All-In-1 Investment Bond and Guaranteed Capital Bond fund management and performance

Whilst strong performance was generated across all regions, two in particular stood out: the Japan equity asset class outperformed the benchmark by 17.2% whilst the Emerging Markets equity assets outperformed by 15.3%, (both in Sterling terms). Within the Global Emerging Markets portfolio, almost half the outperformance was due to Chinese stock selection where technology and healthcare were the dominant success stories. 

In Japan, Technology and Industrials stocks drove the outperformance. The fund also benefitted from opportunities after the March 2020 lows to purchase quality stocks at attractive valuations that were previously considered too expensive.

US equities returned 19.0% for the year against the benchmark return of 15.5% with Technology stocks a dominant success story during 2020. Profits in several stocks were taken to allow investment in assets that subsequently benefitted from the buoyant vaccine news. These changes were designed to take advantage of the reflation/recovery stage now being entered.

The European equity portfolio delivered strong outperformance against its benchmark (the assets returned 5.1% whereas the benchmark returned 2.8%) during the year. Stock selection accounted for all the outperformance led by Technology and Industrials. 

UK equity assets (-8.9%) outperformed the FTSE All Share (-9.8%) over the year helped by stock selection within Industrials. Overall, the UK equity market lagged behind all major equity markets during 2020. Fears of a no-deal Brexit hampered the market throughout the year. The market also suffered for its relatively high exposure to energy-related stocks.

 The UK corporate-bond portfolio returned 10.8% for the year, outperforming its benchmark, which returned 9.6%. Strong performance came from the 70% holding in medium and long-dated bonds, which outperformed short-dated bonds during 2020. Stock selection was the main driver for the funds outperformance.

The diversification into Developed Markets bonds late in 2019 proved positive as the fund returned 9.7% for the year, comfortably ahead of its benchmark return of 7.2%. 

The benefit of the funds exposure to both UK Gilts and US Treasuries was most noticeable during quarter 1, where these assets offset equity weakness within the fund. Their resilient characteristics resulted in stable performance throughout the year. Due to the strong returns across most asset classes, the Multi-Asset fund (DRR) performed strongly returning 8.2%, comfortably ahead of its target of 4.6%. 

Despite rebounding during the second half of 2020, Property assets experienced a difficult year, ending down -2.9% over the 12 months. The assets are UK focussed which suffered heavily during the lockdown. The funds return was also negatively impacted by the direct property assets.