Portfolios of Active Funds
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.
Key Characteristics
Portfolios Structure
- Portfolios are made up of 14 to 17 Ucits or Alternative Ucits funds (according to profile).
- We have started two currency based family of portfolios ; in US dollar and in Euro. Swiss Francs will follow shortly
- Apart one fund with a bi-monthly liquidity, all funds have a daily liquidity.
- Usually we select the same funds for USD or EUR portfolios, unhedged for equity strategies and hedged for fixed income ones.
- The performances are shown net of fees, using the institutional share classes, making these Model Portfolios fully replicable.
Strategic Allocations
We keep a constant balance between equity and fixed income strategies according to the Model Portfolios profiles and guidelines. We also maintain a neutral currency and regional allocation versus benchmarks.
Portfolios outperformance should 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.
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, the portfolio can be invested up to 33% in Absolute Return strategies, including Alternative Ucits funds.
Growth Portfolio
The most equity oriented portfolio with an objective 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.
Review and Outlook – October 2017
Financial markets in October were once more driven by strength in the global economy. Corporate earnings and dovish central bank behaviour all contributed to a supportive environment for equities that saw several stock markets globally reaching record highs. The third quarter began like the two prior quarters with US large cap growth and emerging market stocks leading the advance. Technology (and momentum) are propelling this year’s advance in the U.S. markets, leaving other sectors (and styles) well far behind. For the month, U.S. technology sector advanced 7.8%, as measured by the S&P Technology index, vs. 2.9% for the S&P 500 Index, and is up 37.2% so far in 2017, vs. 16.9% for the S&P.
In Fixed Income, Credit continues to lead. Investors in corporate credits continue to enjoy higher total returns due to credit spreads tightening, reaching a 3-year low (US investment grade OAS: 95bps and US high yield OAS: 370bps). According to Moody’s, the US speculative-grade default rate dropped to 3.3% at the end of the third quarter and is projecting a default rate of 2.3%. Emerging markets debt remain also well oriented as credit spread tightened in most countries. Emerging markets debt in local currencies suffered however for the second month in a raw from the recovery of the USD vs. major other currencies (return was -2.8% in October, but still up 11.1% Ytd).
Outlook
No change in the portfolio in October, neither in the fund selection, nor in the portfolio construction.
We keep our risk-on mood which is expressed through:
- An overweight in spread duration for all profile
- An overweight in emerging markets, both equities and FI
- A value-style bias for the Growth and Balanced portfolios
Performance Review – October 2017
The MSCI World Equity index (USD) had a performance of +2.1% during the month while the Barclays Global Aggregate index (USD hedged) returned +0.4%. On a YTD basis they return respectively +27.4% and +2.7%.
In October, the active management contributed strongly to the outperformance. 17 of the 26 funds we have in all Model Portfolios had a positive excess return.
In absolute terms, the Growth portfolio recorded the best performance with +1.5% ahead of the Yield & Income portfolio at +1.1%, closely followed by the Balanced portfolio at +1.0%.
Yield & Income Portfolio (USD)
The portfolio outperformed its benchmark by 10bps in October. The contribution of active management was positive by 37bps.
Long spread duration was also a positive factor while its exposure in EM local debt detracted.
The exposure to MLPs was also a detractor. We stay confident this allocation will pay off over the long run as a source of steady income. The high correlation to the Energy sector should start to contribute positively after the recent recovery in energy price.
Balanced Portfolio
The portfolio underperformed by 20bps in October. The absolute return pocket was the main detractor in a strong equity rally. The value bias of the equity allocation was also crippling.
Active management however contributed by 68bps to the outperformance.
Growth Portfolio
The portfolio was flat (-1bps) vs. its benchmark. Active management contribution (+39bps) was offset by the value tilt of the portfolio.
US Dollar Portfolios
US Dollar - Yield and Income
Cumulative Performance to end October 2017
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2017 | 2.15% | 1.58% | 0.72% | 1.01% | 1.27% | 0.19% | 1.55% | 0.03% | 0.58% | 1.05% | 10.59% | ||
| Benchmark | 0.68% | 1.49% | 0.35% | 0.95% | 1.10% | -0.06% | 1.13% | 0.71% | 0.32% | 0.95% | 7.88% | |||
| 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 MSCI All Country World + 2/3 Barclays Gbl Agg
Source: WS Partners, Morningstar
US Dollar - Balanced
Cumulative Performance to end October 2017
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2017 | 1.85% | 1.21% | 0.74% | 0.84% | 0.87% | 0.64% | 1.73% | 0.04% | 1.19% | 1.03% | 10.59% | ||
| Benchmark | 1.19% | 1.82% | 0.56% | 1.10% | 1.37% | 0.07% | 1.54% | 0.63% | 0.72% | 1.23% | 10.70% | |||
| 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 MSCI All Country World + 1/2 Barclays Gbl Agg
Source: WS Partners, Morningstar
US Dollar - Growth
Cumulative Performance to endOctober 2017
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2017 | 2.83% | 1.52% | 1.28% | 1.65% | 1.88% | 0.46% | 2.48% | -0.28% | 1.77% | 1.50% | 16.10% | ||
| Benchmark | 1.70% | 2.14% | 0.78% | 1.25% | 1.65% | 0.19% | 1.95% | 0.54% | 1.12% | 1.51% | 13.58% | |||
| 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 MSCI All Country World + 1/3 Barclays Gbl Agg
Source: WS Partners, Morningstar
Euro Portfolios
Euro - Yield and Income
Cumulative Performance to end October 2017
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2017 | 1.24% | 2.08% | 0.35% | 0.20% | 0.10% | -0.38% | 0.23% | -0.41% | 0.61% | 1.46% | 5.59% | ||
| Benchmark | -0.24% | 2.01% | 0.03% | 0.26% | -0.09% | -0.64% | -0.11% | 0.31% | 0.41% | 1.35% | 3.30% | |||
| 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 MSCI All Country World + 2/3 Barclays Gbl Agg
Source: WS Partners, Morningstar
Euro - Balanced
Cumulative Performance to end October 2017
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2017 | 0.67% | 1.98% | 0.39% | -0.11% | -0.71% | -0.09% | 0.02% | -0.47% | 1.34% | 1.57% | 4.65% | ||
| Benchmark | -0.12% | 2.65% | 0.16% | 0.13% | -0.33% | -0.72% | -0.22% | 0.12% | 0.93% | 1.91% | 4.53% | |||
| 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 MSCI All Country World + 1/2 Barclays Gbl Agg
Source: WS Partners, Morningstar
Euro - Growth
Cumulative Performance to endOctober 2017
Calendar Returns
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | YTD | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Portfolio | 2017 | 1.24% | 2.58% | 0.76% | 0.29% | -0.22% | -0.54% | 0.21% | -0.93% | 2.03% | 2.43% | 8.07% | ||
| Benchmark | 0.00% | 3.28% | 0.29% | 0.00% | -0.56% | -0.81% | -0.34% | -0.08% | 1.45% | 2.46% | 5.76% | |||
| 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 MSCI All Country World + 1/3 Barclays Gbl Agg
Source: WS Partners, Morningstar