Smith & Williamson Managed Portfolio Service

Transcription

1 Smith & Williamson Managed Portfolio Service Investment Review Q For professional advisers use only

2 Investment outlook The Dollar fell by 2.3% in the first three months of the year reflecting moderating growth and higher interest rate expectations in the US Government bond yields in the US and the UK have remained low despite rising interest rate expectations; high equity valuations must be supported by rising earnings to be sustainable The Bank of England s 2% GDP forecast may be too optimistic given headwinds to consumption growth Political concerns in the Eurozone have dampened, but developments in the French election to be held in May will be key to this continuing Emerging Markets have benefited from the weak Dollar and positive signals from the Chinese economy Source:, Bloomberg and Thomson Reuters Datastream as at

3 Risk rated models annual risk and return since inception Source: StatPro/ Morningstar Direct /Smith & Williamson as at MPS inception date

4 Performance Portfolio profile Distribution Technology Risk score 3 months (%) 3 months Multi-Asset Composite Benchmark (%) 6 months (%) 6 months Multi-Asset Composite Benchmark (%) 1 Year (%) 1 Year Multi-Asset Composite Benchmark (%) 3 Year (%) 3 Year Multi-Asset Composite Benchmark (%) Since launch (%)* Since launch Multi-Asset Composite Benchmark (%) Defensive Defensive Income Balanced Income Balanced Growth Growth Dynamic Growth Source: as at All figures total return only. *Launch date Benchmark: Smith & Williamson Multi-Asset Composite Benchmark. 4

5 Investment process The MPS team The Process The Result Your Smith & Williamson Portfolio James Burns Head of Investment Companies Research Strategic Asset Allocation Distribution Technology Risk Graded Tactical Asset Allocation Smith & Williamson Research 100% 90% 80% 70% Genevra Banszky von Ambroz, CAIA Open Ended Funds and Investment Companies Analyst David Amphlett-Lewis Head of Passive Research Security Selection Open Ended Funds Investment Companies Passives 60% 50% 40% 30% 20% 10% 0% Defensive Devensive Growth Balanced Income Balanced Growth Growth Dynamic Growth Supported by a network of over 55 investment professionals responsible for investment research. Property Equities - Developed UK Equities - Developing International Bonds - Index Linked Other Alt Equities - Developed International Bonds - Corporate Bonds - Sovereign 5 Source: and StatPro as at

6 Defensive Portfolio Profile The strategy aims to preserve capital in inflation adjusted terms through investing up to 85% in defensive assets such as government bonds, corporate bonds and property. Up to 35% of the portfolio may be invested in global stock market investments subject to prevailing market conditions. Asset breakdown 10.7% 6.7% 15.5% Product mix 6.7% 19.2% S&W 3 - Defensive portfolio profile* 29.2% Asset Class Portfolio (%) Benchmark (%) Active (%) Sovereign Index Linked Credit % Bonds Equities Property/Alt 58.6% Passive OEIC/Unit Trust Closed Ended Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Estimated yield** 2.7% Portfolio expense estimate** 0.7% Note: Investors should note that this discretionary strategy is actively managed with a view to ensuring volatility remains consistent with the risk level. The asset allocation is likely to change in order to offer exposure to favoured asset classes and regions in line with Smith & Williamson s strategic views, and with the risk levels associated with the portfolio s objective. As a result the current mix of defensive and growth investments within the portfolio will change and therefore differ significantly over time. *Source: Smith & Williamson Investment Management as at Benchmarks Update as at Jan Benchmark: Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at Pie chart data as at

7 Defensive Income Portfolio Profile The strategy aims to deliver defensive total returns with an emphasis on also offering higher than average income. The portfolio may invest between 35% and 60% in global stock market investments subject to market conditions with the remainder in defensive asset classes. Asset breakdown 10.2% 1.0% 41.9% 20.1% Product mix 1.0% 14.3% S&W 4 - Defensive Income portfolio profile* Asset Class Portfolio (%) Benchmark (%) Active (%) Sovereign Index Linked Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets 46.9% 64.6% Bonds Equities Property/Alt Passive OEIC / Unit Trust Closed Ended Estimated yield** 3.0% Portfolio expense estimate** 0.8% Note: Investors should note that this discretionary strategy is actively managed with a view to ensuring volatility remains consistent with the risk level. The asset allocation is likely to change in order to offer exposure to favoured asset classes and regions in line with Smith & Williamson s strategic views, and with the risk levels associated with the portfolio s objective. As a result the current mix of defensive and growth investments within the portfolio will change and therefore differ significantly over time. *Source: Smith & Williamson Investment Management as at Benchmarks Update as at Jan Benchmark: Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at Pie chart data as at

8 Balanced Income Portfolio Profile The strategy aims to deliver balanced returns through a combination of investment income and capital growth. The portfolio is diversified across major asset classes and may invest between 55% and 70% in global stock market investments subject to market conditions. Asset breakdown 8.5% 0.3% 28.5% Product mix 0.3% 18.7% 15.2% S&W 5 Balanced Income portfolio profile* Asset Class Portfolio (%) Benchmark (%) Active (%) Sovereign Index Linked % Bonds Equities Property/Alt 65.9% Passive OEIC / Unit Trust Closed Ended Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Estimated yield** 2.7% Portfolio expense estimate** 0.8% Note: Investors should note that this discretionary strategy is actively managed with a view to ensuring volatility remains consistent with the risk level. The asset allocation is likely to change in order to offer exposure to favoured asset classes and regions in line with Smith & Williamson s strategic views, and with the risk levels associated with the portfolio s objective. As a result the current mix of defensive and growth investments within the portfolio will change and therefore differ significantly over time. *Source: Smith & Williamson Investment Management as at Benchmarks Update as at Jan Benchmark: Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at Pie chart data as at

9 Balanced Growth Portfolio Profile The strategy aims to deliver balanced growth through investing actively across defensive and riskier asset classes. The portfolio is biased towards global stock market investments and may invest between 65% and 85% in equities with the remainder diversified across defensive asset classes. Asset breakdown 0.1% 5.8% 18.5% Product mix 0.1% 12.8% 20.1% S&W 6 Balanced Growth portfolio profile* Asset Class Portfolio (%) Benchmark (%) Active (%) Sovereign Index Linked 75.6% Bonds Equities Property/Alt 67.0% Passive OEIC / Unit Trust Closed Ended Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Estimated yield** 2.3% Portfolio expense estimate** 0.8% Note: Investors should note that this discretionary strategy is actively managed with a view to ensuring volatility remains consistent with the risk level. The asset allocation is likely to change in order to offer exposure to favoured asset classes and regions in line with Smith & Williamson s strategic views, and with the risk levels associated with the portfolio s objective. As a result the current mix of defensive and growth investments within the portfolio will change and therefore differ significantly over time. *Source: Smith & Williamson Investment Management as at Benchmarks Update as at Jan Benchmark: Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at Pie chart data as at

10 Growth Portfolio Profile The strategy aims to deliver long-term growth by investing predominantly in stock markets across a wide range of geographic regions. The portfolio will always retain an emphasis on developed markets, and in particular investments in UK company shares. The portfolio will normally be more than 90% invested in stock markets but may be up to 15% in defensive asset classes. S&W 7 Growth portfolio profile* Asset Class Portfolio (%) Benchmark (%) Active (%) Sovereign Index Linked Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Estimated yield** 1.9% Portfolio expense estimate** 0.9% Asset breakdown 5.1% 0.2% 5.7% 89.0% Bonds Equities Property/Alt 29.3% Product mix 58.2% 0.2% 12.4% Passive OEIC / Unit Trust Closed Ended Note: Investors should note that this discretionary strategy is actively managed with a view to ensuring volatility remains consistent with the risk level. The asset allocation is likely to change in order to offer exposure to favoured asset classes and regions in line with Smith & Williamson s strategic views, and with the risk levels associated with the portfolio s objective. As a result the current mix of defensive and growth investments within the portfolio will change and therefore differ significantly over time. *Source: Smith & Williamson Investment Management as at Benchmarks Update as at Jan Benchmark: Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at Pie chart data as at

11 Dynamic Growth Portfolio Profile The strategy aims to deliver long-term growth by investing actively in stock markets across a wide range of geographic regions. The portfolio will usually retain a strong emphasis on developing markets with the flexibility to be as much as 50% invested in Asia and Emerging markets, subject to market conditions. The portfolio will usually be fully invested in stock markets. Asset breakdown 3.2% 0.3% 2.9% 32.0% Product mix 0.3% 7.7% S&W 8 Dynamic Growth portfolio profile* Asset Class Portfolio (%) Benchmark (%) Active (%) Sovereign Index Linked Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets % Bonds Equities Property/Alt 60.1% Passive OEIC / Unit Trust Closed Ended Estimated yield** 1.8 Portfolio expense estimate** 0.9% Note: Investors should note that this discretionary strategy is actively managed with a view to ensuring volatility remains consistent with the risk level. The asset allocation is likely to change in order to offer exposure to favoured asset classes and regions in line with Smith & Williamson s strategic views, and with the risk levels associated with the portfolio s objective. As a result the current mix of defensive and growth investments within the portfolio will change and therefore differ significantly over time. *Source: Smith & Williamson Investment Management as at Benchmarks Update as at Jan Benchmark: Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at Pie chart data as at

12 S&W Range activity highlights Past 12 Months Name Reasons for trade Rationale Driver Jun 16 Sold Vanguard Long Duration UK Gilt Selling out of long duration gilts as now riskier at lower yields Allocation Macro Jun 16 Bought ishares UK Gilts 0-5 Years Moving shorter duration in gilt allocation as protection from long end has reduced Allocation Macro Jun 16 Sold Kames High Yield Reducing high yield due to its higher correlation to equities Allocation Valuation Jun 16 Bought Royal London Corporate Bond Switching into investment grade at expense of high yield Allocation Valuation Jul 16 Sold FP Argonaut European Alpha Reducing exposure and switching into hedged class due to currency concerns Jul 16 Bought FP Argonaut European Alpha (Hedged) Adopting hedged exposure to European equities Allocation Macro Jul 16 Sold Liontrust Macro UK Growth Reducing exposure to manager following period of poor performance Switch Jul 16 Bought Artemis UK Select Increasing exposure to growth themes through proven manager at new house Style Manager Sep 16 Sold SPDR US Dividend Aristocrats ETF Selling after period of strong performance fro US income stocks Sep 16 Bought Vanguard US Equity Index Introducing benchmark exposure on concerns over interest rate trajectory Allocation Valuation Sep 16 Reduced Kames Investment Grade Bond Reduced to introduce currency diversification within fixed income Sep 16 Reduced AXA US Short Duration High Yield Reduced to introduce currency diversification within fixed income Allocation Macro Sep 16 Bought ishares $ Corporate Bond ETF Introduction of US Dollar fixed income exposure given elevated UK currency risk Dec- 16 Sold Fidelity Enhanced income Switching to manager with historically lower beta Switch Dec- 16 Bought RWC Enhanced Income Introducing a manager with historically lower beta Style Manager Dec- 16 Reduced Vanguard US Equity Index Profit taking from US allocation following strong performance Allocation Valuation Feb 17 Sold Marlborough Multi-Cap Income Reducing UK small cap exposure Feb 17 Increased IP UK Strategic Income Increasing favoured manager following an atypical period of softer performance Allocation Macro Feb 17 Increased RWC Enhanced Income Increasing large cap UK exposure, whilst maintaining portfolio yield Note: The above is representative of transactions widely executed across the S&W range and should not be construed as comprehensive of all transactions in all models. Individual holdings changes in specific S&W strategies may therefore not be detailed. Those shown will be those which have been applied across more than one of the S&W strategies and seek to capture the direction of travel of asset allocation of the S&W range over the period shown. Source: as at

13 Stock stories Legal & General High Income Trust This open-ended fund adopts a well-diversified approach to investing in bonds issued by companies assessed as less able to guarantee repayment of their debts, and which therefore offer much higher income than traditional investment grade debt securities. Managed since 2011 by Martin Reeves, previously of Alliance Bernstein, the fund looks to avoid the debt of complex financial companies such as banks, instead focusing on those where their bottom up industry research can deliver value through avoiding insolvencies, and maintaining the income profile. BH Macro This is an investment company that gives exposure to the Brevan Howard Master Fund, a large macro hedge fund strategy. Exposure is predominantly to the highly liquid global fixed income and forex markets, with particular emphasis on the value of capital preservation and gradual profit-building. Whilst recent performance has been underwhelming, central to its appeal is its neutral to negative correlation with traditional asset classes such as bonds and equities, especially in times of acute market distress and sharp corrections. Troy Income & Growth Trust A core UK equity income investment trust which has been managed by Francis Brooke since August Troy are traditional stock pickers and Brooke invests across the market cap range looking to produce a reliable, growing dividend with an eye on capital protection. The fund will tend to be overweight companies that have strong business models and reliable cash flows while avoiding cyclically geared stocks. The fund has a strong track record of risk-adjusted returns with it tending to outperform in bear markets but under-perform in strong cyclical bull markets. Vanguard US Equity Index This open ended tracker seeks to replicate the performance of a broad range of North American company shares, as represented by the S&P Total Market index. The fund invests an amount proportional to the size of each company within the index to ensure returns closely mirror those seen in the world s largest stock market with low levels of associated fees and charges, currently 0.1% per annum. Fidelity Emerging Markets Managed by Nick Price, this open-ended fund invests in global emerging markets. Nick is a highly experienced manager and is supported by a team of almost fifty analysts. The focus is on companies with low debt and structural competitive advantages, with stocks being assessed on quality, consistency of returns and price. The approach is bottom-up and target led, with stocks only being bought when they offer the chance of returns of greater than 20%. The long term track record is strong with stock selection being the key driver of consistent outperformance of both its benchmark and peer group. 13

14 Appendix

15 MPS Range characteristics 3 Defensive 4 Defensive Income 5 Balanced Income 6 Balanced Growth 7 Growth 8 Dynamic Growth To preserve capital in inflation adjusted terms through investing up to 85% in defensive assets such as government bonds, corporate bonds and property. Up to 35% of the portfolio may be invested in global stock market investments subject to prevailing market conditions To deliver defensive total returns with an emphasis on also offering higher than average income. The portfolio may invest between 35% and 60% in global stock market investments subject to market conditions with the remainder in defensive asset classes. To deliver balanced returns through a combination of investment income and capital growth. The portfolio is diversified across major asset classes and may invest between 55% and 70% in global stock market investments subject to market conditions. To deliver balanced growth through investing actively across defensive and riskier asset classes. The portfolio is biased towards global stock market investments and may invest between 65% and 85% in equities with the remainder diversified across defensive asset classes. To deliver long-term growth by investing predominantly in stock markets across a wide range of geographic regions. The portfolio has an emphasis on developed markets, and in particular investments in UK company shares. The portfolio may be up to 15% in defensive asset classes. To deliver long-term growth by investing actively in stock markets across a wide range of geographic regions. The portfolio will usually retain a strong emphasis on developing markets with the flexibility to be as much as 50% invested in Asia and Emerging markets. The portfolio will usually be fully invested in stock markets. DT allocation equity weight DT long-term volatility estimate 1 Multi-Asset Composite volatility (since launch) 3 S&W volatility (since launch) (%) 2, 3 Multi-Asset Composite volatility (1 Year) 3 S&W portfolio volatility (1 year) 3 Underlying portfolio yield estimate Novia portfolio expense estimate (%) Portfolio security count Distribution Technology; Q Capital Markets Assumption Update 2 Launch date as at (unaudited), Bloomberg and Morningstar as at All figures total return. 4 Source: Novia as at Launch date

16 Contact us Mickey Morrissey Partner, Head of Retails Sales t: e: Mickey joined Smith & Williamson in December 2012 as Head of UK IFA Sales and was appointed Head of Distribution in July He is responsible for growing intermediated sales into the DFM, Managed Portfolio Service and MultiManager business lines. Previously Mickey was Head of Distribution at Liontrust Asset Management for ten years and prior to that worked at Merrill Lynch Investment Managers for 12 years. Julian Polnik DFM Business Development t: e: Julian joined Smith and Williamson Investment Management in November 2011 as Head of Broker Desk. Julian has a BA Honours degree in Politics and Social Psychology from Loughborough University and a Diploma in Management Studies from the University of Westminster. He is a Chartered Fellow of the Chartered Institute for Securities and Investment. Lucy Mitchell Associate Director t: e: lucy.mitchell@smithandwilliamson.com Lucy joined Smith & Williamson in April 2015 as Associate Director primarily to develop further the Managed Portfolio Service via platforms as well as the Bespoke DFM offering for the intermediary market. Lucy graduated from the University of Birmingham with a BSc in Economics and Political Science. She has also completed the IMC and Investment Advice Diploma (IAD). 16

17 Disclaimer The value of investments can go down as well as up and investors may not receive back the original amount invested. Past performance is not a guide to future performance. There can be no assurance that any portfolio will achieve its investment objective, the target return or any volatility target. Any target return or volatility target shown is neither guaranteed nor binding on the Manager. When investments are made in overseas securities, movements in exchange rates may have an effect on the value of that investment. The effect may be favourable or unfavourable. Investing in alternative assets involves higher risks than traditional investments and may also be highly leveraged and engage in speculative investment techniques, which can magnify the potential for investment loss or gain. Investments in emerging markets may involve a higher element of risk due to political and economic instability and underdeveloped markets and systems. Please note that bond funds may not behave like direct investments in the underlying bonds themselves. By investing in bond funds the certainty of a fixed income for a fixed period with a fixed return of capital are lost. These profiles are tailored to the output of a Distribution Technology (DT) risk profiling process which is complex and not for use without assistance from a financial adviser. Performance outcomes will depend on the rebalancing and timing of entry and exit to the strategy on the platform. This document contains information believed to be reliable but no guarantee, warranty or representation, express or implied, is given as to their accuracy or completeness. This is neither an offer nor a solicitation to buy or sell any investment referred to in this document. documents may contain future statements which are based on our current opinions, expectations and projections. does not undertake any obligation to update or revise any future statements. Actual results could differ materially from those anticipated. Appropriate advice should be taken before entering into transactions. No responsibility can be accepted for any loss arising from action taken or refrained from based on this publication. In relation to these Smith & Williamson s portfolio profiles, is unable to assess or provide advice on the suitability of this profile for individual circumstances. No consideration has been given to the suitability of any investment profile for the particular needs of any recipient. SWIM will not be responsible to any other person for providing the protections afforded to retail investors or for advising on any investment, as a result of using this information. Issued by which is a trading name of LLP. Authorised and regulated by the Financial Conduct Authority (registration number is ). Ref: 52217lw 17