Investment Model Portfolios for Adviser Firms

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Last year was a dramatic one in economic, social and political terms as the world was hit by the COVID-19 pandemic. After a rocky start, investment markets defied all of this and we ended the year with significant positive returns.

2021 looks likely to be a year of rebuilding and recovery and, having digested the relative impacts of a new US President, a thin Brexit deal being signed as the UK left the EU, the effect that the pandemic is having on economies and the start of the new vaccines being administered, we are expecting the year ahead to be more positive.

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The majority of our Investment Model Portfolios have performed well in a year that began with shocking market falls as COVID-19 spread around the world.  In fact, some of our portfolios have really excelled in both relative and absolute terms.  We thought that this level of outperformance warranted some further analysis, and have dissected where this alpha was generated. [click to continue…]

Since our last update stock markets have continued their impressive recovery in value from the lows of the first quarter. This growth has particularly been in sectors that saw a surge in demand during global lockdowns, such as technology stocks. However, there have been some areas of significant losses, such as the travel and leisure industries, which have suffered greatly from the restrictions.

Our Investment Model Portfolios have mostly performed well over the previous quarter, with holdings in government bonds, which we increased earlier in the year, providing valuable protection against falls.

The future is still highly uncertain, with COVID cases in the UK still rising and further lockdown measures being introduced on a frequent basis, five vaccine trials taking place, and the US election taking place early in November.

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US Flag

The upcoming US election will, as ever, have wide-ranging consequences for not just America, but for most of the world.  Policy on global relations, the environment, the economy, military and social issues could potentially change quite radically and these decisions could be especially crucial at this critical stage in the recovery from the COVID-19 pandemic. [click to continue…]

Active Investing in Passives

The active versus passive investment debate is one that has endured for a long time, dating as far back as Harry Markowitz’s work on Modern Portfolio Theory nearly 70 years ago. In the summer of 2011 GDIM launched Passive Investment Model Portfolios, and at that stage we struggled with including the word ‘passive’ in the portfolio names. Although they are populated by funds that track equity and bond indices, our actively managed and regularly reviewed ‘passive’ portfolios are analysed and scrutinised in the same way as our Whole-of-Market portfolios, which use both active and passively managed funds, so the moniker does seem to be somewhat incongruous. Both strategies have merit and can be used effectively together both in mixing active and passive funds within a portfolio and by proactively managing passive instruments. [click to continue…]

April saw a turning point as the world began to get to grips with the spread of COVID-19 and markets began a gradual recovery, though there were still some periods of volatility.

Many countries have eased lockdown measures and the stock markets reacted well as the loosening of restrictions lead to increased retail and business activity. We are not out of the woods yet though, and have seen a secondary increase in COVID-19 infections in some US states and in countries such as India and Brazil, where they are still struggling to contain the virus.

Our portfolios have performed well under pressure this year, and we have managed to protect capital significantly better than the market. This means that our portfolios have, largely, not seen their values fall as far as their respective benchmarks. Most have then added some growth over the last three months, building back up lost value or even exceeding their January values (based on % growth over 5 years to 3rd July 2020).

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At the half way stage of 2020 we reflect on the previous six months and how this has impacted our portfolios. We have been rewarded with relative outperformance for defensive positioning and believe this remains appropriate given the uncertainty in which we operate. [click to continue…]

Many advisers we speak to are looking for an engaging way to handle investments for a younger generation, who, when investing, generally have a longer timeframe to work with.  We have also found that younger investors are the most likely to be engaged with environmental and social issues and are more likely to prefer an investment strategy that can provide positive outcomes beyond a healthy financial return. We believe that the GDIM Thematic Portfolio can help you to meet the needs of these investors. [click to continue…]

As the spread of the Coronavirus continues across the US and Europe, every day brings new data. We have seen some encouraging signs of slowing contagion in Italy and a return to growth in some parts of the Chinese economy, but the battle to contain the spread and protect the vulnerable is still ongoing. Arguably, the US is the most influential region to be affected by the virus, and the situation there has yet to unfold. With this potentially disruptive cloud on the horizon we must remain cautious and continue to carefully observe the developments. 

As noted above the Chinese economy is showing positive progress in both official and unofficial measures but as an economy that is reliant on trade with the West, we cannot foresee a significant move toward full capacity in the near future.

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Ethical Investing

The ethical revolution has continued to accelerate in 2020. Extinction Rebellion protests are still taking place, ever more plant-based food and products are coming to market, and businesses are trying to show that they are taking environmental and social concerns seriously. The reason for these developments is consumer and investor demand. Consumers are looking for products that do not harm the environment, and investors want to see the companies in which they have a stake doing right by the world

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