Standard Life Wrap Account – Quarterly Investment Review

The Jupiter and BlackRock Funds

After a positive start, this fund has underperformed its peers for some time now and it has become apparent that the fund manager does not have a sufficient level of resource available to him considering the complexity of the sector being invested in.

The BlackRock Continental European fund, however, now has an impressive long-term track record and is considered to be a core European Equity fund. The managers have considerable analytical resource in the European sector, conversely to the Jupiter fund, and the investment strategy is geared towards achieving growth from large European companies.

The Standard Life and Vanguard Funds

The Standard Life GARS fund was originally introduced to provide a broader diversification during a period of uncertainty when Fixed Interest investments were being disproportionately affected by the Government policy of Quantitative Easing. The GARS fund was designed to have a comparable volatility and risk level to that of Fixed Interest, but because it operates in a completely different way it was largely unaffected by Quantitative Easing and increased diversification in the low-risk part of the portfolio.

Despite a positive track record in the early years, GARS has suffered recently as a result of difficulty navigating a turning point in the economic and market cycle. The weaker economic data coming from China and the US in 2016 impacted on the GARS fund, as well as the recent strengthening in the Dollar which negatively affected Emerging Market investments; to which GARS has been heavily exposed.

Whilst we do not make our investment recommendations based purely on past performance, the outlook for GARS is not positive according to many independent ratings agencies, with the top agencies rating GARS as a 1-Star fund (out of 5). This, coupled with the fact that we are no longer in a period of Quantitative Easing and therefore the fund has served its purpose, means that our recommendation at this time is to switch out of this fund.

The Vanguard LifeStrategy fund aims to achieve income and capital returns through exposure to a diversified portfolio comprised of approximately 40% in equity securities; and 60% in fixed income securities. The fund will seek to achieve its investment objective predominantly through investment in passive, index-tracking collective investment schemes which helps to keep the cost down.

Since the inception of the fund, back in 2011, the Vanguard fund has consistently achieved returns in the top quartile (the top 25% of funds) when compared to its peers; it is also highly rated by independent agencies and currently holds a 5-Star rating. The fund maintains a similar volatility and risk level to that of GARS, and so the overall risk level of your portfolio will not be disturbed by making the switch into this fund.