We have always said that the focus should be on the long term, however we are mindful to address the recent underperformance.

Between 1 January 2020 and 19 August 2022, the Balanced Positive Impact Portfolio held up relatively well.

But from this point things changed:

There were two factors behind this. Firstly, the mini budget in September impacted infrastructure and property funds and this is a significant part of the portfolio. The second impact was the short selling of Home REIT which crashed the share price.

During the last couple of months we have seen the portfolio benefit from the sale of Civitas, which had a significant uplift in the share price, and that gives us confidence that something similar could happen with Home REIT when it is re-listed.

The portfolio is not just about alternatives. The equity element has held up well and this gives us confidence going forward. We have also removed some of the assets and brought in some new infrastructure strategies which should benefit from the transition to renewable energy and energy self-sufficiency.

With this portfolio the underperformance has been less about the equity style of the investments but more about the alternatives which make up an element of the risk.

In reality, the main hit has been Home REIT, but the other infrastructure and property funds would have been a drag.

In the rebalance we reduced the alternatives bucket from 34% to 30%. We increased slightly the exposure to debt to 12% and introduced a strategic bond strategy which is more diversified compared to the previous holdings.

In summary, the last few months have been really hard for the portfolio, however we feel confident that the equities are correctly positioned to capture the future. We have reduced some of the risk within the alternatives but at the same time are looking to capture infrastructure growth over the next few years. Ultimately, money will come back from Home REIT and this could provide an uplift when this happens.

Note: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of LWM Consultants. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog, and the reader should accept that by its very nature many of the points are subjective and opinions of the author. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.