Fund Objective

The objective of the fund is to offer a balance of growing income and capital with moderate risk through investment in a diversified portfolio of securities.

View on Past Performance

The final quarter of 2005 rounded the year off in fine fashion. The UK equity market rose by 4.3% in the quarter boosting the overall return for the year to 22.0%. Among the other developed markets, in sterling terms the US returned 5.2% and 17.3%, and Europe 6.2% and 24.1% for the quarter and year respectively.The best performance however came from the Asian and Emerging markets with Japan, for example, rising by 15.7% in quarter four and 41% for the 12 months. Bonds were more lacklustre, albeit still respectable, increasing by 2.8% in quarter four and 7.9% for the year. Over the quarter, the Portfolio Fund returned 4.23% versus 4.61% for the benchmark, and for the year 22.30% versus the benchmarkÂ’s 20.15%.

Future Expectations

While three years of double digit returns does weigh on oneÂ’s mind when forecasting returns for the coming year, many of the fundamental drivers behind markets suggest further strength in 2006. M&A should remain strong, world economies look robust, and the UK economy should rebound modestly following the weakness demonstrated in 2005. The commodity sectors are harder to predict in view of the presence of speculators and with China being a key driver. Nonetheless, the positives attached to the sector remain largely in place. On balance, with company earnings expected to rise by high single digit levels, a similar performance from equities seems reasonable - not as strong as 2005 but still enough to represent an attractive asset class.

Fund Details