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Performance review: Canaccord cuts equities and property

by Elsa Buchanan on Mar 31, 2014 at 13:01


Over the last 12 months, the portfolio has returned 5.9% versus the WMA Balanced benchmark, which rose by 7.2% over the same period.

Since the model was launched in 2011, it is up 19.8%, versus the benchmark, which is up 22.2%.

‘We have also exposed our clients to considerably less risk and, as such, our Sharpe ratio stands considerably higher at 1.03 versus 0.75 for the WMA Balanced,’ he said. The portfolio has averaged 5.7% volatility since inception, considerably less than the WMA’s 10%, he added.

Over 12 months, volatility was 6.5% compared to 8.5% for the benchmark.

Smith admits he held gilts for ‘slightly too long’, which dampened performance. ‘We were certain [Bank of England governor Mark] Carney would introduce forward guidance properly, but he ended up by introducing a forward guidance laden with inflation caveats, so of course gilt yields carried on rising,’ he said.

Conversely, performance was driven by US Vanguard Opportunities, iShares FTSE, infrastructure plays and a 5.8% position in the ‘stunning’ Polar Capital Healthcare fund.

Smith believes markets will continue to move sideways through the first half of the year. After the strong period of multiple expansion driven by quantitative easing (QE), he warned that equity markets could start struggling as QE is reduced further.

‘This could shave off 2% a quarter.’

The investment manager anticipates that stock markets will still return between 5% and 8%, with the US at the top end of the range, followed by the UK, and Europe towards the lower end of the spectrum.

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