Hello. I'm Lindsey James, Investment Strategist at Quilter Investors.
Welcome to today's video update. Where we'll be looking to address the main questions you've been asking your financial advisors about your investments in the Cirilium portfolios.
I'm delighted to be joined by the Cirilium portfolios managers, Ian Jensen-Humphreys and Sacha Chorley, who you might be aware took over running the portfolios a year ago.
So turning to you, Ian, I think many of our viewers will have been invested over the past five years and really quite challenging investment conditions, and perhaps they haven't seen as good performance as they might have expected.
So how do you think you can deliver good outcomes moving forward? Thank you, Lindsey. So we certainly acknowledge that the performance that the Cirilium portfolios have delivered has not been what we would have hoped and expected for. You know, going forward, how can we try and improve upon those outcomes?
Or really it comes down to how we are looking to invest in and what we're trying to achieve. Now we absolutely acknowledge that the primary goal that that we have for investors is to deliver strong returns over the medium to long term to help people reach their financial goals. However, what we're also really focused on doing, and this is a a key belief that Sacha and I have is to try and manage those shorter-term wobbly moments in markets as well. Yeah.
Whilst we want to deliver strong returns, we want to deliver smooth returns. We don't want investors to be exposed to every single peak and trough in the market. So we're laser focused not only on the long term, but also on managing that short term, managing the volatility that we can see in markets.
So what you're saying is that you're really trying to focus on protecting on the downside predominantly?
Absolutely. Although, not at the cost, of trying to deliver long term upside returns in rising markets. Okay. Understood. Thank you.
Now, Sacha, we specifically discussing the actively managed Cirilium portfolios today, which means you select the underlying holdings and also how much you buy and hold in the portfolios.
So what added value does that bring? I think that brings a lot of added value. When we're thinking about active management in these portfolios, it really comes through in two levels. The first is where we're thinking about the allocations to different regions, different sectors, different parts of the bond market, we are actively considering the pros and cons of each of those investments. And allocating the portfolios appropriately.
The second aspect is in how we build the portfolios up once we have those allocations.
Now this really relies on understanding what the investment universe is to make sure that we're choosing the most appropriate assets for each part of the portfolio. That could be holding an active manager. It could be implementing through tools that are used to help manage the downside in the portfolio. But, crucially, the selection of the asset is a very active decision on our part.
And Ian, since taking on the management of the portfolios, you've been making quite substantial changes to the holdings within them. Are you now happy with the shape of the portfolios? Is there anything more you're looking to change? Yes, we are happy with the shape of the portfolios.
We spent a few months upon taking over the portfolios, really going out to meet all the managers that we owns to understand how they manage money to try and understand in what scenarios those managers would do well or do badly.
We then sat down together did a lot of work, figured out which managers we wanted to retain, and which other managers we wanted to add into the portfolios that weren't there already that we knew and we liked and thought could really help the returns.
It took us a few months to enact all those changes, but now we're in a position whereby we really feel both comfortable with what's in the portfolios and confidence that we're in a good shape to deliver strong returns going forward. Okay.
Thank you. And for Sacha, the last question, what's your outlook for markets as we approach 2024? And how could these views benefit the portfolios?
Sure. So what has been very interesting about 2023 has been the continued strength of the global economy, really. That is quite heavily centred on the US, where we have seen continued resilience in the labour market, for example, and that has allowed companies to continue to deliver earnings growth. Now at the same time, we have seen interest rates from central banks across the world increase quite substantially.
And so we are mindful as we come into 2024 that we are potentially still to see some of the lagged impacts of those interest rate increases come through into the economies.
What that means for our portfolios is that we think it's very important to be relatively balanced. So we have a relatively neutral stance as we sit here today, but we can see that given the scale of the interest rate increases that we've seen over the last twelve months, that there could be some risk that we enter a more challenging market backdrop. And therefore, we have thought very carefully about adding holdings into the portfolio that could provide a little bit of protection in those more challenging environments.
Thank you, Sacha. So it sounds like you are broadly neutral but with an eye on the risks that are out there. So thank you very much, both of you, for your time, and thank you at home as well for your time, and also for the faith that you place in us when you invest with Quilter.
