Interactive Investor

Positive end to first quarter: fund winners and losers in model portfolios

22nd April 2022 12:11

Kyle Caldwell from interactive investor

We run through how the model portfolios fared in March, ahead of Morningstar taking over the decision-making. 

The final month of the first quarter of 2022 was a stronger showing for global stock markets, which boosted the performance of interactive investor’s five model portfolios.

Leading the way with a gain of 3.9% was ii Ethical Growth, followed by ii Low-Cost Growth, which returned 3.6%. ii Active Income took the bronze medal, up 3.4%, ahead of ii Low-Cost Income and ii Active Growth, which delivered respective returns of 2.7% and 2.4%.

Year-to-date, however, it has been a challenging period for the five portfolios, particularly for the three growth models. Each has posted losses, with ii Ethical Growth and ii Active Growth down notably, 10.3% and 9.6%.    

Performance of models over 12-month time periods

Discrete (%) returns for the periods*:   
 01/04/2021 - 31/03/202201/04/2020 - 31/03/202101/04/2019 - 31/03/2021
Growth Portfolios   
ii Active Growth2.643.8-4.5
ii Ethical Growth1.541.9N/A*
ii Low-Cost Growth9.635.4-11.2
Growth benchmark11.932.1-10.3
Income portfolios   
ii Active Income12.528.7-15
ii Low-Cost Income11.523.9-15.5
Income benchmark11.724.7-14.6
Morningstar GBP Adventurous Allocation average633.5-10.2

Notes *as at 31 March 2022. Portfolio launch date (for monitoring purposes) was 1 January 2019, except Ethical Growth portfolio, launched 1 October 2019. Data source: Morningstar Direct. Past performance is not a reliable indicator of future results.

As we announced recently, Morningstar’s Manager Selection Services Group took over the day care of the five model portfolios from 1 April.

As a result, various changes have been made, with new constituents, ejections and tweaks to the percentage weightings of some of the holdings.

The new percentage weightings for all the constituents in the five models can be found on the model portfolio page

In future, Morningstar will be providing editorial updates on performance.

Below, we run through the best- and worst-performing funds in the models in March – ahead of Morningstar making a number of changes that were effective from 1 April.

Growth portfolios

Most of the holdings in ii Ethical Growth had a good month, but two stood out: Baillie Gifford Positive Change and FP Foresight Global Real Infrastructure, with returns of 11.7% and 9.1%.

Baillie Gifford Positive Change is a high-conviction portfolio of around 25 to 50 stocks, with a focus on high-quality growth companies. As a result of its investment style, its short-term performance (down 9.7% in the first quarter of 2022) has been negatively impacted by the market rotation that’s played out since the start of 2022. In short, growth companies have become less popular on the grounds that such stocks are negatively impacted by high inflation and increases in interest rates because both devalue their expected future earnings.

Foresight Global Real Infrastructure, in contrast, made a positive return of 1.8% in the first three months of 2022. This is no mean feat given that most fund sectors posted losses. The fund is a potential hedge against increases in the cost of living, as it has 70% of its underlying assets directly linked to inflation, with the remaining 30% indirectly exposed.

Bringing up the rear was Syncona (LSE:SYNC). The life science-focused trust lost 7.1% in March. It has posted big losses over one and three years. It was ditched by Morningstar on 1 April, which said the decision to sell was to “reallocate to less risky alternatives”.

In ii Low-Cost Growth, the biggest contributor to returns in March was L&G Global 100 Index, which was up 7%. The big tech shares saw their share prices recover some of the lost ground from January and February, which boosted the performance of this passive fund. The index has significant weightings to the US technology behemoths that have delivered exceptional performance after benefiting from loose monetary policy. The four largest holdings, comprising more than 40% of the passive fund, are Apple (NASDAQ:AAPL)Microsoft (NASDAQ:MSFT),  Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN).

As our recent editorial article pointed out, L&G Global 100 Index has outperformed most active funds over one, three and five years. However, going forward, its performance faces the headwind of tech being likely to be less dominant given the tightening of monetary policy.

Just one holding in ii Low-Cost Growth produced a negative return during the month – Vanguard Global Bond Index – which lost 2.5%.

The same pattern played out in ii Active Growth. Jupiter Strategic Bond was the sole active fund in the red, down 2.2%.

Investors have been ditching bond funds. The latest statistics from the Investment Association (IA) show that in February a total of £2.5 billion was withdrawn from funds. Of that amount, £2.4 billion was outflows from bond funds. Investors are selling due to inflation being at its highest level in decades. This is bad news for bonds, as inflation erodes the purchasing power of the income investors are paid.

Fundsmith Equity was the biggest contributor to performance for ii Active Growth in March, up 4%.

Performance of the three growth model portfolios 

% total return (with income reinvested) as of 31 March 2022, after*:     
 1 month3 mths6 mths1 yearSince inception*
Growth portfolios     
ii Active Growth2.4-9.6-7.62.652.1
ii Ethical Growth3.9-10.3-7.61.528**
ii Low-Cost Growth3.6-
Growth benchmark3-0.63.711.944
Growth benchmark since 1 October 2019 (date ii Ethical Growth was launched)    23.9
Morningstar GBP Adventurous Allocation average3.5-3.9-0.9636.3

Notes *as at 31 March 2022. Portfolio launch date (for monitoring purposes) was 1 January 2019. Data source: Morningstar Direct. Past performance is not a reliable indicator of future results.

Income portfolios

Murray International (LSE:MYI), which has a value focus, had the greatest influence on the performance of ii Active Income. The trust, managed by Bruce Stout, returned 5.7% in March.

In a recent video interview with interactive investor, Stout explained that the trust’s high dividend yield offers a defence against inflation. He also ran through why the trust has very low exposure to UK shares.

Three other constituents had a strong month: Utilico Emerging Markets (LSE:UEM), BMO Commercial Property Trust (LSE:BCPT) and abrdn Private Equity Opportunities (LSE:APEO). The respective returns were 6.9%, 6.4% and 4.7%.

As was the case with ii Active Growth, posting a loss of 2.2% for ii Active Income was Jupiter Strategic Bond.

In ii Low-Cost Income, the worst performer was Vanguard Global Bond, which is also held in ii Low-Cost Growth. The passive fund was down 2.5%.

Topping the charts was iShares Global Property Securities Equity Index, the WisdomTree Global Equity Dividend Growth ETF and the SPDR® S&P Global Dividend Aristocrats ETF GBP (LSE:GBDV), which returned 7.5%, 5.7% and 4.1%.

Performance of the two income model portfolios 

% total return (with income reinvested) as of 31 March 2022, after*:     
 1 month3 mths6 mths1 yearSince inception*
Income portfolios     
ii Active Income3.
ii Low-Cost Income2.71.55.311.524.5
Income benchmark2.22.56.711.727.3
Morningstar GBP Adventurous Allocation average3.5-3.9-0.9636.3

Notes *as at 31 March 2022. Portfolio launch date (for monitoring purposes) was 1 January 2019. Data source: Morningstar Direct. Past performance is not a reliable indicator of future results.

Our Model Portfolios have been compiled by investment experts to help investors who do not have the time or the confidence to make their own investment choices. There are a variety of financial goals they are designed to help people meet.

However, you should note that the selection of our Model Portfolios is not a ‘personal recommendation’. This means we have not assessed your investment knowledge, your financial situation (including your ability to bear losses), your investment objectives, your risk tolerance, or your sustainability preferences.

You should ensure that any investment decisions you make are suitable for your personal circumstances, and if you are unsure about the suitability of a particular investment or think you need a personal recommendation, you should speak to a suitably qualified financial adviser.

The past performance of an investment is not a reliable indicator of future results, and ii does not guarantee or predict the future performance of the Model Portfolios or the constituent investments.

Risk Warning(s)

The value of your investments may go down as well as up. You may not get back all the money that you invest.

Investing in emerging markets involves different risks from developed markets, in many cases the risks are greater.

The value of international investments is affected by currency fluctuations which might reduce their value in sterling.


Annual performance can be found on the factsheet of each fund, trust or ETF. Simply click on the asset’s name and then the performance tab.

Any changes to the Model Portfolio constituents and the rationale behind those decisions will be communicated through the Quarterly Investment Outlook.

To see a list of previous updates to Model Portfolio constituent investments, please go to the relevant Model Portfolio’s ‘Timeline’.

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