“April proved to be a difficult month for risk assets with equities, in particular, selling off quite sharply. Broadly speaking our fund selections tend to be less economically sensitive than average in terms of their stock picks and sector allocation, thereby mitigating some of the falls. We did, however, decide to switch out of the GAM US All Cap into the Allianz US Equity after some lacklustre performance. The Allianz fund is similarly multi-cap but style agnostic. We hope that this change will bring greater consistency to an area that is demonstrating better economic traction than much of the Western world.”

“The behavior of major markets clearly changed early in the second quarter of this year. As a consequence, we further increased our exposure to fixed income. All fixed income funds in the portfolio are actively managed, many of them through a broad array of markets, both in terms of geographic and rating focus. On the equity side, the European exposure has been trimmed some more, leaving US and emerging investments as the bulk of the investments. As the Euro crisis unfolds, mitigating the risky assets volatility remains key to a balanced portfolio management.”

“After three consecutive months of positive performance, markets corrected during April. While US equities have been quite resilient, European markets have been under pressure. In this context, the model portfolio performed above the balanced benchmark. The performance has been supported by good results of our fixed income allocation and the return generated by our global equity and patrimonial funds.

We replaced Robeco Emerging Market Equities with JPM Emerging Mkts Opps and Investec American with Allianz US Equity A. We maintain our asset mix unchanged.”

“The same causes produced the same effects: disappointing economic data in the US and fresh anxiety concerning the sovereign crisis in Europe made equity markets fall in April. On top of that, recent Chinese GDP data revealed a growth slowdown in the first quarter. We removed our exposure to commodities which may suffer from lower demand. On the other hand, the US high yield market remains attractive, and we further increased our exposure to the AXA WF US High Yield Bonds fund.”

“In April the portfolio yielded a performance above its benchmark, partly due to the defensive positioning adopted by the end of March. Positive contributions came from Aberdeen World Equity, Nordea European Value and UBAM US Equity Value. The biggest detractor was GLG Japan CoreAlpha, both due to the market dynamics and its own aggressive allocation. We maintain a defensive stance on the portfolio, in view of the difficult situation in Europe and of the possible soft patch in the US growth path.”

“Due to increasing uncertainty about the debt problems within the euro area and the political situation in France and Greece the portfolio risk as a whole was further decreased. Compared to last month we eliminated the position in euroland equity funds and increased our exposure to German Bunds and money market funds.”

“Most of the major international stockmarkets have been on the weaker side since beginning of April on the back of weaker economic data, from the US and China as well as the Eurozone. The euro sovereign debt crisis has come into the focus again. Investors’ confidence remains weak because of the uncertainty of the implications on the European debt resolution of Francois Hollande’s victory in France and an inconclusive Greek election. Our portfolio, which is allocated according to C-Quadrat Best Fonds Strategy, reacted to this market environment with an increase in its fixed income exposure.”

“According to Bloomberg the P/E on the Euro Stoxx 50 is now 8.63 with a dividend yield of 5.17 per cent (as of 21 May). For those investors who view risk as the permanent loss of capital rather than volatility, we are of the view that risk is actually lower than many appreciate. With this in mind, we have decided to maintain our asset allocation and will consider reducing fixed income and increasing equities should the current correction continue. Our managers have performed as expected and of particular interest was the positive return in April of almost 3 per cent from Eclectica.”