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Written by: Juliet Schooling Latter
07/01/2021
Hopping on the scales in the first week of the New Year is no-one’s favourite task, but the January weigh-in is an opportunity to re-assess more than your exercise and diet plan. When was the last time you ran a health check on your ISA or your pension?

As different investments perform in different ways over the course of a year, the value of your savings can also shift quite dramatically. Some may have gained in value – or put on weight – while others may have literally shed the £s.

What was a perfectly diversified portfolio a year ago may now need some tweaking.

How 2020 may have reshaped your portfolio

2020 was an exceptional year in more ways than one. Having seen our retirement savings plummet in March and April when the significance of the global pandemic hit home, thankfully, most stock markets subsequently recovered.

Some companies that benefited from the world staying at home did extraordinarily well – Amazon, Zoom and Ocado to name a few – while others have been fighting for their survival or forced into administration.

This has all had an impact on our savings. For example, the average technology fund is up 46% this year, and the average China equity fund is up 30%. Even our core holdings have moved pretty significantly in the last 12 months.

The average US equity fund is up 17%. If you had 60% invested in the US before (which is the country weighting in the global index) you have about 70% today.

If you had these options in your portfolio, they have done their job, but do you have too much of them now? Is it time to trim your holdings and take some profits?

And then there is the UK. UK Equity Income funds have been the building block of many a portfolio for years now, but they’ve had a shocker in 2020 – dividends have been cut left, right and centre, and the average fund value has decreased 9% year-to-date.

Is it time to look elsewhere or, now we have a Brexit deal, is it time to top up your holding, while UK equities are cheaper than their developed market peers?

Detoxing your investments

If you are looking to make your portfolio healthier and adopt better habits, you could look at how ‘ESG’-friendly it is. The environment, social issues and corporate governance are all big topics in other areas of our lives so why not our investments too?

There are plenty of excellent funds available that fit the bill, whether you care most passionately about climate change (Ninety One Global Environment or Pictet Global Environmental Opportunities, for example) or all three areas are your top priority for 2021 (Edentree Amity UK or Rathbone Global Sustainability).

Get a personal (investment) trainer

If you’re lacking motivation or the thought of rebalancing your portfolio is too much on top of everything else, you could opt to use the investment equivalent of a personal trainer – a multi-asset fund manager who will invest in all sorts of asset classes and adjust the allocation between them throughout the year to make the most of opportunities.

One of the best performing funds of this ilk in 2020 was Liontrust Sustainable Future Managed, which invests in equities, bonds and cash. All ESG factors are considered and the managers have identified three mega trends with dependable growth prospects: better resource efficiency (cleaner), improved health (healthier), and greater safety and resilience (safer).

Another option is Artemis Monthly Distribution, which also invests in equities and bonds and pays out an income on a monthly basis. Its historic yield is currently 3.3%.

If you’d like to invest in a wider range of asset classes, Premier Miton Multi-Asset Growth & Income is worth a look, as it invests in a combination of equities, bonds, commercial property and alternative investments.

Ninety One Cautious Managed is another option. It is currently invested in all of those asset classes as well as physical gold and silver. It also has an equity ‘hedge’ which could make money should stock markets fall again.

Juliet Schooling Latter is research director at Chelsea Financial Services

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