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 contact us.

Key Characteristics

Portfolios Structure

  • Portfolios are made of 14 to 17  Ucits or Alternative Ucits funds (according to profile).
  • Two currency based portfolios ; in US dollar or in Euro.
  • Apart one fund with a bi-monthly liquidity, all funds have a daily liquidity.
  • Usually we select identical funds either for US dollar or Euro based portfolios, but keeping currency exposure hedge for fixed income funds.
  • The performances are shown net of fees, calculated from the cheapest share classes, hence 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, and to a certain extent to a diversification optimisation. Tactical bets such as investment style (value, growth defensive), sector allocation (e.g., commodities, real estate), interest rate or spread duration may 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

In many ways, the weakness in Q4 set the stage for the recovery in equity markets during the quarter. The Federal Reserve reacted to the markets sinking and to a weakening global growth by becoming more patient. As a consequence, much of the rally this year has been built on market expectations that the Fed won’t raise interest rates again at any point in the next months, if not years. In fact, the next move expected from the Fed by the bond market is rather a cut.

As a result, the 10-year Treasury yields went down dramatically to 2.4% and the German government bonds showed negative yields for the first time since 2016. The US yield curve flattened out further in the meantime or, depending on the term, was even inverted. The spread between 10-year US Treasury yields and the 3-month LIBOR rate was negative and stood at -20 basis points at the end of the month.

The global stock markets ended March with very different results. In the US, the S&P500 ended in positive territory in March (+1.9%) essentially driven by the large cap growth stocks. On the other hand, the small and mid-cap stocks were negatively impacted in the last two weeks of the month, ending the month down by -2.1% (Russell 2000). The European market was also supported by the large cap growth stocks, and the EM markets experienced divergent figures (+1.7% in Asia vs. -2.5% in Latin America).

Outlook

At the current level of the market, we are comfortable to have had reduced our overweight exposure in small- and mid-caps equities in developed markets, as well as in European equities. We will follow the result from the earnings season in the US, central banks action and the Chinese economy path. All those factors are likely to remain the main support to fuel rallies in risk assets.

In the Fixed Income, while a large part of our fixed income holdings is in floating rates, we are aware that our portfolios are vulnerable to decrease in rates as it has been the case during the month. However, we still don’t see any value to increase the portfolios duration at this juncture and made no changes in our fund holdings during the period.

Performance Review – March 2019

The MSCI ACWI (USD) was up +1.3% during the month while the Barclays Global Aggregate index (USD hedged) was up 1.8%.

Active management had a mixed contribution in March. While a majority of our equity fund managers did outperform their indices, most managers in the fixed income funds suffered from their short duration exposure. Over the 25 funds we have in all Model Portfolios, 13 recorded a positive excess return.

In absolute terms, the Growth portfolio (+0.7%) outperformed the Yield and Income portfolio (+0.6%), and the Balanced portfolio (+0.4%).

Yield & Income Portfolio (USD)

Despite achieving a decent return of +0.6% for the month, the portfolio however underperformed its benchmark by -95bps. The underweight in duration (around 4 years) costs the portfolio more than 1% in relative performance during the month. The active management contribution was slightly negative (-24bps). For the first quarter of 2019, the portfolio is still beating its benchmark by +98bps.

Balanced Portfolio (USD)

The portfolio delivered a positive performance of +0.4%, but underperformed its benchmark by -112bps, of which 60bps were due to the short duration. The absolute return pocket was also a detractor as both, equities and fixed income markets rallied strongly. Finally, active management has had a negative contribution of -32bps. While recording a strong return of +5.9% for the first quarter of 2019, the portfolio is lagging its benchmark by 156bps, which is usual during periods where both asset classes, equities and fixed income, record returns well above what the absolute return part of the portfolio can deliver.

Growth Portfolio (USD)

The Growth portfolio had a performance of +0.72% vs +1.38% for its benchmark. Out of the -66bps of underperformance, -30bps came from the duration effect, and -33bps from the active management. During the first quarter the portfolio slightly outperformed its benchmark by +16bps.

US Dollar Portfolios

US Dollar - Yield and Income

Cumulative Performance to end March 2019


Calendar Returns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
Portfolio 2019 4.59% 1.67% 0.63% 7.00%
Benchmark 3.39% 0.96% 1.58% 6.02%
Portfolio 2018 2.88% -1.91% -0.66% 0.76% -0.63% -0.50% 1.50% -0.20% 0.71% -3.54% -0.22% -2.48% -4.36%
Benchmark 1.42% -1.55% -0.21% 0.07% 0.26% -0.04% 1.00% 0.42% -0.12% -2.63% 0.80% -1.48% -2.12%
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 March 2019


Calendar Returns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
Portfolio 2019 4.01% 1.50% 0.36% 5.95%
Benchmark 4.50% 1.38% 1.48% 7.51%
Portfolio 2018 2.75% -1.59% -0.42% 0.82% -0.97% -0.54% 1.49% -0.32% 0.78% -3.58% -0.07% -2.11% -3.84%
Benchmark 2.47% -2.21% -0.73% 0.31% 0.22% -0.15% 1.50% 0.48% 0.02% -3.84% 0.96% -2.88% -3.96%
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 March 2019


Calendar Returns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
Portfolio 2019 6.20% 2.06% 0.72% 9.16%
Benchmark 5.61% 1.81% 1.38% 9.00%
Portfolio 2018 3.65% -2.87% -1.07% 0.82% -0.44% -1.19% 1.66% 0.54% 0.00% -6.66% 0.64% -4.12% -9.06%
Benchmark 3.53% -2.87% -1.24% 0.54% 0.17% -0.26% 2.00% 0.55% 0.16% -5.05% 1.13% -4.28% -5.81%
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 March 2019


Calendar Returns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
Portfolio 2019 4.15% 1.82% 1.00% 7.10%
Benchmark 3.06% 1.06% 1.89% 6.12%
Portfolio 2018 1.46% -1.36% -1.10% 1.26% 0.42% -0.66% 1.26% -0.03% 0.64% -2.96% -0.39% -2.99% -4.49%
Benchmark 0.04% -0.99% -0.65% 0.53% 1.28% -0.21% 0.78% 0.45% -0.21% -2.02% 0.66% -1.98% -2.37%
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 March 2019


Calendar Returns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
Portfolio 2019 3.70% 1.71% 0.86% 6.39%
Benchmark 4.15% 1.66% 2.07% 8.07%
Portfolio 2018 1.08% -0.82% -0.93% 1.60% 0.42% -0.67% 1.30% -0.19% 0.71% -2.76% -0.21% -2.66% -3.17%
Benchmark 0.48% -1.28% -1.26% 1.10% 1.86% -0.28% 1.28% 0.65% -0.01% -2.80% 0.88% -3.48% -2.97%
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 March 2019


Calendar Returns

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD
Portfolio 2019 5.86% 2.49% 1.58% 10.20%
Benchmark 5.24% 2.25% 2.25% 10.04%
Portfolio 2018 1.10% -1.62% -1.70% 1.97% 1.78% -1.28% 1.39% 0.87% 0.07% -5.27% 0.55% -4.81% -7.06%
Benchmark 0.93% -1.56% -1.86% 1.67% 2.43% -0.35% 1.78% 0.85% 0.20% -3.58% 1.10% -4.97% -3.61%
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