50/50 Bond Reserve/Long-Term Return Portfolio

50:50 Bond Reserve/Long-Term Return Portfolio

Overview

Latest Factsheet and Market Commentary as at 31 October 2025

Portfolio commenced 24 October 2014

OBJECTIVE:
To outperform inflation.

STRATEGY:
Actively managed with a long-term bias to real assets e.g. equities. The Portfolio normally invests in a wide range of ETFs to gain significant diversification and exceptional liquidity at very low cost.

Overall Asset Allocation

Top 10 Holdings

Top 10 Holdings	% of Portfolio
iShares Core UK Gilts UCITS ETF	13
ISHARES II PLC-USD TREAS BD 7-10YR	11.5
iShares Core MSCI EM IMI UCITS ETF	7.7
VANGUARD INV SER-UK GILT UCITS ETF	6.7
Amundi UK Equity All Cap UCITS ETF	6.3
Invesco GBP Corporate Bond UCITS ETF	6.2
iShares Core FTSE 100 UCITS ETF	5.6
iShares Core £ Corp Bond UCITS ETF	5
Invesco FTSE RAFI US 1000 UCITS ETF	4.8
Lyxor Smart Overnight Return UCITS ETF	4.4

Fixed Income by Asset Class

Underlying Holdings Key Statistics - Fixed Income

Number of Holdings	Yield to Maturity	Maturity	Duration	S&P Rating
211 Govt. Bonds 2,864 Corp. Bonds	5.14%	8.48	5.6	A/A-

Equities by Region

Underlying Holdings Key Statistics - Equities

Number of Holdings	Best Dividend Yield Forward 12m	Best Price to Book Forward	Best P/E Ratio *	Best LTG EPS
7,926	3.4%	1.8	15.1	10.2%

Last 3 years annualised volatility

50/50 Bond Reserve/Long-Term Return	6.7%
Asia Pacific Ex. Japan (MSCI Asia Ex Jap)	16.8%
Em Markets (MSCI EM)	15.2%
US Equities (MSCI USA)	13.2%
UK Index-Linked Gilts (Barclays UK Infl Linked)	11.2%
Europe Excl UK (MSCI Eur. Ex UK)	11.1%
Japan (MSCI Japan)	11.1%
UK Equities (MSCI UK)	9.8%
UK Gilts (Bloomberg UK Govt All>1 Yr)	7.9%
UK Corp Bonds (iBoxx Large Cap TRI Index)	6.2%

Performance After Fees

Growth of £100,000

Performance is based on the monthly performance of the first client discretionary portfolio after all charges. Individual client portfolios may differ due partly to differences in the timing of initial investment or withdrawals or rebalancing. The SCM 50/50 Absolute Return / Long-Term Return (£) Benchmark is the average of cash (Barclays Benchmark Overnight GBP Cash Index) and inflation (the return of the UK RPI All Items Index). Competitor data is based on the average performance of the IA Targeted Absolute Return and the IA Mixed Investment 40-85% Shares Sectors and the comparison is offered as a guide only.

Rolling Return

12m to 30/09/2020	12m to 30/09/2021	12m to 30/09/2022	12m to 30/09/2023	12m to 30/09/2024	12m to 30/09/2025
-1.9%	9.9%	-15.3%	9.2%	10.7%	5.8%

Source: SCM Private LLP

The performance of the 50/50 portfolios has been calculated as the average performance of the two underlying portfolios after costs, from the common date of inception.

Past performance is not a guide to future returns. The value of investments and the income from them can go down as well as up, so investors may not recover the amount of their original investment.

Fee & Charges

ALL Fees & Charges	Percentage
SCM Discretionary Fund Management Charge	0.40%
Underlying ETF costs (KIID Ongoing Charge)	0.14%
Transaction Costs of buying/selling funds	0.12%
Transaction Costs within funds	0.03%
Custody & Administration Fee	0.12%
Total Fees & Charges	0.81%

Asset Allocation Changes and Market Commentary

In early October we reduced our equity exposures and switched into bonds within our various mixed bond/equity portfolios, as a measured step in line with our long-term risk management principles. Rather than react to volatility, we chose to act ahead of it. We emphasize quality credit, gilts, and income-producing assets, with equity exposure continuing to be well diversified across geographies and factors without the conventional market cap-weighted overwhelming biases to US equities, US tech and the US Magnificent & tech stocks (Mag 7).

While no trades were executed during the month itself, the SCM/MoneyShe Team had already taken significant risk off the table in early October. Individual Equity ETFs were reduced by between 12% and 18% within the various mixed bond/equity portfolios, with proceeds reinvested into bonds. This decision was driven by valuation concerns, particularly in US tech, and a view that market optimism was overreaching. Subsequent market moves since this asset allocation decision have vindicated our caution.

The chart below shows asset performance across major global markets in October:

Key Themes

Key Themes – Tech Wobbles, AI Euphoria Fades, Bitcoin Drops, Crypto Sentiment Sours

October was another reminder that markets can appear calm on the surface but fragile underneath. Headline equity indices eked out modest gains, and bond markets rallied on the back of softer inflation data. But beneath the surface, dispersion rose, conviction fell, and sentiment around technology and crypto assets shifted sharply.

US tech stocks faltered in the second half of October, with Meta falling nearly 20% after warning on the scale of its AI capex programme. Markets that had cheered the ‘AI arms race’ narratives began to question the return on investment, particularly as user growth plateaued and monetisation lagged expectations. As the graph below shows, a similar experience impacted Meta in 2022. SCM/MoneyShe has very low exposures across its portfolios to Meta and the other so-called Magnificent 7 stocks.

Meanwhile, Nvidia and other AI hardware beneficiaries saw heightened volatility, while valuation multiples across the sector remain near historic extremes. Outside the US, concerns around AI saturation and infrastructure constraints also grew. European data suggested ChatGPT subscriptions have flatlined since May, and sentiment around AI adoption is weakening in several key verticals. Investors are beginning to reassess whether AI can deliver both growth and margin expansion at the current scale.

Another sign of shifting risk appetite came from crypto markets. Bitcoin has fallen by over 27% since its early October high. While some of the weakness was linked to ETF outflows, broader concerns about the lack of real-world adoption, regulatory headwinds, and waning enthusiasm around blockchain infrastructure have weighed on sentiment. The decline in crypto assets, which are often seen as proxies for speculative risk, is consistent with a broader shift in positioning. SCM/MoneyShe does not have any exposure to Bitcoin within any of its portfolios.

SCM View: Risks Under Priced, Sentiment Fragile

Markets have been forced to reassess their previously aggressive assumptions around Federal Reserve easing. By the end of October, futures implied just one full rate cut by the end of 2026, compared to expectations of three earlier in the summer. This repricing followed several sticky inflation periods and the Fed’s continued messaging that policy remains data-dependent, not politically driven. Meanwhile, Goldman Sachs estimates tariffs will lift core PCE by 0.6 percentage points, complicating the inflation path and limiting the Fed’s room to manoeuvre. The Fed Chair, Jerome Powell, reiterated that “we’re not declaring victory,” reinforcing our belief that central banks are unlikely to provide the safety net that markets have grown accustomed to.

As we move towards year-end, we continue to monitor developments around US earnings, central bank messaging, and broader geopolitical risks.

Alan Miller, Chief Investment Officer
18 November 2025