Another positive month for AM&A portfolios

August summary

Our Model Portfolio Performance Data can be viewed here: AM&A Model Portfolios – August 2020.

Fund performance was a bit of a mixed bag in the traditionally quiet month of August – with some risk-on strategies performing well while others lost money, and fixed income strategies lost out. Equity markets were largely positive with the FTSE All Share up by 2.4% and the US blue-chip S&P 500 index gaining an impressive 5% (in sterling terms) during August.

Some of the strongest performing sectors could be found at the riskier end of the spectrum led by smaller companies strategies.

The best performing sector was Japanese Smaller Companies where the average fund rose by 5.7% during August. It was also joined in the top 10 by its UK, European and North American peers. It was a strong month for Japanese equity strategies broadly, however, with the IA Japan sector up by 4.6% on average as the Japanese economy appeared more resilient in the face of a second wave of Covid-19 infections.

Another strongly performing part of the market in August was technology as the sector continued to lead the market recovery and Apple saw its market cap hit $2trn. As such, the average Technology & Telecommunications funds made a total return of 5.2%. It was also beneficial for US equity strategies – where tech stocks represent a significant part of benchmarks such as the S&P 500 – with the average IA North America strategy up by 5%.

Other strong performers included the Asia Pacific Including Japan, China/Greater China and Global sectors.

Fixed income sectors dominated the other end of the sector performance table, with UK government bond strategies rooted to the bottom. The average UK Index Linked Gilts fund was down 5.4 per cent last month, while the UK Gilts sector posted a loss of 3.8%.

Other fixed income sectors struggling in August included Global Bonds, Global Emerging Market Bonds and Sterling Corporate Bond sectors.

AM&A’s Model Portfolios rose by an average of 2.1% over August and have now, on average, broadly speaking recovered to their values at the beginning of the year whilst the FTSE 100 and FTSE All Share indices are languishing at 19% and 18.5% below their January 1 values.

Over a ten year period, the value of our Moderately Cautious Portfolio, despite having a risk rating of only 46% of the FTSE 100 Index, has yielded a 30% greater return than the FTSE 100 whilst our highest risk portfolio, having a risk rating of 75% of the FTSE 100 Index, has yielded almost twice the return of the FTSE 100

The rally we have benefitted from over the past five months has emphasised the importance of remaining fully invested in the markets and whilst we believe that market volatility will continue for the foreseeable future, we remain fully committed to our buy and hold diversified investment strategy which has benefited clients in the past 12 years since our Model Portfolios were initially launched and hopefully will continue to serve our clients well in the future.

David Marks, Head of Investments at AM&A