Your monthly snapshot of the WealthSelect Managed Active Portfolios, crafted by your portfolio manager, Stuart Clark and chief investment officer, Marcus Brookes.
WealthSelect Managed Active Portfolios
Stuart Clark
Portfolio Manager
Marcus Brookes
Chief Investment OfficerIn this month’s edition:
1. Market summary
Global equities rose by 1.9% in July as positive economic data from the United States and other developed market economies pushed stocks higher. July was most notable for the outperformance of emerging markets, which had lagged their developed market counterparts for much of the year. Chinese equities were the chief driver of this, with the government moving to address some of the key domestic issues that had faced the country since its re-opening.
Equity markets
US
US equities rose 2.2% in July, as stocks within the energy, financials and technology sectors outperformed. The US Federal Reserve (Fed) enacted what many analysts now believe to be its final interest-rate rise of the cycle, nudging US rates higher by 0.25%. While Fed messaging suggested it remained open-minded to further rate rises, positive economic data paired with plateauing inflation were enough to lift investor sentiment throughout the US.
Europe
While the European Central Bank raised interest rates by 0.25% in July, analysts see the bank as nearing the end of its tightening cycle as inflation continues to recede. The prospect of falling rates paired with positive economic growth data helped power European equities to a 2.1% uplift in July, with real estate and energy stocks among the top performers. Corporate earnings appeared to hold up well as earnings season began mid-month.
UK
Domestically-focused stocks helped deliver a positive month for UK equities, which gained 2.5% in July. This came in response to analysts having softened their forecasts for further interest-rate rises throughout 2023, as inflation appeared to relent. This was particularly welcome news for domestic companies which rallied throughout the month, with notable rise in UK small cap equities. Property stocks were outperformers over the period.
China
Emerging markets equities delivered a 3.9% gain in July, outperforming developed markets in the process. A rally in Chinese equities helped drive performance for the index, with China rising 7.2% over the month after local authorities pledged economic support to the beleaguered domestic real-estate sector. Following a difficult June, Turkey was the top-performing emerging market while Egypt, Taiwan and India were among the main detractors.
Fixed income
The prospect of interest-rate hiking cycles coming to an end in Europe and the US were largely supportive to credit markets, as US government bonds fell by 1.4% in July. Suggestions that the US may avoid recession this year underpinned much of the optimism in markets, with Global High Yield Bonds rallying by 1.2%, while Global Corporate bonds made a modest gain of 0.6%. Global Government Bonds were down for the period, falling by 0.4%.
Total return, percentage growth in pounds sterling except where shown, rounded to one decimal place. Performance is represented by the appropriate IA sector average..
2. Performance review
Stock markets posted positive returns in July, as risk assets were buoyed by resilient data fuelling hopes for a soft landing. Weaker than expected inflation data over the month provided further support, leading to a broad rally across most asset classes and regions. Against this backdrop, the WealthSelect Managed Active Portfolios delivered positive returns across all risk levels, ranging from 1.1% at risk level 3 to 2.4% at risk level 10.
The top performing individual funds in the portfolios were the Quilter Investors China Equity Fund (managed by Janus Henderson) and the Quilter Investors Europe (ex UK) Equity Income Fund (Schroders), which returned 8.1% and 4.2% respectively. While the Quilter Investors China Equity Fund trailed its benchmark by 1.3%, the Quilter Investors Europe (ex UK) Equity Income Fund outperformed by 0.9%.
Performance summary (%)
| Cumulative performance | Discrete annual performance to end of July | ||||||||||
| 1 month | YTD | 1 year | 3 year | 5 year | Since launch |
2022 - 2023 |
2021 - 2022 | 2020 - 2021 | 2019 - 2020 | 2018 - 2019 | |
| Managed Active 3 | 1.1 | 2.8 | 1.3 | 4.4 | 12.3 | 38.2 | 1.3 | -4.2 | 7.6 | 2.0 | 5.6 |
| IA Mixed 0-35% Shares | 1.0 | 1.7 | -2.0 | -2.1 | 2.3 | 23.4 | -2.0 | -6.4 | 6.7 | 0.4 | 4.1 |
| Managed Active 4 | 1.3 | 3.3 | 2.3 | 8.5 | 16.0 | 49.1 | 2.3 | -3.6 | 10.0 | 0.9 | 5.9 |
| IA Mixed 20-60% Shares | 1.4 | 2.7 | 0.0 | 6.0 | 7.7 | 36.2 | 0.0 | -5.3 | 12.0 | -2.3 | 4.0 |
| Managed Active 5 | 1.4 | 3.8 | 3.4 | 12.8 | 19.6 | 59.8 | 3.4 | -3.1 | 12.7 | -0.1 | 6.2 |
| IA Mixed 20-60% Shares | 1.4 | 2.7 | 0.0 | 6.0 | 7.7 | 36.2 | 0.0 | -5.3 | 12.0 | -2.3 | 4.0 |
| Managed Active 6 | 1.6 | 4.4 | 4.6 | 17.4 | 23.1 | 69.4 | 4.6 | -2.3 | 15.0 | -1.2 | 6.2 |
| IA Mixed 40-85% Shares | 1.7 | 4.2 | 1.5 | 14.6 | 17.1 | 60.1 | 1.5 | -4.3 | 18.0 | -2.9 | 5.2 |
| Managed Active 7 | 1.8 | 4.9 | 5.7 | 22.2 | 27.0 | 80.3 | 5.7 | -1.6 | 17.5 | -2.5 | 6.6 |
| IA Mixed 40-85% Shares | 1.7 | 4.2 | 1.5 | 14.6 | 17.1 | 60.1 | 1.5 | -4.3 | 18.0 | -2.9 | 5.2 |
| Managed Active 8 | 2.0 | 5.6 | 7.0 | 27.2 | 31.6 | 92.0 | 7.0 | -1.0 | 20.1 | -3.4 | 7.2 |
| IA Flexible | 1.2 | 3.4 | 1.6 | 16.3 | 18.5 | 64.5 | 1.6 | -4.4 | 19.7 | -2.4 | 4.3 |
| Managed Active 9 | 2.2 | 6.1 | 7.8 | 32.2 | 37.9 | 112.5 | 7.8 | 0.1 | 22.5 | -3.2 | 7.8 |
| IA Flexible | 1.2 | 3.4 | 1.6 | 16.3 | 18.5 | 64.5 | 1.6 | -4.4 | 19.7 | -2.4 | 4.3 |
| Managed Active 10 | 2.3 | 6.5 | 8.4 | 35.3 | 42.7 | 135.9 | 8.4 | 0.8 | 23.7 | -3.0 | 8.8 |
| IA Global | 1.9 | 8.6 | 5.3 | 29.5 | 42.1 | 133.3 | 5.3 | -3.1 | 26.9 | 0.1 | 9.6 |
Source: Quilter Investors as at 31 July 2023. Total return, percentage growth, rounded to one decimal place. All performance figures are net of underlying fund charges, but gross of the Managed Portfolio Service charge. Deduction of this charge will impact on the performance shown. The WealthSelect Managed Active Portfolios launched on 24 February 2014.
3. Investment outlook
July was a positive month for global equity markets. The US recorded its longest run of consecutive months of positive performance in two years, despite US interest rates reaching a 22-year high. It was also a positive month for Chinese equities, buoyed by some policy easing and hopes of further stimulus. This helped boost emerging market indices after what had been a muted start to the year in terms of performance.
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