NorthStar’s Latest Investment Results Exceed Expectations

Despite challenging economic conditions caused by the COVID-19 pandemic, stock markets have rallied in recent months, buoyed by the rollout of vaccines and an expectation that economic activity will soon pick up. This had driven positive investment returns for investors with all NorthStar clients seeing increases in the value of their portfolios.

All portfolios we run provided investors with positive returns over the past six months with seven of the eight delivering returns ahead of their benchmark. Returns ranged from 3.1% to 18.1% over the past six months, with total returns of between 2.8% and 11.7% over the past year as a whole. This represents very strong performance in volatile market conditions.

You can read more about our unique investment approach underpinned by our own investment philosophy based on 8 core principles and backed by Nobel Prize winning research. This helps our portfolios deliver the maximum possible returns to clients while closely monitoring and minimising risks.

How the NorthStar portfolios performed

The chart below shows a comparison of the NorthStar portfolios since inception (01.01.15) to 01.02.21:

How the returns compare

The chart below shows how the NorthStar portfolios have performed against their benchmarks over the past 12 months (February 2020 to February 2021). All have performed well in absolute terms over this period with all bar one ahead of their benchmark:

Investment performance background

At NorthStar, our ‘Investment Committee’ meet regularly to discuss the state of investment markets, opportunities to capitalise on, and ways to position our portfolios to ensure they deliver strong returns for our clients. Every six months, the committee consolidate their research, discuss investment options and formulate their recommendations. Here is a brief summary of the key points from our recent Investment Committee meeting:

• COVID-19: The full economic, health and social impacts of the pandemic remain largely unknown. It is also unclear how the strategies employed by different countries will ultimately fare. What is certain is that the scars from the crisis will last for many years and maybe for generations to come. It is likely many countries will be moving into the next phase of the pandemic during this year where attention will turn to how to recover, reinvent and repay debts as well as how to best plan for the next global crisis.
• US Election: The US election result was conclusive and the country is now embarking on a new political, social and economic direction. The impact of the Biden administration remains to be seen. This is likely to mean a boost to infrastructure spending and additional fiscal stimulus. It is also expected to lead to a renewed focus on global institutions, multilateralism and trade. These factors are likely to be positive for investors in aggregate with the US continuing to drive global investment returns.
• Megatrends: COVID-19 has accelerated several global megatrends. From home working to e-commence, video communication and other digital services, the pandemic has made our societies even more reliant on these technologies. This has created some significant winners and losers but the trend is clear and set to continue. The other megatrend that is accelerating is that of ‘green’ or ’ethical’ investing with many firms committing to environmental reforms and others capitalising on the significant and sustainable revenue streams environmentally friendly products and services will provide.
• Real Assets: With interest rates across most Western countries at historically low levels and quantitative easing continuing in several regions, there is huge demand for ‘real assets’. Stocks, commodities and other investable assets are seeing unprecedented demand and flows of capital. Investors are seeking assets that will deliver positive real returns and we expect demand to remain high for the foreseeable future.
• Performance: All portfolios posted positive returns over the past six months, with seven of the eight outperforming their benchmark. The biggest gains were seen in the higher risk portfolios with the Adventurous Growth portfolio delivering a returning of over 17% during this period. The lower-risk portfolios demonstrated a good degree of downside protection when markets fell during the past year and this will be important to protect investors should markets decline.
• Outlook: It is likely the heightened levels of market volatility will persist throughout 2021. There remains much uncertainty around the shape of the global recovery, mutations in the virus, vaccine rollout and key political and procedural decisions that are still to play out. Making forecasts is difficult at the best of times, but recent events have shown just how tricky it is to accurately assess what may happen in the coming months. With this in mind, we are even more committed to retain our diversification discipline and ensure we continue to assess the best trade-offs between risks and returns within all portfolios. We share the consensus view that there are more positive than negative drivers for markets in 2021 and are optimistic for further returns for investors.

The Benefits of Our Investment Approach

The NorthStar portfolio range is a key part of our complete investment management solution. An expertly crafted range of portfolios exclusively for NorthStar clients. Here’s a reminder of the key benefits this provides:

• Optimised portfolio construction. Using advanced modelling techniques, we ensure our portfolios are fully optimised. By blending the very best funds, we create portfolios that are greater than the sum of their parts.
• Effective risk management. Every NorthStar portfolio is constructed within specific risk parameters so you can be confident that you will never be exposed to unnecessary investment risks.
• Academically supported philosophy. Our investment philosophy and construction process is based on many years of empirical evidence and Nobel Prize winning research, helping us provide the very best investment portfolios.
• Low-cost investment solution. We utilise the best value investment funds available to help us lower the cost of investing. We then charge just 0.6% a year to provide you with a full investment management service.
• Diversified investment approach. We don’t believe in putting all our eggs in one basket. We create portfolios that utilise a broad range of asset classes to reduce volatility and improve investment returns.
• Ongoing monitoring & reviews. We never take our eye off the ball when it comes to our portfolios. We continually monitor and regularly review all portfolios to ensure they always deliver the best outcomes.
• Smart portfolio rebalancing. Every NorthStar portfolio is rebalanced every 6 months to ensure it always remains optimized, efficient and on-track to deliver your investment objectives.
• Complete flexibility as standard. You are never tied into to any NorthStar portfolio. You can switch between portfolios, change your regular contributions or disinvest any time you like – all at no cost.

Wrapping up

We’re really pleased with the performance of the NorthStar portfolio range and the returns we’ve delivered for our clients.

If you would like more information on the NorthStar portfolios, our investment philosophy or would like to chat about how we can help you make the most of your existing investments, please get in touch.