchange Traded Funds and some of which are general investment risks. Not all Exchange Traded Funds are suitable for all investors. The value of investments and the income from them can go down as well as up and investors may not recover the amount of their original investment. The sterling value of overseas investments, and the income from them, will fluctuate as a result of currency movements. Past performance is not necessarily a good indication of likely future performance. The tax treatment of investments depends on each investor’s individual circumstances and is subject to changes in tax legislation. Evercore Pan-Asset Capital Management Limited is Authorised and Regulated by the Financial Services Authority