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.
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.
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.
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.
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
Fourth Quarter 2020
In the fourth quarter, equity markets continued to rally for the third consecutive quarter and significantly outperformed fixed income markets. The US election result and positive news on Covid-19 vaccines helped more cyclical segments of the market to recover. Globally, value stocks rose by 16% and had their best quarter since 2009. Even more spectacular was the performance of small caps, which returned 24%, erasing the underperformance vs. large caps for the year. Growth equities gained nearly 13%, underperforming over the quarter, but are still ahead by a wide margin for the calendar year. Rising commodity prices were driven by strong demand for industrial metals in Asia. Oil prices also rose, aided by the vaccine news.
From a regional perspective, emerging market equities rose nearly 20% and Asia ex-Japan returned almost 19%, both benefiting from renewed hopes of a cyclical recovery, a falling dollar and increasing global trade activity. US stocks reacted positively to the election result, which contributed to the 12% climb for the quarter. In Europe, after the leaders of Poland and Hungary had effectively blocked the European Union’s recovery fund, EU governments finally found a compromise. This paves the way for a EUR 1.8 trillion financial support package, provided it is ratified by the national parliaments of the 27 member states.
Finally, on the monetary policy front, the European Central Bank increased the size of its planned asset purchases by EUR 500 billion to EUR 1,850 bn and extended the horizon over which it will make these purchases by nine months to the end of March 2022.
Outlook
We decided to reduce slightly our growth bias in the portfolios. We added two new funds exposed to industrials and infrastructure. On the fixed income side, we made no changes during the fourth quarter.
In summary we start the year with the following characteristics in the portfolios:
- Despite being reduced, growth style remains in overweight
- Sector allocation in infrastructure and in healthcare
- Exposure in US small cap equity
- Overweight in Emerging Markets and Underweight Europe
- Underweight in interest rate duration
- Overweight credit spread duration mainly through Emerging Markets debt
- Exposure in uncorrelated fixed income strategies such as the cat bonds and supply chain financing.
Performance Review
December 2020
The MSCI ACWI (USD) was up +4.6% during the month while the Barclays Global Aggregate index (USD hedged) was up +0.3%.
Active management had a positive contribution. Over the 27 funds we have in portfolios, 21 were outperforming their respective benchmark. Alpha generation originated mainly from fixed income funds.
In absolute terms, the Growth portfolio (+3.7%) outperformed the Balanced portfolio (+3.0%) and the Yield & Income portfolio (+2.8%).
Year 2020
MSCI ACWI (USD) was up +16.3% during the year while the Barclays Global Aggregate index (USD hedged) was up +5.6%.
The 3 portfolios had strong absolute and relative performance
- Growth portfolio (+17.7%) outperformed by 490bps its benchmark (2/3 MSCI ACWI / 1/3 Barclays Global Agg)
- Balanced portfolio (+12.9%) outperformed by 173bps its benchmark (1/2 MSCI ACWI / 1/2 Barclays Global Agg)
- Yield & Income portfolio (+14.0%) outperformed by 456bps its benchmark ((1/3 MSCI ACWI / 2/3 Barclays Global Agg)
The outperformance came from two main factors. Active management that generated strong alpha on one part, and the growth style bias we maintained all over the year, on the other part. On the fixed income side, contribution was mixed and globally neutral. Credit strategies such as EM debt and high yield were badly hurt during the market dislocation in March, but strongly rebounded for the second half of the year.
As a rule, we are always fully invested, meaning we never change our asset allocation between the 3 main asset classes (equity, FI and absolute return) and cannot increase cash to reduce exposure to markets. However, we have been active in the asset classes and have made a number of changes during the year.
- In January 2020 we increased our allocation in equity growth funds.
- Last week of February, following the widespread of the pandemic, we increased the duration of the portfolio by 2 years. We initialized a 10% allocation in the 30-years US Treasury ETF across all the portfolios which proved to be useful but not enough to fully compensate the unprecedented monthly spread widening.
- Beginning of April, we decreased progressively the 30-years US Treasury exposure following the announcement of the quantitative easing. We have strengthened the most affected credit markets, such as EU debt, Loans and CLOs.
- During the summer we made several changes on the Absolute Return pocket in the Balanced portfolio, initializing two long/short equity strategies which proved to be very successful in the second half of the year.
- During the summer also we increased our small cap exposure by investing in a US small cap fund.
- In December, following the announcement of three vaccines being effective against the virus we decreased slightly our growth style funds in favour of two funds exposed to cyclicals and infrastructure companies.
Yield & Income Portfolio (USD)
The portfolio outperformed its benchmark by +104bps in December. It was slightly hurt by the equity growth bias but the overweight in spread duration and the alpha generation of active management (+57bps) more than compensated.
Balanced Portfolio (USD)
Although the absolute return pocket tends to be a lagging factor when both markets, equity and credit, are in risk-on moods, the strategy outperformed its benchmark by 59bps. A long/short US equity fund did particularly well during the month (+7.6%). More generally, the alpha generation was a strong contributor in the portfolio (+102bps).
Growth Portfolio (USD)
The Growth portfolio was the most affected by style rotation. However it outperformed its benchmark by 55bps, thanks to the strong contribution of fixed income funds and the added value of active management (+21bps).
US Dollar Portfolios
USD - Yield and Income
Cumulative Performance to end December 2020
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2020 | 0.19% | -2.47% | -10.45% | 6.50% | 4.71% | 2.76% | 3.30% | 2.59% | -1.03% | -0.48% | 5.95% | 2.77% | 13.96% |
| Benchmark | 0.81% | -1.89% | -5.60% | 4.64% | 1.62% | 1.37% | 2.46% | 1.45% | -0.80% | -0.83% | 4.49% | 1.73% | 9.40% | |
| Portfolio | 2019 | 4.59% | 1.67% | 0.63% | 1.97% | -2.39% | 2.91% | 0.90% | -1.11% | 0.95% | 1.69% | 1.37% | 2.17% | 16.26% |
| Benchmark | 3.39% | 0.96% | 1.58% | 1.16% | -1.02% | 3.11% | 0.61% | 0.71% | 0.37% | 0.79% | 0.72% | 1.01% | 14.14% | |
| 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 (EUR) + 2/3 X II Barclays Gbl Agg ETF H EUR
Source: WS Partners, Morningstar
USD - Balanced
Cumulative Performance to end December 2020
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2020 | -0.68% | -2.98% | -8.44% | 5.95% | 3.34% | 2.14% | 3.08% | 2.52% | -0.96% | -0.17% | 6.33% | 3.04% | 12.93% |
| Benchmark | 0.33% | -3.43% | -7.62% | 6.15% | 2.29% | 1.82% | 3.15% | 2.60% | -1.43% | -1.24% | 6.47% | 2.45% | 11.20% | |
| Portfolio | 2019 | 4.01% | 1.50% | 0.36% | 1.64% | -2.65% | 2.65% | 0.92% | -1.37% | 1.24% | 1.94% | 1.43% | 1.99% | 14.36% |
| Benchmark | 4.50% | 1.38% | 1.48% | 1.71% | -2.24% | 3.97% | 0.54% | -0.06% | 0.80% | 1.28% | 1.15% | 1.63% | 17.18% | |
| 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 (EUR) + 1/2 X II Barclays Gbl Agg ETF H EUR
Source: WS Partners, Morningstar
USD - Growth
Cumulative Performance to end December 2020
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2020 | -0.68% | -4.30% | -9.68% | 8.05% | 3.42% | 2.83% | 4.24% | 3.53% | -1.30% | -0.43% | 8.50% | 3.72% | 17.74% |
| Benchmark | -0.16% | -4.98% | -9.63% | 7.67% | 2.96% | 2.26% | 3.84% | 3.75% | -2.06% | -1.65% | 8.44% | 3.17% | 12.84% | |
| Portfolio | 2019 | 6.20% | 2.06% | 0.71% | 2.39% | -4.35% | 4.44% | 0.61% | -2.00% | 0.95% | 2.30% | 2.02% | 2.51% | 18.89% |
| Benchmark | 5.61% | 1.81% | 1.38% | 2.27% | -3.47% | 4.83% | 0.46% | -0.83% | 1.23% | 1.77% | 1.57% | 2.25% | 20.23% | |
| 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 (EUR) + 1/3 X II Barclays Gbl Agg ETF H EUR
Source: WS Partners, Morningstar
Euro Portfolios
Euro - Yield and Income
Cumulative Performance to end December 2020
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2020 | 0.53% | -2.09% | -10.15% | 6.30% | 3.67% | 2.35% | 1.21% | 2.26% | -0.36% | -0.38% | 4.70% | 1.75% | 9.18% |
| Benchmark | 1.13% | -1.73% | -5.70% | 4.62% | 1.04% | 1.00% | 0.61% | 1.11% | -0.20% | -0.66% | 3.46% | 0.87% | 5.32% | |
| Portfolio | 2019 | 4.15% | 1.82% | 1.00% | 1.86% | -2.37% | 1.85% | 1.52% | -0.82% | 1.13% | 0.67% | 1.75% | 1.25% | 14.54% |
| Benchmark | 3.06% | 1.06% | 1.89% | 1.05% | -1.02% | 2.15% | 1.22% | 0.92% | 0.56% | -0.15% | 1.00% | 0.23% | 12.58% | |
| 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 December 2020
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2020 | 0.13% | -2.42% | -8.89% | 5.87% | 2.62% | 1.74% | 1.18% | 2.18% | -0.36% | -0.06% | 5.39% | 2.17% | 9.10% |
| Benchmark | 0.88% | -3.11% | -7.66% | 6.19% | 1.46% | 1.29% | 0.45% | 2.12% | -0.50% | -0.95% | 4.95% | 1.22% | 5.78% | |
| Portfolio | 2019 | 3.70% | 1.71% | 0.84% | 1.56% | -2.56% | 1.43% | 1.41% | -1.09% | 1.43% | 0.91% | 1.80% | 1.08% | 12.81% |
| Benchmark | 4.15% | 1.66% | 2.07% | 1.69% | -2.11% | 2.68% | 1.56% | 0.37% | 1.20% | -0.01% | 1.66% | 0.59% | 16.49% | |
| Portfolio | 2018 | 1.08% | -0.82% | -0.91% | 1.60% | 0.42% | -0.67% | 1.30% | -0.19% | 0.71% | -2.76% | -0.21% | -2.66% | -3.16% |
| 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% | 0.99% | -0.12% | 0.19% | 4.12% |
| 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 | 0.27% | 2.48% | 1.02% | 0.24% | 0.35% | 1.68% | 1.74% | 8.02% | |||||
| 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 December 2020
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2020 | 0.07% | -3.99% | -9.51% | 7.92% | 2.08% | 2.18% | 0.65% | 2.86% | -0.13% | -0.14% | 6.55% | 2.18% | 10.02% |
| Benchmark | 0.63% | -4.49% | -9.63% | 7.76% | 1.88% | 1.58% | 0.28% | 3.13% | -0.80% | -1.24% | 6.45% | 1.57% | 6.11% | |
| Portfolio | 2019 | 5.86% | 2.49% | 1.58% | 2.40% | -4.08% | 2.86% | 1.87% | -1.50% | 1.46% | 0.72% | 2.68% | 1.14% | 18.57% |
| Benchmark | 5.24% | 2.25% | 2.25% | 2.32% | -3.20% | 3.21% | 1.90% | -0.19% | 1.84% | 0.12% | 2.32% | 0.94% | 20.48% | |
| Portfolio | 2018 | 1.10% | -1.62% | -1.45% | 1.97% | 1.78% | -1.28% | 1.39% | 0.87% | 0.07% | -5.27% | 0.55% | -4.81% | -6.81% |
| 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% | 1.56% | -0.28% | 0.98% | 7.90% |
| 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 | 0.00% | 3.88% | 1.55% | 0.66% | 0.46% | 2.35% | 1.69% | 11.03% | |||||
| 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