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.

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 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.

After a strong first quarter, risk assets continued their rally in April. Equity markets climbed across the regions, while high yield spreads narrowed further. This year’s rebound has been driven by accommodative central banks, the expectation of a recovery in Chinese growth, and the anticipation of a resolution to Sino-American trade negotiations. Further support for the markets came from a solid start to the Q1 US earnings season. This renewed optimism in the equity markets is also reflected in the outperformance of cyclicals vs. defensives in April.

In the US, equity markets had another good month in April, with the S&P 500 up 4.1% for the month, which brings the total return year-to-date to 18.3%. The NASDAQ witnessed even bigger gains in April, up 4.8% for the month and 22.4% year-to-date. Yields continue to remain low as the Federal Reserve has been on hold from raising rates since January. The 10-Year Treasury closed the month at around 2.5%, where it’s been much of the year. The Yield curve, while very flat, has re-steepened, which adds to confidence about the economy.

In Europe, the ECB sees no reason to abandon its ultra-loose monetary policy as inflation is barely rising at all in the eurozone despite wage growth. SNB head, Thomas Jordan, defended negative interest rates, referring to them as a set of tools that had proved its worth, and hinted at the possibility of even lower rates. The European equity market was the most prolific with a rise of 5.0%.

Finally, the EM equity market was lagging the developed ones. The announcement of the planned end to the US administration’s waivers on oil sanctions on Iran sent the oil price higher in April, on top of the 27% price increase in Q1. While economic activity and equity markets in net oil-exporting countries such as Russia, Saudi Arabia, Qatar, and UAE benefited from this development, it is an increasing headwind for oil-importing and inflation-prone countries. Argentina and Turkey showed signs of macroeconomic instability last month, with the Turkish lira falling by more than 5% and the Argentinian peso by more than 2.5% vs. the US dollar.

Outlook

A one-to-one replacement in the absolute return bucket will take place after disappointing performance of a long/short equity strategy. Otherwise we keep our long carry, short duration stance unchanged in the fixed income while we could marginally reduce our beta equity sensitivity.

In the equity space, we favour active managers with the ability to navigate successfully markets characterised by frequent style rotation.

The MSCI ACWI (USD) was up +3.3% during the month while the Barclays Global Aggregate index (USD hedged) was almost flat (+0.1%).

Active management had a strong positive contribution in April. Over the 25 funds we have across our Model Portfolios, 17 had a positive excess return.

In absolute, the Growth portfolio (+2.4%) outperformed the Yield and Income portfolio (+2.0%) as well as the Balanced portfolio (+1.6%).

Yield & Income Portfolio (USD)

The portfolio outperformed its benchmark by +81bps. After the relative drop last month due to its short duration positioning, the portfolio rebounded nicely in April due to its overweight spread exposure and to the positive contribution of active management (+60bps). Among others the alternative fixed income strategies such as the loans and the CLO (+1.7%) and CLOs (+1.2%) benefited the most from the spread tightening.

Balanced Portfolio (USD)

The portfolio was flat versus its benchmark (-7bps). The absolute return pocket could not contribute due to its inability to participate to the strong equity rally. Active management contributed positively (+44bps), which partly offset the defensive stance of the portfolio. A long/short equity fund had a disappointing performance since the beginning of the year, and more particularly in April (-3.4% for the month). While the factor of underperformance will need to be thoroughly analysed, it is definitively a candidate for replacement.

Growth Portfolio (USD)

The Growth portfolio had a performance of +2.4% vs +2.3% for its benchmark (+13bps in relative). Active management contributed positively (+34bps) which was partly offset by a small overweight exposure in EM and in the Japanese equity market.