Netwealth Portfolio Performance – Our Four-Year Track Record

Performance in the year to 31st May 2020 against peer groups

Past Performance Detail

Source: Asset Risk Consultants and Netwealth, with data as of 31st May 2020. Netwealth portfolio returns are shown in GBP, net of all charges associated with the underlying fund investments, and a Netwealth fee of 0.35% per annum which covers management, trading, custody and administration charges. Netwealth’s fees range from 0.65% – 0.35% pa depending on account size. ARC data contains estimates for April and May 2020.
Past performance is not a reliable guide to future performance.

Context of recent returns against history

During March and April, we often used the below chart to place the market environment into a historical context when writing and speaking to clients. It shows how recent experience, although unsettling, is within our bounds of expectations for portfolio behaviour in light of the best and worst twelve month periods seen for each Risk Level’s allocations in the past twenty five years. Reassuringly, the response from clients has been positive, with many clients retaining their initial chosen portfolio risk level and some taking advantage of cheaper markets to add to portfolios or to increase risk. As we look back following the rebound, it highlights to us the importance in remaining invested. At the end of May, portfolio losses for the year so far have moderated and returns over the past year are now positive after fees for all risk levels except for Risk Level 7. Considered from this perspective, the experience looks far more normal, since it hides the shorter-term turbulence.

Performance in the year so far against historic extremes

Source: Netwealth calculations. All returns shown are net of fees in GBP terms, as of 31st May 2020.

At Netwealth, we continue to emphasize the importance of taking a longer-term view on market risks and potential rewards in order to maximise clients’ likelihood of reaching investment objectives. While portfolio allocations range from conservative exposures of short-dated bonds to diversified global equity markets, in accordance with their risk profiles, we are pleased to see that portfolios have mostly delivered positive returns above their inflation-relative targets since launch. The market environment has varied through time, and so has portfolio performance. Nevertheless, the range of twelve month returns has been well within the extremes of the past twenty five years, as seen below. Annualised performance (the total portfolio returns smoothed across time) has been in line with expectations, with incrementally higher returns from the more ambitious portfolios, delivered at the cost of higher levels of volatility, as intended.

Annualised performance since launch against historic ranges

Source: Netwealth calculations. All annualized returns shown are net of fees in GBP terms, as of 31st May 2020. Inception date is 31st May 2016.

Strong performance vs peers

To gauge whether our portfolios have delivered competitive returns, we compare results to the Asset Risk Consultants Private Client Indices (ARC PCI). We are pleased to be able to say that performance has continued to be strong, with portfolios beating their peer aggregates by 1.0% to 1.9% per annum on an absolute basis, as well as delivering better risk-adjusted returns.

Performance since inception against peer groups

Source: Asset Risk Consultants and Netwealth, with data as of 31st May 2020. Returns shown net of fees in GBP. ARC data contains estimates for April and May 2020.
Past performance is not a reliable guide to future performance.

Portfolio changes and looking further ahead

The experience of 2020 so far has shown us two things. Firstly, diversified portfolio construction is vital, as investors can rarely anticipate what events will disrupt market behaviour. Secondly, not over-reacting during periods of volatility is often the best way to ensure that portfolios see the best longer-term returns.

However, we need to be watchful. Economic and market conditions remain uncertain, so considered evaluation of opportunities and risks will remain crucial. In March and April, we rebalanced the portfolios to take advantage of better valuations in selected equity and corporate bond markets. Central bank intervention has brought fixed income yields to record low levels, so building a portfolio of secure, yielding assets has become more challenging. For this reason, we have adjusted down the exposures and ambitions of our lowest risk level portfolios. We believe that the longer-term prospects for equity markets could remain attractive, but we are aware that the recent rebound has been very powerful. Market confidence so far has been secured by the massive fiscal and monetary response to the crisis, but we should be alert to the fact that a wide range of outcomes could still be realised in the coming months.

The Netwealth Investment Approach

By sticking to sensible, calculated combinations of diversified, liquid assets, we believe our clients are protected from many of the behavioural pitfalls that can meaningfully impact long-term investment performance targets.

The benefits of this strategy have been reflected in our performance. Coupled with a rigorous adherence to lower costs and our focus on compounding incremental gains for portfolio returns, we consider our portfolios to be well positioned to help clients continue to achieve their investment goals.

To find out more about our investment approach, please click here.

Important information

When investing your capital is at risk. The value of investments may go down as well as up, so you could get back less than you invested.

Netwealth offers advice restricted to the services provided, and does not provide independent advice across the market.

Netwealth Investments Limited is authorised and regulated by the Financial Conduct Authority with firm reference number 706988.

Netwealth is covered by the Financial Services Compensation Scheme (FSCS).