Quarterly Performance Review - July 2021

At the end of the second quarter, Dean Lush, Executive Vice Chair, and Clement Hutton-Mills, Senior Client Adviser, sit down to discuss how our client portfolios performed this quarter, with a closer look at contributions from both our return and diversifying assets, together with an overview of recent portfolio activity.

In a continuation of strong first quarter performance, our sterling balanced portfolios returned +4.8% in the second quarter and are now up +10.2% YTD.

Performance contributions came largely from our return assets, which returned +7.4% in local currency terms, compared to returns of +7.1% from the MSCI World Index. Standout performers within our portfolios included holdings such as American Express, Lloyds, Wells Fargo, Moody’s and S&P – those generally more sensitive to improvements in the overall economic environment. Given this strong performance, the return assets held in our portfolios have, in aggregate, outperformed the broader stock market over the last six months.

Meanwhile, a small drag from our put options was offset by a positive contribution from our recently added inflation focus implementation vehicle, creating an overall flat contribution from our diversifying assets.

Portfolio activity was heavier on the diversifying side of the portfolio this quarter – we topped up our exposure to inflation-linked bonds and purchased the Saba Fund. The Fund employs multiple strategies to capitalise on the market’s indifference to the risks associated with credits of differing quality, by owning higher quality credits and shorting lesser quality ones. We expect it to perform well in a broad ‘risk off’ environment, while experiencing limited losses outside of these periods.

After strong contributions from our return assets, we also trimmed back our positions in several holdings, including Deere, and completed a full sale of Fox, re-allocating the capital to the Lansdowne Developed Markets strategy.

While a solid start to the year, we remain mindful of possible risks, remaining cautiously optimistic.

Should you have any questions, please get in touch.

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The value of investments, and the income from them, can go down as well as up, and you may not recover the amount of your original investment.  Past performance should not be taken as a guide to future performance.  This content should only be used or reproduced with the express written permission of Rothschild & Co.