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).
- 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, including currency exposure hedged for fixed income funds.
- The performances are shown net of fees, calculated on 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. 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
Equity markets experienced welcome respite in January, after a terrible end to 2018. Both developed and emerging market equities gained over 8%, boosted by signals from the US Federal Reserve that it would be more patient with further rate rises, as well as by improving rhetoric towards China from the White House. Risk assets recovered some of the losses they made in the fourth quarter.
In the US, while the next few jobs reports will continue to be watched by the Fed for signs of higher wage growth, the US central bank has signalled that it is in less of a rush to tighten this year. The lower oil price, despite recent gains, meant that the latest headline inflation reading for December fell to 1.9% year on year. This means there will be less pressure on the Fed to raise rates in order to control inflation. The bond markets throughout January have priced in no further rate rises from the Fed over 2019.
In Europe, concerns over the persistence of slowing growth in the eurozone were still prevalent. The ECB also said the risks surrounding the euro area growth outlook have moved to the downside. Despite this, the central bank kept its forward guidance on rates as well as its balance sheet re-investments the same. Similar to the ECB, the Bank of Japan also kept its monetary policy tools unchanged, but it did downgrade its inflation forecast for the fiscal year 2019 from 1.4% to 0.9%.
At this stage in the cycle, where the macroeconomic data is more mixed and political uncertainties remain, we implemented (effective at the beginning of February) a more defensive stance in the portfolio as discussed in the December newsletter.
Outlook
As explained in the previous newsletter, we have decided to reduce our overweight exposure in small- and mid-caps equities as well as to reduce our overweight in European equities. Instead of that we reinforced our holding in a Large Cap Global Quality Growth portfolio and we introduced a new holding in a US Large Cap fund. We keep however our EM overweight unchanged.
In the Fixed Income side, while we keep our exposure on Credit (particularly in Subordinated Financials) and on EM debt unchanged, we took some profit in some alternative strategies where we see the risk premium as relatively tight (RMBS non-agency and Cat bonds). As we don’t intend to increase our portfolio’s sensitivity to the duration or to the credit spread, we were happy to introduce a Supply Chain Finance fund which offers at current valuation a relatively interesting yield (6.5% in USD), no interest rate duration and a low volatility profile. Other alternative fixed income strategies could be introduced in the next few weeks.
Performance Review – January 2019
The MSCI ACWI (USD) was up +8.1% during the month while the Barclays Global Aggregate index (USD hedged) was up 1.1%.
In January, active management recovered after a poor 4th quarter last year. Most of equity fund managers took profit from the recovery of small- and mid-cap equities and by the rebound of cyclical sectors such as the Consumer Discretionary or Industrials. Over the 26 funds we have in all Model Portfolios, 10 recorded a positive excess return.
In absolute, the Growth portfolio (+6.2%) outperformed the Yield and Income portfolio (+4.6%) and the Balanced portfolio (+4.0%).
Yield & Income Portfolio (USD)
The portfolio outperformed its benchmark by +120bps, helped by its EM and Credit overweight exposure. The High Yield fund (+4.8%), Subordinated Financials fund (+3.2%) and EM debt in local currencies (+6.5%) were particularly supportive. Active management was also a strong positive contributor (+56bps).
Balanced Portfolio (USD)
The Absolute Return pocket was a detractor from performance as we can expect in such a strong rally, both for equities and fixed income asset classes.
The portfolio return remains however strong (+4.0%) underperforming its benchmark by -49bps, but with lower volatility and higher sharp ratio. Active management was a positive contributor (+41bps) and strongly helped to mitigate the underperformance.
Growth Portfolio (USD)
The Growth portfolio (+6.2%) outperformed by +49bps in December. The detracting overweight in European equities was largely compensated by the strong relative performance of our selected fund managers (+59bps), as well as by the rebound in small- and mid-cap stocks.
US Dollar Portfolios
US Dollar - Yield and Income
Cumulative Performance to end January 2019
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2019 | 4,59% | 1,31% | 4,59% | ||||||||||
| Benchmark | 3,39% | 1,22% | 3,39% | |||||||||||
| 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 January 2019
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2019 | 4,01% | 1,29% | 4,01% | ||||||||||
| Benchmark | 4,50% | 1,67% | 4,50% | |||||||||||
| 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 January 2019
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2019 | 6,20% | 1,93% | 6,20% | ||||||||||
| Benchmark | 5,61% | 2,12% | 5,61% | |||||||||||
| 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 January 2019
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2019 | 4,15% | 4,15% | |||||||||||
| Benchmark | 3,06% | 3,06% | ||||||||||||
| 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 January 2019
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2019 | 3,70% | 3,70% | |||||||||||
| Benchmark | 4,15% | 4,15% | ||||||||||||
| 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 January 2019
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2019 | 5,86% | 5,86% | |||||||||||
| Benchmark | 5,24% | 5,24% | ||||||||||||
| 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