Report of the Investment Committee 2008 - St James's Place

Ian McVeighSJP/Cautious Managed FundJupiter fund managers have taken a variety of steps to mitigate the effects of thefinancial and economic crisis over the last year. We held a strong bias towardstriple-A rated bonds within the bond portfolio before the credit crisis began inmid 2007. This boosted performance as investors, worried by the sudden lackof liquidity, sought out higher quality assets. As the crisis unfolded, however, welooked for opportunities in lower-rated debt where spreads had reachedhistorically attractive levels.With regard to the fund’s UK equity holdings, we continued our very underweight position inUK bank stocks which we have held since mid-2007. This has been a significantly positivecontributor to the performance of the UK portfolio amid the credit crunch and the bail-out of highstreet banking names. In the European portfolio, Alex Darwall’s style has ensured a concentrationon companies with global operations, strong balance sheets and better prospects for growth thantheir peers. Elena Shaftan sharply reduced exposure to Russian equities, from almost 70% in May to30% and cut exposure to cyclical stocks such as oils and materials as commodity prices began tofall. The rebalanced portfolio now holds more defensive sectors e.g. pharmaceuticals and telecomsand has increased the cash level to above 20%.The portfolio’s overall structure, with its significant exposure to short dated bonds, has also helpedto mitigate the worst impact of weak global stock markets so far in 2008.22