Collectively our six portfolios outperformed their respective benchmarks on 25 out of 30 occasions.

EDITION 34 PORTFOLIO SELECTIONS

Global stock markets, with the help of some US$6tn of government money and central bank stimulus, have made a remarkable recovery from the lows of March.

Our own portfolios have held up very well against the IA national average benchmarks. Our Edition 33 portfolios while maintaining a relative cautious asset allocation benefited from our overweight positions in US, Asia and China markets to supply good capital returns. On the other side of the allocation we continued to hold US treasuries and UK gilts in case of a weak recovery and second wave sell off. While these selections were maintained in order to provide a safety net to our portfolios, they have in hindsight lost money. UK gilts lost -4.94% in the past 6 months while US Treasuries are down -1.29% over the same period. Fortunately, our overweight exposure to US, Asia and China stocks positioned us well for the recovery.

As we look forward, we are confident of an improving economy supported by pent up demand, unprecedented liquidity and a break-through in a Covid vaccination programmes before Christmas. This more optimistic outlook allows us to maintain our overweight positions in US, China, Japan and Asia and underweight in the UK and Europe. We do however expect a Brexit deal bounce for UK equity.

We have reduced our holdings in US treasuries and UK gilts by extending our exposure to investment grade corporate bonds and a return to some short dated global high yield credit. These sectors have performed better over the past eight months as compared to government bonds. We do not feel we need the higher security of government bonds to the same extent as we did in the spring.

As for specialist sectors we are now reducing our relatively modest holdings in gold funds. With equities making a recovery the price of gold has dipped and so have returns on Gold funds. In the past three months the Blackrock Gold and General Fund has fallen -11.45% but has provided good returns prior to that. Gold is an inflation hedge and safe haven asset and retains its place for these qualities. We have however changed our fund manager from Blackrock to Ninety-One Global Gold. This switch was based upon performance and volatility. Ninety-One has mining interests in Canada, Australia and Africa.

Our holding in the First Sentier Global Listed Infrastructure Fund was expected to perform well this year on the back of higher government infrastructure spending. Unfortunately, the fund has had something of a disappointing year having lost its fund management rating agency status and delivered some disappointing returns. We have therefore reduced its allocation and moved this to the iShares Global Clean Energy ETF based upon ratings, performance, sector and costs. We expect the clean energy sector to be very well supported from a central government and leading companies shift to a low carbon future. This fund grew by 37.73% over the past three months and 84.35% over the past year to 11th November.

We have maintained our holding in Polar Capital Technology Fund having returned 27.08% over the past six months to 11th November. We expect the Tech sector to continue to prosper but we do expect some reversal in the strength of momentum in this sector as other sectors recover their past positions due to the availability of a Covid vaccine.

We have again avoided any direct holdings in European equity funds but gain European exposure through global funds and sector specialist funds. European markets have fared better than the FTSE 100 over the past six months but we still have concerns over the ECB range to create growth and national debt levels. We have slightly reduced our UK holdings for 2021 despite the UK likely to enjoy a recovery phase with a Brexit deal and an improving outlook for traditional British sectors such as finance, oil, energy and pharmaceuticals. The FTSE 100 offers attractive valuations and is capable of a late recovery. Sterling currently stands at US$1.33 and is expected to rise to around US$1.35 once a Brexit deal is secured. This strengthening of sterling may initially hit the exporters in the FTSE 100.

We have maintained our investments in Japan as it is well placed to benefit from the improvement in global trade and the growth in technology. Japanese corporations enjoy relatively attractive values and are rewarding shareholders with growing dividend payments. We have switched our Japanese fund manager from Lindsell Train to JPMorgan based upon performance.

Our US holdings are made up of three attractive funds, namely Baillie Gifford America, T. Rowe Price US Large Cap Growth Equity and Natixis Loomis Sayles US Equity Leaders. All three have added very attractive returns to the portfolio. The respective returns over the past 6 months have been 50.14%, 19.24% and 26.53% to the 11th November. With the election of President Biden, Wall St are comfortable with the new administrations spending plans knowing they will be trimmed by a Republican Senate and that taxes on US corporations will not rise significantly. The Federal Reserve has stated that it will keep interest rates low even if inflation hits the 2% target and continue to pump US$120bn of cash into the economy each month through the Feds quantitative easing bond purchasing programme.

As China is likely to be the only G20 nation to achieve GDP growth this year despite Covid, our direct investment into China equity funds has increased. In addition to the well-established FSSA Greater China Growth Fund we have added Baillie Gifford China. These funds have growth 22.4% and 40.93% respectively over the past six months. The emerging market have benefited from a weaker US$ and low oil prices. As global trade resumes so will the outlook for South East Asia. We sold our holdings in India in Edition 33 and are not returning to India in this Edition as China is offering greater attraction.

With interest rates higher abroad than the UK’s 0.1%, we have sought a higher exposure to global bonds. Our main overseas fixed interest holdings are the M&G Macro Bond and Vanguard Global Bond Index. Both have suffered some loss of return over the past six months due partly to the improvement in equity and price falls.

As of 11th November 2020, the best performing funds held in our portfolios over the past 6 months have been;

JP Morgan Emerging Markets	37.89%
Veritas Asian	37.62%
JP Morgan Asia Growth	30.64%
Baillie Gifford International	28.13%
FSSA Greater China Growth	28.02%
Fidelity Asia Pacific	26.49%
Polar Capital Global Technology	27.08%
Natixis Loomis Sayles US Equity	26.53%

The regions and sectors that rebounded from the Covid crisis were Asian, Chinese and US companies and the Tech sector.

As of 11th November 2020, the poorest performing funds held in our portfolios over the past 6 months have been;

Vanguard Long Dated Gilt Index	-8.58%
Vanguard UK Government Bond Index	-4.94%
Vanguard US Government Bond Index	-1.29%

All of the above funds were chosen as safe haven assets in case of a heavy second wave fall off in global equities. Fortunately, this has not proved to be the case but could off without a working vaccine and high infection rates. The negative returns did drag performance but our out performing stock selections compensated.

As far as the 34rd Edition of our portfolios are concerned, across all six portfolios, eight new funds have entered our selections while four funds have either been dropped or substituted. We have done this for a number of reasons. These being performance related, cost related or that a fund has lost an analysis rating. There are also sectors that we no longer wish to invest in.

The funds removed are: –	TER
BlackRock Gold and General	1.48%
Lindsell Train Global Equity	0.70%
Lindsell Train Japanese Equity	0.76%
Liontrust Special Situations	0.92%

The funds removed are: –	TER
iShares Global Clean Energy	0.72%
Baillie Gifford UK Equity	0.59%
Baillie Gifford Pacific	1.03%
JP Morgan Japan	1.26%
Merian Corporate Bond	0.87%
Ninety-One Global Gold	1.55%
Schroder Sterling Corporate Bond	0.86%
Baillie Gifford China	0.87%

We are pleased to report that at the time of writing, our six portfolios have performed very well compared to the relevant national Investment Association (IA) benchmarks. The relative performance is measured over six time periods: – 3 Months, 6 months, 1 year, 3 years and 5 years. Collectively our portfolios outperformed their respective benchmarks on 25 out of 30 occasions which is an 83% competency.

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