At the end of every quarter, our investors are sent a full report detailing the performance of their portfolios. Packed with insight about both wider market developments and the details of the portfolio’s composition, it is essentially a rundown of everything affecting the investor’s progress over that period.
The first quarter of 2021, for example, has been defined by the slow return to economic normality. As the UK begins to open up after months of restrictions, so too are the outlooks of investors, who are now beginning to envisage life after Covid-19. It has meant a positive quarter, one that has raised plenty of considerations for investors and wealth managers alike to consider.
How our portfolios performed
The report’s most important section details performance. Investors are given a full breakdown of how their portfolio performed over the quarter, along with information about the specific assets that made the difference. We also then compare that performance with an industry benchmark to give investors a reference point.
Here’s an example of how our relatively high-risk P6 portfolio fared over the first quarter of 2021. As you can see, the quarter saw the continuation of reasonably high volatility but, ultimately, the performance of the portfolio was positive.
Our quarterly reports keep investors in the loop on not only the relative performance of their various assets but also the reasons behind them. We explain how broader market trends have an impact on our portfolios, as well as the situations in which they don’t. For example, this quarter, our portfolios were unaffected by the GameStop saga, whereas the resurgence of ‘value’ stocks is something that has encouraged us to act.
Through these reports, our investors are kept well and truly up to date with the decisions our asset allocation specialists are taking and the impact they may have on their investments.
Where we invest
The report is also a way to ensure that investors are fully informed as to what actually makes up their portfolios. The proportions of different assets in our portfolios are determined by the risk level assigned to any given investor. For example, lower-risk portfolios will generally hold more bonds, while higher-risk portfolios will be more greatly made up of equities.
When we decide to rebalance our portfolios – usually but not exclusively to take advantage of opportunities identified by our team – these percentages can shift. The report sent out to our investors explains, in full, the reasons for any changes to our allocation.
As you can see from the breakdown below, the P6 is a relatively high-risk portfolio, so it features a significant chunk of equities.
The report features plenty of other metrics that will be of interest to many investors. These include explanations of how allocation in a given risk level has changed over time, how the volatility has affected performance, and the various currency exposures in the portfolio, to highlight a few.
Looking ahead to the next quarter
The quarterly reports sent to Moneyfarm investors are more than simple retrospectives. Part of detailing any changes made during the quarter, or analysing its trends, is to look ahead and assess where the opportunities and pitfall may lie going forward.
During the first quarter of 2021, the focus was on vaccine rollouts and how the reopening of various economies might impact markets. Looking ahead to the current quarter, the outlook is equally positive, with vaccination programs in full swing and some economies already beginning to take steps toward normality.
Value stocks outperforming growth stocks, the continued rise of China, US bond yields, Brexit – these are just a few of the topics we’ve highlighted to keep an eye on as Q2 develops. As wealth managers, keeping investors to date on the topics that drive our decision-making process is an important part of our role.
If you want to see an example of the report in full, or want to discuss your own investment options, get in touch with our investment advisory team by phone or by email. They’ll be happy to help.