Lowes MPS - Quarterly Reports

Performance The portfolio strongly outperformed the sector average during the period, returning 4.70% and 2.29% respectively. Pleasingly, all funds within the portfolio, with the exception of the two property funds, delivered a positive return during the period. Strongest performers during the period were UK equity income funds which are allocated to, in particular the Man GLG Income fund. Not only was this the strongest performing fund in the portfolio, but it was also the third strongest performing fund in the IA UK Equity Income sector. Performance was helped by its focus on valuation and allocation to sectors such energy and financials. The managers also took advantage of the flexibility in their remit to be able to add corporate bonds to the fund, locking in attractive yields for the fund. Within the fixed income allocation there were strong performances from funds including Artemis Strategic Bond, Invesco Monthly Income Plus and TwentyFour Dynamic Bond, each ranking first quartile within the IA Sterling Strategic Bond sector. The weakest performer during the quarter was the L&G UK Property Feeder fund, with weakness seen across physical property markets in general. Higher bond yields made this asset class less attractive to some investors, coupled with concerns that a protracted economic slowdown/recession would be negative for capital values. Whilst we monitor closely, we continue to see property as an alternative, diversifying income stream for the portfolio. Although further interest rate hikes are still forecast from year end levels in the UK, Europe and US, the market began to price in the possibility of interest rate cuts in the US for the second half of 2023. This was on the basis of inflation falling from its peak and also the threat of recession. This was somewhat at odds with the US Federal Reserve however, who believe that there is little likelihood that cuts will be seen in 2023. Whilst interest rates in the US therefore are likely to peak in the first half of 2023, it remains to be seen therefore whether we will see a full ‘Fed pivot’. Portfolio Activity and Positioning During the quarter there were two changes made to the portfolio. The exposure to the Jupiter Investment Grade Bond fund was removed in favour of the Premier Miton Strategic Monthly Income fund. The latter, being a strategic bond fund rather than sterling investment grade bond fund, has a much greater level of flexibility within its mandate. This ranges across allocation to fixed income asset classes to duration/interest rate sensitivity management. Given this, coupled with high yields being available at the short end of the yield curve, prompted the switch. A position in the VT Gravis UK Infrastructure Income fund was also added. This fund had seen something of a sell-off in its underlying holdings, meaning that it was offering a greater level of yield than it had for some time. The quality of the underlying assets meanwhile remains intact. This purchase was funded by the partial reduction in the exposure to the Royal London Sustainable Managed Growth fund. Disclaimer The portfolio is managed on a discretionary basis therefore the investment manager may make changes to the investments held without notice. Investors are agreeing to the investment model as recommended by an Adviser and may not be investing into the specific assets included in this report. Past performance is not a guide to future performance. The value of investments and any income from them can fall as well as rise and are not guaranteed, so you may get back less than you invested. If you invest in currencies other than your own, fluctuations in currency value will mean that the value of your investment will move independently of the underlying asset. Consideration should be given to whether it is felt that the outcome of any risk assessment is accurate and advice should be sought for factors such as investment objectives, the investment term, attitude to risk, capacity for investment loss and the level of inflation. This illustrative document is intended for investors where advice has been given by Advisers. Models are prepared in accord ance with the stated objective and not client circumstances. Information from given sources is taken to be reliable and accu rate, which Lowes Investment Management Ltd cannot warrant for accuracy or completeness. Lowes Investment Management is authorised and regulated by the Financial Conduct Authority (192938). Source: FE Analytics, Bid-Bid, Total Return