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Issued by 1OAK Capital Limited, authorised and regulated by the Financial Conduct Authority.  1OAK Capital Ltd (1OAK) (Registered in England & Wales Number: 06890293; FCA registration number 501453) provides fund management services for its customers. 1OAK Capital Limited is authorised and regulated by the Financial Conduct Authority. Registered Office of 50 Sloane Avenue London SW3 3DD.

Please excuse us if we blow our own trumpet, or rather Blackrock’s trumpet, for once. Our funds and strategies performance is tracked against a benchmark made up of two broad indices that reflect the returns from equities and bonds.

From our end of month analysis, we noticed that ALL of the non-equity assets in the MA80 fund had performed better than the fixed income benchmark for the month of April. This is one of the reasons that the fund has performed better than the benchmark. It is in part because the portfolio is positioned to reflect a view that there will be more inflationary pressure but that real yields will remain low.

This note looks at the fixed income benchmark and performance of the non-equity assets in a little more detail.

What is the benchmark we have chosen?

The benchmark for the non-equity assets is the iShare that tracks the performance of the Barclays Bloomberg Aggregate Bond Index. (AGG). This index is a broad-based fixed-income index that fixed income managers widely use as a benchmark to measure relative performance.

The index includes government Treasury securities, corporate bonds, mortgage-backed securities (MBS), asset-backed securities (ABS), and bonds issued by US Municipal Bonds to represent the universe of bonds in the market. The index functions similarly for the bond market to what the FTSE 100 index does for the UK equity market.

The index is considered the best total bond market index, as it is used by more than 90% of investors in the United States. AGG only includes securities that are of investment-grade quality or better, have at least one year to maturity and have an outstanding par value of at least $100 million. Bonds are weighted according to market capitalization, which means the securities represented in the index are weighted according to the market size of each bond type.

There are then some large sections of the bond market that are not included in AGG. This includes inflation linked securities, floating rate bonds, and sub-investment grade corporate bonds. Here is a link to the fact sheet for the index: 

How have the assets held in the 1OAK MA fund and Strategies performed relative to the benchmark?

The short answer here is pretty well. Over the month AGG was +0.32% while the average performance of the non-equity assets was +1.76%. Every asset in the non-equity sleeve offered a positive return and they all performed better than the benchmark. Once we take the weight of each asset into account the return of the non-equity assets was +1.66%.

Adjusting for the overall weight of non-equity assets in the portfolio, the benchmark would have contributed 0.06%; the assets held contributed 0.31%, as shown in Figure 1 below

Figure 1: Total contribution of Benchmark and non-equity assets

analysis of non returns 1

Figure 2 below shows the weight and monthly return of each non-equity asset.

Figure 2: Weight and performance of non-equity assets in MA80

analysis of non returns 1 

The excess performance of each asset compared with the benchmark and the weight of each asset in the fund can be combined to show the contribution of each asset class to the outperformance of the fund as shown in Figure 3 below:

Figure 3: Asset class contribution to MA80 return

 analysis of non returns 1

Figure 3 shows that every asset class made a positive relative contribution over the month. The biggest contributions coming from Gold, Property and long dated treasuries.

We would be the first to admit that this is a bit of an anomaly and not something we would expect to be repeated.


The non-equity assets in the MA80 fund are included to offer diversification benefits and act as a counterweight to the dominant equity positions.

The positive returns across the sleeve are because rates fell back slightly over the month. The better-than-benchmark returns of the assets held reflect the fact that Blackrock have positioned this sleeve to offer the maximum benefit given their view that we are likely to see more inflation but low real returns from bonds as the global economy restarts from the Covid lock-down.

It would not be reasonable to expect this sort of result to repeat itself on a regular basis, but the positioning of the non-equity sleeve should offer benchmark-beating returns if BlackRocks’ market expectations turn out to be correct.

Download Analysis of Non Equity