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
In the equity markets, viewed broadly from the bottom line (i.e., S&P500 up 0.6%), the month looked rather boring. However, judging from the sector by sector results (consumer staples up 4.2%, while industrials were down 3.4%), or at issue level variance (107 issues up at least by 5%, and 69 down by at least 5%), there was plenty of action with many winners and losers. The intra-index and intra-sector moves reached an extreme in June. It marks also the prolongation of a strong momentum-driven market which have seen the traditional growth-oriented sectors outperforming the value sectors, month after month.
Since the last US presidential election, the spread in performance between the best and the worst sector has grown steadily to stand at 57.8% (information technology added +52.4%, while telecommunication services lost -5.4%). Apart in the US, it has been a difficult month for risk assets such as equities. The trade war issue made the market nervous, with the concern growing outside of the US. Non-US markets declined by 2.25%, with emerging markets being the worst (MSCI EM -4.2% in USD).
In fixed income the month finished flat, with the significant exception of the emerging markets (BBgBarc Global Aggregate +0.2%). For the fifth month in a row the EM debt markets struggled in both, hard currency (JPM EMBI Global TR USD -1.2%), and in local currencies (JPM GBI-EM Global Diversified TR USD -2.9%).
Outlook
No change in the portfolio during the month of June. However, among the active bets we have in the portfolios, two are particularly painful on a YTD basis: value bias in equities and the overweight in Emerging markets. While we will reduce our value bias at the end of the month, we will keep our overweight in Emerging markets unchanged (reduce the hard currency exposure while initiating a small position in local currencies). We believe an active manager in EM debt should take profit from this indiscriminate dislocation of the market.
In alternative strategies, we will continue to expand our balanced portfolio diversification towards less directional strategies, whenever we find the opportunity to add successful managers. The recent market movement has severely shaken market neutral alternative strategies, leaving many with double digit negative performance YTD. It constitutes an interesting stress test period that will help us evidence the most robust of those strategies.
Performance Review – June 2018
The MSCI World Equity index (USD) had a return of -0.5% during the month while the Barclays Global Aggregate index (USD hedged) returned +0.2%.
In June, active management struggled particularly in equities and in absolute return strategies. Their contribution was deteriorating as over the 27 funds we have in all Model Portfolios, 17 had a negative excess return for the period.
In absolute terms, Balanced portfolio (-0.4%) outgrow the Yield and Income portfolio (-0.5%) and the Growth portfolio (-1.2%).
Yield & Income Portfolio (USD)
The portfolio underperformed its benchmark by 46bps during the period. The Yield & Income, like the two other portfolios suffered mainly from its overweight in Emerging markets, both in equity and in fixed income assets. Unlike the other portfolios, the contribution of active management was slightly positive (+23bps).
Balanced Portfolio (USD)
The balanced strategy underperformed its benchmark by 28bps during the month. The portfolio is slightly less exposed to Emerging markets than the two other strategies.
On the other hand, the market neutral long/short equity strategies which are part of the portfolio’s absolute return pocket were negatively oriented. The overall contribution of active management was negative (-23bps).
Growth Portfolio (USD)
The strategy suffered the most from its overweight in Emerging markets as well as its holdings in deep value managers. On top of that, active management had a negative contribution (-27bps).
Our overweight exposure in deep value strategies will be reduced at the end of the month in order to have a more balanced style exposure going forward.
US Dollar Portfolios
US Dollar - Yield and Income
Cumulative Performance to end June 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 2.88% | -1.91% | -0.66% | 0.76% | -0.63% | -0.50% | -0.12% | ||||||
| Benchmark | 1.42% | -1.55% | -0.21% | 0.07% | 0.26% | -0.04% | -0.08% | |||||||
| 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 June 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 2.75% | -1.59% | -0.42% | 0.82% | -0.97% | -0.43% | 0.11% | ||||||
| Benchmark | 2.47% | -2.21% | -0.73% | 0.31% | 0.22% | -0.15% | -0.15% | |||||||
| 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 June 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 3.65% | -2.87% | -1.07% | 0.82% | -0.44% | -1.19% | -1.22% | ||||||
| Benchmark | 3.53% | -2.87% | -1.24% | 0.54% | 0.17% | -0.26% | -0.24% | |||||||
| 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 June 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 1.46% | -1.36% | -1.06% | 1.26% | 0.42% | -0.66% | 0.03% | ||||||
| Benchmark | 0.04% | -0.99% | -0.65% | 0.53% | 1.28% | -0.21% | -0.03% | |||||||
| Portfolio | 2017 | 1.24% | 2.08% | 0.35% | 0.20% | 0.10% | -0.38% | 0.23% | -0.41% | 0.61% | 0.70% | -0.20% | 0.56% | 5.18% |
| 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 | 0.07% | 2.05% | 1.00% | 0.53% | 0.20% | -0.23% | 1.34% | 5.05% | |||||
| 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 June 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 1.08% | -0.82% | -0.91% | 1.60% | 0.42% | -0.67% | 0.67% | ||||||
| Benchmark | 0.48% | -1.28% | -1.26% | 1.10% | 1.86% | -0.28% | 0.58% | |||||||
| Portfolio | 2017 | 0.67% | 1.98% | 0.39% | -0.11% | -0.71% | -0.09% | 0.02% | -0.47% | 1.34% | 1.09% | -0.12% | 0.19% | 4.22% |
| 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 | 0.19% | 2.48% | 1.02% | 0.24% | 0.35% | 1.68% | 1.74% | 7.93% | |||||
| 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 June 2018
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2018 | 1.10% | -1.62% | -1.53% | 1.97% | 1.78% | -1.28% | 0.35% | ||||||
| Benchmark | 0.93% | -1.56% | -1.86% | 1.67% | 2.43% | -0.35% | 1.18% | |||||||
| Portfolio | 2017 | 1.24% | 2.58% | 0.76% | 0.29% | -0.22% | -0.54% | 0.21% | -0.93% | 2.03% | 1.84% | -0.28% | 0.98% | 8.19% |
| 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 | 0.15% | 3.88% | 1.55% | 0.66% | 0.46% | 2.35% | 1.69% | 11.20% | |||||
| 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