Portfolios of Active Funds
WSP Model Portfolios are built from our universe of selected active Ucits funds. We manage actively the allocation according to current and expected market conditions and taking into consideration the fund managers’ exposure.
The aim is to demonstrate that an optimal combination of strategies, coupled with a careful selection of active fund managers, have the ability to deliver added-value to investors over the long run, while keeping a full exposure and constant asset allocation within the given investment profiles.
More detailed reporting including portfolio quantitative and qualitative data are available to customers having subscribed to the WS Partners Model Portfolio Services. Would you request more information on this service, please do not hesitate to contact us.
Key Characteristics
Portfolios Structure
- Portfolios are made up of 14 to 17 Ucits or Alternative Ucits funds (according to profile).
- We have started two currency based family of portfolios ; in US dollar and in Euro.
- Apart one fund with a bi-monthly liquidity, all funds have a daily liquidity.
- Usually we select the same funds for the USD or the EUR based portfolios, with hedged currency exposure for fixed income funds.
- The performances are shown net of fees, calculated on the cheapest share classes, and making our Model Portfolios fully replicable.
Strategic Allocations
We keep a constant balance between equity and fixed income strategies according to Model Portfolio profiles and guidelines. We also maintain a neutral currency and regional allocation compare to benchmarks.
The portfolio outperformance should mainly arise from the alpha generated by active management. Tactical bets such as investment style (value, growth defensive), sector allocation (e.g., commodities, real estate), interest rate or spread duration might also contribute, time to time, to the value added generation.
Yield & Income Portfolio
A conservative portfolio with a 1/3 equity and 2/3 fixed income allocation.
Within the equity universe we tend to favour yielding strategies rather than pure price appreciation funds.
The objective is to outperform over time a benchmark composed by 1/3 of the MSCI All Country World Index, and by 2/3 of the Barclays Global Aggregate Bond Index.
Balanced Portfolio
The portfolio aims to outperform a benchmark made of 50% MSCI All Country World Index, and 50% Barclays Global Aggregate Bond Index in a risk-adjusted return basis and with a capital preservation mindset.
For that reason, we maintain around 33% of the portfolio allocation into Absolute Return strategies, including Alternative Ucits funds.
Growth Portfolio
The most equity oriented portfolio with the aim to beat a benchmark composed by 2/3 of the MSCI All Country World Index and 1/3 of the Barclays Global Aggregate Bond Index. Growth of capital through capital appreciation is the main long term portfolio objective.
Market Review and Outlook
Volatility, which came back during the first quarter, persisted through April. Geopolitical headlines continued to play a significant role in unsettling investors, particularly the “trade war” and the situation in Syria. Coupled with uncertainty over the nuclear agreement with Iran, oil price rose 7% over the month. As a result, commodities were the top performing asset class (up 2.2% YTD and 2.6% in April).
While around 1/3 of the S&P have reported, the US first-quarter earnings season is showing strong momentum, with EPS growth at +23%. Of those S&P companies having reported so far, more than 3/4 have exceeded expectations. Despite the strong earnings report, the S&P500 ended the month up only 0.4%. The MSCI Europe delivered the strongest total return of 4.5% for the month. At the other end, Emerging Markets were lagging (-0.4% in USD). Even though modestly and for the first time since September 2017, Value outperformed the Growth style by 0.4%.
In fixed income, the US 10-year Treasury yield hit 3% for the first time since 2014 after the uptick in inflation, which has increased expectations for the number of Fed rate hikes this year. The Italian 10-year yield continued to fall after the March elections and the 10-year spread over German Bund yields declined to 123 basis points, helped by the rise in the 10-year Bund yield to 0.56%. After 2 consecutive months of spreads widening, they tightened modestly by 7bps for the IG and 16bps for the HY.
The EUR / USD exchange rate cooled to 1.20 as a result of the decelerating economic momentum in the eurozone and the expectation of tighter US monetary policy.
Outlook
No change in the portfolio during the month of April, neither in fund selection, nor in allocation, although we are still looking to add more uncorrelated strategies, both in equities and in fixed income.
In equities we still favour low beta strategies. In fixed income we keep a reduced exposure to credit and emerging markets local currencies in favour of low correlated strategies like cat-bonds or mortgage related securities.
In alternative strategies, we are happy with our diversification in no directional strategies, long/short exposure to the equity markets, and risk premia exposures independent from an inflationary led interest rates environment.
Performance Review – April 2018
The MSCI World Equity index (USD) had a performance of +0.9% during the month while the Barclays Global Aggregate index (USD hedged) returned -0.4%.
In April, active management contribution was mixed as over the 27 funds we have in all Model Portfolios, 15 had a positive excess return.
In absolute terms, the Growth portfolio (+0.8%) slightly outperformed the Balanced portfolio (+0.8%) and the Yield & Income portfolio (+0.7%).
Yield & Income Portfolio (USD)
The portfolio strongly outperformed its benchmark by 63bps during the month, recovering from the previous month underperformance of 45bps. Fixed income uncorrelated strategies like Cat Bonds, CLOs and RMBS experienced strong returns in a rising rate environment. Active management had a modest positive contribution of 13bps.
Balanced Portfolio (USD)
The balanced portfolio outperformed its benchmark by 48bps in April, the fourth consecutive month of alpha creation, driven by the value bias and by the short duration profile of most of the fixed income strategies. Again, active management contribution was a modest but steady contributor at +12bps.
Growth Portfolio (USD)
Value tilt of the portfolio helped again this year and was the main factor of outperformance at +28bps. On the other hand, active management contribution was detrimental for the portfolio at -34bps.
US Dollar Portfolios
US Dollar - Yield and Income
Cumulative Performance to end April 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 2.88% | -1.91% | -0.66% | 0.70% | 0.96% | ||||||||
| Benchmark | 1.42% | -1.55% | -0.21% | 0.07% | -0.29% | |||||||||
| Portfolio | 2017 | 2.15% | 1.58% | 0.72% | 1.01% | 1.27% | 0.19% | 1.55% | 0.03% | 0.58% | 1.05% | 0.61% | 1.07% | 12.45% |
| Benchmark | 0.68% | 1.49% | 0.35% | 0.95% | 1.10% | -0.06% | 1.13% | 0.71% | 0.32% | 0.95% | 0.73% | 0.63% | 9.36% | |
| Portfolio | 2016 | 1.16% | 2.25% | 1.04% | 0.86% | -0.43% | -1.25% | 1.25% | 4.93% | |||||
| Benchmark | 1.04% | 1.81% | 0.06% | 0.17% | -1.23% | -0.86% | 0.84% | 1.81% |
Benchmark: 1/3 iShares MSCI All Country World ETF+ 2/3 X II Barclays Gbl Agg ETF
Source: WS Partners, Morningstar
US Dollar - Balanced
Cumulative Performance to end April 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 2.75% | -1.59% | -0.42% | 0.79% | 1.49% | ||||||||
| Benchmark | 2.47% | -2.21% | -0.73% | 0.31% | -0.21% | |||||||||
| Portfolio | 2017 | 1.85% | 1.21% | 0.74% | 0.84% | 0.87% | 0.64% | 1.73% | 0.04% | 1.19% | 1.03% | 0.93% | 0.66% | 12.35% |
| Benchmark | 1.19% | 1.82% | 0.56% | 1.10% | 1.37% | 0.07% | 1.54% | 0.63% | 0.72% | 1.23% | 1.02% | 0.88% | 12.82% | |
| Portfolio | 2016 | 0.01% | 2.83% | 0.94% | 0.65% | -0.55% | 0.36% | 1.59% | 5.93% | |||||
| Benchmark | 0.62% | 2.43% | 0.12% | 0.28% | -1.35% | -0.46% | 1.17% | 2.81% |
Benchmark: 1/2 iShares MSCI All Country World ETF+ 1/2 X II Barclays Gbl Agg ETF
Source: WS Partners, Morningstar
US Dollar - Growth
Cumulative Performance to end April 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 3.65% | -2.87% | -1.07% | 0.82% | 0.41% | ||||||||
| Benchmark | 3.53% | -2.87% | -1.24% | 0.54% | -0.15% | |||||||||
| Portfolio | 2017 | 2.83% | 1.52% | 1.28% | 1.65% | 1.88% | 0.46% | 2.48% | -0.28% | 1.77% | 1.50% | 1.22% | 1.64% | 19.45% |
| Benchmark | 1.70% | 2.14% | 0.78% | 1.25% | 1.65% | 0.19% | 1.95% | 0.54% | 1.12% | 1.51% | 1.32% | 1.12% | 16.37% | |
| Portfolio | 2016 | -1.01% | 4.18% | 1.46% | 1.17% | -1.04% | 0.28% | 1.33% | 6.44% | |||||
| Benchmark | 0.21% | 3.05% | 0.19% | 0.39% | -1.47% | -0.06% | 1.50% | 3.80% |
Benchmark: 2/3 iShares MSCI All Country World ETF+ 1/3 X II Barclays Gbl Agg ETF
Source: WS Partners, Morningstar
Euro Portfolios
Euro - Yield and Income
Cumulative Performance to end April 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 1.46% | -1.36% | -1.10% | 1.20% | 0.17% | ||||||||
| Benchmark | 0.04% | -0.99% | -0.65% | 0.53% | -1.08% | |||||||||
| Portfolio | 2017 | 1.24% | 2.08% | 0.35% | 0.20% | 0.10% | -0.38% | 0.23% | -0.41% | 0.61% | 1.46% | -0.20% | 0.56% | 5.97% |
| Benchmark | -0.24% | 2.01% | 0.03% | 0.26% | -0.09% | -0.64% | -0.11% | 0.31% | 0.41% | 1.35% | -0.17% | 0.26% | 3.39% | |
| Portfolio | 2016 | 1.12% | 2.05% | 1.00% | 0.53% | 0.20% | -0.23% | 1.34% | 6.16% | |||||
| Benchmark | 1.03% | 1.51% | 0.11% | -0.22% | -0.52% | 0.14% | 0.92% | 3.00% |
Benchmark: 1/3 iShares MSCI All Country World ETF (EUR) + 2/3 X II Barclays Gbl Agg ETF H EUR
Source: WS Partners, Morningstar
Euro - Balanced
Cumulative Performance to end April 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 1.08% | -0.82% | -0.93% | 1.57% | 0.88% | ||||||||
| Benchmark | 0.48% | -1.28% | -1.26% | 1.10% | -0.97% | |||||||||
| Portfolio | 2017 | 0.67% | 1.98% | 0.39% | -0.11% | -0.71% | -0.09% | 0.02% | -0.47% | 1.34% | 1.57% | -0.12% | 0.19% | 4.72% |
| Benchmark | -0.12% | 2.65% | 0.16% | 0.13% | -0.33% | -0.72% | -0.22% | 0.12% | 0.93% | 1.91% | -0.23% | 0.41% | 4.72% | |
| Portfolio | 2016 | 0.25% | 2.48% | 1.02% | 0.24% | 0.35% | 1.68% | 1.74% | 8.00% | |||||
| Benchmark | 0.67% | 2.03% | 0.27% | -0.24% | -0.20% | 1.13% | 1.38% | 5.13% |
Benchmark: 1/2 iShares MSCI All Country World ETF (EUR) + 1/2 X II Barclays Gbl Agg ETF H EUR
Source: WS Partners, Morningstar
Euro - Growth
Cumulative Performance to end April 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 1.10% | -1.62% | -1.70% | 1.97% | -0.31% | ||||||||
| Benchmark | 0.93% | -1.56% | -1.86% | 1.67% | -0.87% | |||||||||
| Portfolio | 2017 | 1.24% | 2.58% | 0.76% | 0.29% | -0.22% | -0.54% | 0.21% | -0.93% | 2.03% | 2.43% | -0.28% | 0.98% | 8.82% |
| Benchmark | 0.00% | 3.28% | 0.29% | 0.00% | -0.56% | -0.81% | -0.34% | -0.08% | 1.45% | 2.46% | -0.29% | 0.57% | 6.05% | |
| Portfolio | 2016 | -0.95% | 3.88% | 1.55% | 0.66% | 0.46% | 2.35% | 1.69% | 9.98% | |||||
| Benchmark | 0.31% | 2.56% | 0.42% | -0.26% | 0.12% | 2.13% | 1.83% | 7.28% |
Benchmark: 2/3 iShares MSCI All Country World ETF (EUR) + 1/3 X II Barclays Gbl Agg ETF H EUR
Source: WS Partners, Morningstar