NorthStar’s Latest Investment Results Continue to Deliver
Global investment markets continued to push higher in recent months as many countries began to lift COVID restrictions. Vaccination rollouts have allowed most governments in Europe and North America to start to re-open their economies with consumer demand rebounding strongly. The picture is more mixed in many Asian regions and there are some significant challenges for the majority of developing nations to establish an effective COVID suppression strategy.
The re-opening of the global economy has also seen a surge in commodity prices, with the cost of fuels and other raw materials rising in many regions leading to a spike in inflation. Many central banks have indicated they are likely to accept higher inflation over the coming years but there remain concerns that interest rates may have to rise to keep price rises under control if this level of inflation persists. This factor, along with concerns over new COVID variants took the edge off returns over the summer months, but the general direction of most markets remains upward.
Investment returns are likely to be driven largely by the recovery from the pandemic during the remainder of 2021. Significant challenges remain in terms of vaccine delivery in developing countries, the co-ordination of government strategies, barriers to travel, economic recovery policies and the risks of new variants. How these factors are handled is likely to determine the outlook for investors over the next few years.
You can read more about our unique investment approach underpinned by our own investment philosophy based on 8 core principles and backed by Nobel Prize winning research. This helps our portfolios deliver the maximum possible returns to clients while closely monitoring and minimising risks.
How the NorthStar portfolios performed
All NorthStar portfolios provided investors with positive returns over the past six months. Over the past six months, four of the eight portfolios were ahead of their benchmark, one in line and three behind. Over the past year, seven of the eight portfolios are now ahead of their benchmark, representing continued outperformance.
The chart below shows a comparison of the NorthStar portfolios since inception (01.01.15) to 01.08.21:
How the returns compare
The chart below shows how the NorthStar portfolios have performed against their benchmarks over the past 12 months (August 2020 to August 2021). All have performed well in absolute terms over this period with all bar one ahead of their benchmark:
The chart below show which asset types have contributed to portfolio returns over the past six and twelve months to 01.08.21:
Investment performance background
At NorthStar, our ‘Investment Committee’ meet regularly to discuss the state of investment markets, opportunities to capitalise on, and ways to position our portfolios to ensure they deliver strong returns for our clients. Every six months, the committee consolidate their research, discuss investment options and formulate their recommendations. Here is a brief summary of the key points from our recent Investment Committee meeting:
- COVID: Many Western economies continue to re-open following the rollout of vaccination programs. In other regions, the picture is more mixed. There remain significant concerns about new variants and higher infection rates over the coming winter months in the Northern Hemisphere. The economic and social decisions taken by policymakers are likely to be a key driver of investor sentiment and portfolio returns during the next few years.
- Commodities & Real Assets: The price of many commodities (and other real assets such as equities and property) continue to rise across the world, fuelled by rapidly expanding consumer and business demand as the world emerges from the pandemic. This has caused oil prices to move sharply higher and fuel concerns over inflation in many regions.
- Inflation: In the US and UK, as well as in other regions, inflation is now above target. Many central banks have indicated that they are prepared to accept this and will not look to raise interest rates in the short-term. However, rates may have to rise if inflation becomes entrenched rather than proving to be a short-term spike post-COVID. This has concerned markets and will be an important factor to monitor in the months ahead.
- Performance: All NorthStar portfolios posted positive returns over the past six months, with four of the eight outperforming their benchmark, one in line and three behind. The biggest gains were seen in the higher risk portfolios with the NorthStar Adventurous Growth Portfolio delivering a return of nearly 9% during this period. The lower-risk portfolios demonstrated a good degree of downside protection when markets fell during the past year and this will be important to protect investors should markets decline.
- Outlook: The consensus view is that there are currently more reasons for optimism than pessimism. As economies open up, there is likely to be strong consumer demand and growing business confidence in most regions. That said, significant risks remain due to the unpredictable nature of the pandemic as well as the potential for significant inflation in many regions. We, therefore, expect investment markets to remain volatile but believe there are further returns to be made during the rest of 2021 and into next year.
The Benefits of Our Investment Approach
The NorthStar portfolio range is a key part of our complete investment management solution. An expertly crafted range of portfolios exclusively for NorthStar clients. Here’s a reminder of the key benefits this provides:
- Optimised portfolio construction. Using advanced modelling techniques, we ensure our portfolios are fully optimised. By blending the very best funds, we create portfolios that are greater than the sum of their parts.
- Effective risk management. Every NorthStar portfolio is constructed within specific risk parameters so you can be confident that you will never be exposed to unnecessary investment risks.
- Academically supported philosophy. Our investment philosophy and construction process is based on many years of empirical evidence and Nobel Prize winning research, helping us provide the very best investment portfolios.
- Low-cost investment solution. We utilise the best value investment funds available to help us lower the cost of investing. We then charge just 0.6% a year to provide you with a full investment management service.
- Diversified investment approach. We don’t believe in putting all our eggs in one basket. We create portfolios that utilise a broad range of asset classes to reduce volatility and improve investment returns.
- Ongoing monitoring & reviews. We never take our eye off the ball when it comes to our portfolios. We continually monitor and regularly review all portfolios to ensure they always deliver the best outcomes.
- Smart portfolio rebalancing. Every NorthStar portfolio is rebalanced every 6 months to ensure it always remains optimized, efficient and on-track to deliver your investment objectives.
- Complete flexibility as standard. You are never tied into to any NorthStar portfolio. You can switch between portfolios, change your regular contributions or disinvest any time you like – all at no cost.
The NorthStar Investment Committee are very satisfied with the continued strong performance of the NorthStar portfolio range and the returns delivered to clients.
If you would like more information on the NorthStar portfolios, our investment philosophy or would like to chat about how we can help you make the most of your existing investments, please get in touch.
Performance data do not take into account platform or advisory charges and exclude any holdings in platform ‘cash accounts’. Performance data show returns for discounted ‘super clean’ funds where these are available. Such funds may not be available on all platforms. Performance data are rounded to the nearest 0.1% so small rounding errors may occur. Data correct as at 01.08.21. Source: FE. Data based on relevant sector averages using year-end data points. Sector proxies used: UK Equity: 50% UK All Companies Sector Average + 50% UK Equity Income Sector Average, Europe Equity: Europe Ex UK Sector Average, North America Equity: North America Sector Average, Japan Equity: Japan Sector Average, Asia (ex. Japan) Equity: Asia (ex. Japan) Sector Average, Emerging Market Equity: Global Emerging Markets Sector Average, Property: 50% UK Property Other + 50% Specialist Sector Average, UK Fixed Income: 33.33% Sterling Corporate Bond Sector Average + 33.33% Sterling High Yield Sector Average + 33.33% UK Gilt Sector Average, Global Fixed Income: Global Bonds Sector Average, Specialist & Global Equity: 50% Global Sector Average + 50% Specialist Sector Average, Alternative Strategies: Targeted Absolute Return Sector Average (from 2006 onwards), 3.5% per annum prior to 2006. Cash: Money Market Sector Average. The value of investments and the income from them can fluctuate and investors may not get back the full amount invested. Past performance is not necessarily a guide to future performance. The tax treatment of investments depends on individual circumstances and is subject to changes in tax legislation. Figures are provided for illustrative purposes only and their accuracy cannot be guaranteed. Information provided should not be relied upon in isolation when making investment decisions and does not constitute advice or an offer to purchase any investment or product. Please contact us for more information on our range of portfolios.
Awards, Accreditations & Trade Associations
At NorthStar, we are committed to delivering the best service to our clients and working to the very highest professional standards. Our work has been rewarded with a number of awards and professional accreditations. We are also members of the leading financial services professional trade associations.