WSP Model Portfolios are built from our universe of selected active Ucits funds and the allocation is actively managed by us according to current and expected market conditions and fund manager exposures.

The aim is to demonstrate, through an optimal combination of strategies, that carefully selected active fund managers have the ability to deliver added-value over the long run while keeping a full exposure and constant asset allocation within the following risk-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.

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. Swiss Francs will follow shortly

• Apart one fund with a bi-monthly liquidity, all funds have a daily liquidity.

• Usually we select the same funds for USD or EUR portfolios, unhedged for equity strategies and hedged for fixed income ones.

• The performances are shown net of fees, using the institutional share classes, making these Model Portfolios fully replicable.

Strategic Allocations

We keep a constant balance between equity and fixed income strategies according to the Model Portfolios profiles and guidelines. We also maintain a neutral currency and regional allocation versus benchmarks.

Portfolios outperformance should mainly arise from the alpha generated by the active management. Tactical bets such as investment style (value, growth defensive), sector allocation (e.g., commodities, real estate), interest 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.

Growth Portfolio

The most equity oriented portfolio with an objective 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.

Activity in financial markets slowed in August but returns were generally positive and fundamentals remained healthy. Hurricane Harvey dominated the headlines in the US. While the impact on markets was somewhat limited during the month, the effects are ongoing.

In Fixed Income, safe haven assets outperformed in developed markets. Government bonds were positive with Gilts outperforming supported by ongoing uncertainty over Brexit and its timing. The spread in credit widened slightly, more particularly in high yielding bonds. Emerging markets debt performance was healthy across the board, with local currency, sovereign and corporate bonds posting positive returns.

The global equity market turned slightly positive at month end, thanks to the strong performance of emerging markets, the US and European equities finishing almost flat.

Finally, emerging markets currencies continued to appreciate in August and the US dollar continued to slide, hence pushing the euro higher.

Since inception, the three Portfolio Models continue to be well above their respective benchmarks with outperformance ranging from +350bps up to +528bps. During August, all portfolios recorded negative alphas, erasing two previous months of gains. It was mainly due to equity funds struggling to beat their respective benchmarks, at the same time the portfolios allocation tilts toward value proved to be detrimental.

Outlook

In September, we are planning to switch several funds in the portfolios according to our current highest convictions with regards to the portfolio managers. The overall portfolio exposure will remain however unchanged.

We keep our risk-on mood which are expressed through:

• An overweight in spread duration for all profile
• A slight overweight in Emerging Markets both FI and Equities
• A value bias for the Growth and Balanced portfolio

In Equity, the MSCI All Country World index finished almost flat at +0.14% during the month. Year-to-Date, the equity index is up by +13.5%.  In Fixed Income, the Barclays Global Aggregate index returned +0.91% in US dollar for the month, and is up +2.69% Year-to-Date.

As mentioned above, August marked a pause in portfolios’ outperformance generation, with a mix bag of alpha created by the fund managers across assets and strategies.

Among the 28 funds we have in all Model Portfolios, only 11 funds (39%) had an excess return versus their respective benchmarks, while year to date, still 19 funds (68%) are recording excess returns.

In absolute terms, the Yield and income and the Balanced Absolute Return Portfolios had positive performance, while the Growth Portfolio declined slightly.

Yield & Income Portfolio (USD)

The portfolio underperformed by 68bps in August, with our exposure to a MLPs Infrastructure fund contributing by half to that underperformance. We remain convinced about the merit of this allocation over the long run as a source of steady income, although we are aware that this fund will stay highly correlated to the Energy sector over the short term. The other factors explaining the underperformance were our exposure to spread duration and the negative contribution of active management in August (-0.2%). Year to date, the contribution of active management remains however largely positive (+1.9%)

Out of the 15 funds in the portfolio, 6 of them outperformed their benchmarks.

Balanced Portfolio

The portfolio underperformed by 65bps in August for basically the same reason than the Yield & Income portfolio. In addition, the value bias in the equity pocket were also a detractor. Active management detracted the performance by 18bps during the month. Year to date the active management has a positive contribution of 180bps.

The Absolute Return pocket contributed to the portfolio’s outperformance with 3 out of 5 funds recording returns between +0.75% to +2.44% during the month. This pocket serves as an insurance premium to protect the portfolio’s return during flat to weak market conditions. It has well played its role during a mixed month for risky assets.

Overall in the portfolio, 11 funds outperformed their index while 6 lagged.

Growth Portfolio

The portfolio benefited from its prudent allocation in the fixed income pocket. However, the MLP exposure, the value bias of the equity allocation and active management contribution (-50bps for the month, +180bps Year to date) were all detractor factors. The strategy ended the month 82bps behind its benchmark

In absolute terms, the Growth Portfolio had a return of -0.28% in August, and of +12.40% YTD.