Four months isn't long enough to judge an asset allocation, but with two portfolios to track from our Christmas special (see Asset Allocation for 2017, 16 December 2016), it is interesting to see which selections of investments have fared best so far this year. Back in December we had another look at two 2016 Investors Chronicle portfolios. One was based on a pessimistic outlook where, due to populist policies, protectionism stifled growth but government spending still led to damaging inflation; and another portfolio was based on an assessment of the investment landscape in autumn 2016. We asked a group of asset managers to offer their opinion, with robo-adviser Nutmeg and Bestinvest suggesting tactical changes to our autumn 2016 portfolios, and SCM Private Capital and Charles Stanley Pan Asset looking at allocations in our pessimistic/populist portfolio.
In truth, neither of the Investors Chronicle portfolios was especially optimistic, with the autumn portfolio holding back 15 per cent in cash. In hindsight, this caution was excessive as risky assets have continued to do well in 2017. In spite of the overweight cash position, the autumn portfolio is up 5.58 per cent overall on a total returns basis, with none of its investments seeing a negative performance. The exchange traded funds (ETFs) which have done best are those giving exposure to European equities (up 9.94 per cent), emerging market equities (13.56 per cent), index-linked gilts (9.77 per cent) and gold (9.89 per cent). These are all potentially volatile investments, however, so it is probably a good thing that the cash holding is large to protect against nominal capital losses when conditions aren't as benign as they have been over the past few months.
The portfolio designed to protect wealth from the impact of populism held less cash, but had a higher allocation towards gold. Over our short timeframe thus far, this has done better than any of the other portfolios published at Christmas. This is partly down to being more concentrated in assets that have done well, including gold and index-linked debt, but other investments - including the global quality and minimum volatility equity ETFs and the UK dividend factor ETF - have also contributed to a healthy 6.57 per cent overall return.