Interactive Investor

Leaders and laggards - Model Portfolio October 14 update

16th October 2014 12:45

Helen Pridham from interactive investor

Money Observer's 12 Model Portfolios have all beaten the FTSE All-Share index over the third quarter, but still lagged the 3.1% gain returned by the FTSE World index.

Helen Pridham has decided to replace one poorly performing constituent held in four of our six growth portfolios, as outlined in the quarterly review.

The performance of our six income portfolios varied more than usual over the third quarter, while the best-performing growth portfolios during the past quarter were the two short-term options.

Read below to find out the best and worst-performing holdings in our portfolios.

Leading income holding: Scottish Mortgage Investment Trust

Scottish Mortgage is one of the top-performing global investment trusts over the past one, five and 10 years.

The fund is managed by James Anderson and Tom Slater. Its main exposure is to North America and Europe, but it also has a hefty 19% stake in China.

It has a relatively concentrated portfolio and is heavily focused on two core themes: the emergence of China and disruptive technology. The combination of these elements has paid off well.

Leading growth holding: First State Asia Pacific Leaders

First State Asia Pacific Leaders, managed by the highly respected Angus Tulloch and his team, invests in large and medium-sized companies in the region, with an emphasis on quality.

Tulloch likes companies that can do well in downturns as well as strong markets. Recently he has increased his holdings in India, now the top country exposure at 23%.

The Indian stockmarket has performed strongly this year, particularly since new prime minister Narendra Modi swept to power promising to boost growth.

Lagging income holding: Unicorn UK Income

Unicorn UK Income's flagging performance coincided with the tragic death of its lead manager, John McClure, in June, but the real reason for its decline is its focus on smaller companies.

These have fallen from favour recently. Investors have looked for better value among larger companies.

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However, we believe that, under its new managers, Simon Moon and Fraser MacKersie, who worked closely with McClure, the fund will recover and that smaller companies will outperform over the longer term.

Lagging growth holding: BlackRock World Mining investment trust

The mining sector has been hit recently by weaker year-on-year economic data from China. However, BlackRock World Mining's managers, Evy Hambro and Catherine Raw, believe it is important to highlight the supportive backdrop of synchronous global growth, which in the past has bolstered commodity prices.

They see 2014 as a year of transition, with large mining companies exceeding analysts' earnings expectations.

We also think this sector has got considerable scope for recovery. Mining companies are trading on undemanding valuations and offering attractive dividend yields.

It seems other investors in the trust are also looking to the future, as it remains on a relatively small discount of around 1% to net asset value.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.