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 started with two currency base portfolios ; US dollar and Euro. Swiss Francs will follow

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

• Usually we select the same funds for either the US dollar or the Euro portfolios, unhedged for equity strategies and mostly hedged for fixed income.

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

Strategic Allocations

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

Portfolios outperformance shall 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 the objective to beat a benchmark composed by 2/3 of the MSCI All Country World Index and by 1/3 of the Barclays Global Aggregate Bond Index. The long term objective of this portfolio is to generate return through capital appreciation rather than income collection.

Overall, July has been a positive month across asset classes; the VIX volatility index reached another new low, the S&P500 recorded a new high and commodities, notably oil, made strong gains.

US Treasuries ended the month little changed: the yield on the 10-year compressed 1 bps to 2.29% at month end.

The credit spreads tightened again across all rating categories in corporates as well as in the emerging market debt.

Finally, the euro appreciated as investors continued to anticipate the European Central Bank was getting closer to reducing its stimulus.

Change in the portfolios

There have been no changes in the portfolios in July

Outlook

We keep our risk-on mood expressed through:

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

At this juncture, we are considering, on a case-by-case basis, to switch out some funds currently in our portfolios for funds we have a higher degree of conviction in the investment process or where the portfolio positioning is better aligned to our outlook.

In Equity, the MSCI All Country World index gained +2.78% during the month. Year-to-Date, the equity index is up by +14.5%.  In Fixed Income, the Barclays Global Aggregate index added +0.30% for the month and is up +1.63% Year-to-Date.

Portfolio Models (in USD) delivered again solid results in July, in relative as well as in absolute terms. All portfolios bet their respective benchmarks and posted positive returns for the month.

It has been again a favourable environment for our risk-on mood allocation in the portfolios and all our investment bias have worked positively (overweight in EM and in spread duration, value bias). Unlike in the previous months, the active management contribution didn’t add significantly during the period overall, but looking by asset classes we notice some divergence.

Among the 27 funds we have in the different Model Portfolios, 17 funds (63%) had an excess return versus their respective benchmarks.

All fixed income funds except one, recorded positive alpha ranging from 3 bps up to 168bps.

Similarly, absolute return funds delivered positive alpha ranging from 41bps to 220bps in 4 out of 5 funds.

Meanwhile, the equity funds had positive alpha in 6 out of 13 funds only, demonstrating a challenging environment for active equity managers to outperform some indices on high octane.

Yield & Income Portfolio (USD)

The portfolio benefited strongly from its allocation bets such as in emerging markets and credit spread exposure, while active management was flat, despite 9 out of the 15 funds outperforming their benchmark. Year to date the active management contribution remains unchanged at +210bps

The portfolio outperformed its benchmark by 42bps in July (+1.55% vs +1.13%), by 301bps YTD and by 631bps since inception (June 2016).

Balanced Portfolio

The Balanced Portfolio recorded a positive relative performance for the second month in a row mainly from its emerging markets exposure. The contribution from active management was slightly positive for the month (+21bps) setting up at +207bps since the beginning of the year.

The Absolute Return pocket contributed well by adding 15bps to the portfolio’s outperformance. This pocket serves as an insurance premium to protect the portfolio’s return during weak market conditions.

Only 5 funds out of the 17 funds lagged their benchmark

The Balanced Absolute Return Portfolio was therefore ahead of its benchmark by 19bps, increasing its outperformance to 24bps YTD, and to 336bps since inception.

Growth Portfolio

The Growth portfolio generated a good outperformance of 53bps in July.

Out of the equity funds with a value bias, two have recorded  an impressive performance north of +4% in July, helping the growth portfolio to generate an robust performance for the month. Again, the active management contribution was marginal during the period (+9bps) but remains comfortable on a YTD basis (+232bps).

The performance of the Growth Portfolio remains strong in every time horizon. Actually, the portfolio returned +2.48% in July, +12.72% YTD (+267bps relative to benchmark) and +19.98% (+574bps) since inception.

7 out of 15 funds underperformed their benchmark during the month, most of them being equity funds.