Smith & Williamson Managed Portfolio Service

Transcription

1 Smith & Williamson Managed Portfolio Service Core Range - Investment Review Q For professional advisers use only Please read the important information section

2 Investment outlook Global equities continue to be shown leadership by the US tech sector- collectively the market capitalisation of the top 5 US tech companies is worth more than the 50 largest stocks in the Eurozone The step-up in trade protectionism by President Trump is however concerning for markets The euro has continued to weaken against the dollar, driven by comparatively weak economic performance and a politically weaker Angela Merkel in Germany After five months of deadlock, Italy formed a new government, sparking considerable volatility in Italian equity and bond prices Emerging markets risk assets have come under selling pressure over the past few months due to renewed strength of the US dollar The oil price has remained firm following OPEC s decision to increase production by 1m barrels per day Source: and Bloomberg as at

3 Investment process The MPS team The Process The Result James Burns Head of Investment Companies Research, Partner Strategic Asset Allocation Distribution Technology Risk Graded Tactical Asset Allocation Smith & Williamson Research 100% 90% 80% Your Smith & Williamson Portfolio 70% Genevra Banszky von Ambroz, CAIA Open Ended Funds and Investment Companies Analyst, Associate Director Security Selection 60% 50% 40% David Amphlett-Lewis Head of Passive Research, Partner Open Ended Funds Investment Companies Passives 30% 20% 10% Supported by a network of over 55 investment professionals responsible for investment research. 0% Cash Defensive Defensive Growth Bonds - Index Linked Balanced Income Equities - Developing International Equities - UK Property Balanced Growth Bonds - Sovereign Bonds - Corporate Growth Dynamic Growth Equities - Developed International Alternatives 3 Source: and Factset as at

4 Defensive Portfolio Profile The portfolio objective is to preserve the value of capital in real terms (i.e. so that it is not eroded by inflation). The portfolio invests mainly in funds providing exposure to defensive assets such as government bonds, corporate bonds and property, but with up to 35% invested in funds providing exposure to UK and International equities. The portfolio does not focus on income, which will vary. S&W 3 - Defensive portfolio profile Asset Class Portfolio Active Cash Sovereign Index Linked Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Estimated yield** 2.4% Portfolio expense estimate** 0.7% Asset breakdown 10.9% 10.6% 30.2% 48.3% Cash Bonds Equities Alternatives Product mix 16.4% 54.1% 10.6% 18.9% Cash 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 s Update as at Jan : Smith & Williamson Multi-Asset Composite. **Estimated yield and Portfolio expense estimate as at Source: Smith & Williamson Investment Management and Morningstar.. Pie chart data as at

5 Defensive Income Portfolio Profile The portfolio objective has a focus on providing higher income, whilst preserving the value of capital in real terms. The portfolio is diversified across funds providing exposure to relatively defensive asset classes such as government bonds, corporate bonds and property, but with between 30% and 60% also invested in funds providing exposure to UK and International equities. S&W 4 - Defensive Income portfolio profile Asset Class Portfolio Active Cash Sovereign Index Linked Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Asset breakdown 10.2% 4.8% 37.0% 48.0% Cash Bonds Equities Alternatives Product mix 4.8% 20.9% 12.2% 62.1% Cash Passive OEIC / Unit Trust Closed Ended Estimated yield** 2.6% 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 s Update as at Jan : Smith & Williamson Multi-Asset Composite. **Estimated yield and Portfolio expense estimate as at Source: Smith & Williamson Investment Management and Morningstar.. Pie chart data as at

6 Balanced Income Portfolio Profile The portfolio objective has a focus on generating income, whilst also aiming to grow the capital value by more than inflation. The portfolio is diversified across major asset classes and may have between 55% and 70% invested in funds providing exposure to UK and International equities, subject to market conditions. Asset breakdown 8.3% 2.3% 25.1% Product mix 19.7% 2.3% 11.2% S&W 5 Balanced Income portfolio profile Asset Class Portfolio Active Cash Sovereign Index Linked 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% 64.3% Cash Bonds Equities Alternatives 66.7% Cash 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 s Update as at Jan : Smith & Williamson Multi-Asset Composite. **Estimated yield and Portfolio expense estimate as at Source: Smith & Williamson Investment Management and Morningstar.. Pie chart data as at

7 Balanced Growth Portfolio Profile The portfolio objective has a focus on delivering capital growth in real terms, whilst still producing some income. The portfolio invests actively across all major asset classes and may have between 65% and 85% invested in funds providing exposure to UK and International equities, with the remainder diversified across defensive asset classes. S&W 6 Balanced Growth portfolio profile Asset Class Portfolio Active Cash Sovereign Index Linked Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Estimated yield** 2.0% Portfolio expense estimate** 0.8% Asset breakdown 5.5% 1.9% 14.8% 77.9% Cash Bonds Equities Alternatives Product mix 19.9% 1.9% 6.3% 72.0% Cash 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 s Update as at Jan : Smith & Williamson Multi-Asset Composite. **Estimated yield and Portfolio expense estimate as at Source: and Morningstar.. Pie chart data as at

8 Growth Portfolio Profile The portfolio objective is to deliver long-term capital growth. The portfolio will normally invest more than 90% in funds providing exposure to UK and International equities across a wide range of geographical regions, but may include up to 15% exposure to defensive asset classes. S&W 7 Growth portfolio profile Asset Class Portfolio Active Cash 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 4.9% 0.4% 4.7% 90.0% Cash Bonds Equities Alternatives Product mix 0.4% 4.9% 25.9% 68.8% Cash 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 s Update as at Jan : Smith & Williamson Multi-Asset Composite. **Estimated yield and Portfolio expense estimate as at Source: Smith & Williamson Investment Management and Morningstar.. Pie chart data as at

9 Dynamic Growth Portfolio Profile The portfolio objective is to deliver long-term capital growth and will usually be fully invested in stock markets. 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. S&W 8 Dynamic Growth portfolio profile Asset Class Portfolio Active Cash Sovereign Index Linked Credit Global High Yield International Bonds Property Other Alternatives UK North America Europe Japan Pacific Emerging Markets Asset breakdown 3.1% 0.3% 2.5% 94.1% Cash Bonds Equities Alternatives Product mix 0.3% 4.0% 30.6% 65.1% Cash Passive OEIC / Unit Trust Closed Ended Estimated yield** 1.7% Portfolio expense estimate** 1.0% 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 s Update as at Jan : Smith & Williamson Multi-Asset Composite. **Estimated yield and Portfolio expense estimate as at Source: and Morningstar. Pie chart data as at

10 Risk rated models annual risk and return since inception Performance calculated net of underlying holding charges and platform fees and gross of Smith & Williamson fee. Including the Smith & Williamson fee will reduce returns. Source: Factset/Morningstar Direct /Smith & Williamson as at MPS inception date Discrete data can be found on slides 11 and

11 Performance - cumulative Portfolio profile Distribution Technology Risk score 3 months 3 months 6 months 6 months 1 Year 1 Year 3 Year 3 Year 5 Year 5 Year Since launch Since launch Defensive Defensive Income Balanced Income Balanced Growth Growth Dynamic Growth Performance calculated net of underlying holding charges and platform fees and gross of Smith & Williamson fee. Including the Smith & Williamson fee will reduce returns. Source: Factset as at All figures total return only. *Launch date : Smith & Williamson Multi-Asset Composite. 11

12 Performance - annual 1 Year to Portfolio profile Distribution Technology Risk score 30/06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/ /06/2014 Defensive Defensive Income Balanced Income Balanced Growth Growth Dynamic Growth Performance calculated net of underlying holding charges and platform fees and gross of Smith & Williamson fee. Including the Smith & Williamson fee will reduce returns. Source: Factset as at All figures total return only. *Launch date : Smith & Williamson Multi-Asset Composite. 12

13 S&W Range activity highlights Past 12 Months Name Reasons for trade Rationale Driver Sep 17 Reduced Vanguard US Equity Index Reducing exposure to US market on relative valuation grounds Allocation Valuation Sep 17 Sold BlackRock European Dynamic (H) Removing currency hedge on European equities due to more positive outlook Sep 17 Bought BlackRock European Dynamic Increasing European equity exposure on relative valuation grounds Allocation Macro Jan 18 Sold Jupiter Strategic Bond Reducing high yield in favour of investment grade in UK corporate credit allocation Allocation Macro Jan 18 Bought Sequoia Economic Infrastructure Income Provides attractive income profile with lower correlation to broader credit markets Allocation Macro Jan 18 Sold ishares Core FTSE 100 Reducing UK large cap equities Jan 18 Bought Miton UK Multi-Cap Income Increasing UK small cap exposure Allocation Valuation Jan 18 Reduced Goldman Sachs India Equity Profit taking after strong run, valuation becoming a concern Jan 18 Increased Pictet Russian Equities Attractively valued market compared to peers, beneficiary of firm oil price Allocation Valuation Jan 18 Reduced Baillie Gifford Japan Trust Manager retiring in May, trading at a significant premium to NAV Switch Jan 18 Bought Man GLG Japan Core Alpha Diversifying Japanese exposure to include large cap value Style Valuation Jan 18 Reduced BlackRock Smaller Companies Trust Top-slicing holding as discount to NAV has narrowed Allocation Valuation Apr 18 Sold Lombard Odier Global Corporate Bond Hedged share class, looking to diversify currency exposure Apr 18 Increased ishares $ Corporate Bond Increasing exposure to US dollar to diversify portfolio Allocation Macro Apr 18 Sold IP UK Strategic Income Disappointing performance, refocusing UK list Apr 18 Increased Miton UK Multi-Cap Income Refocusing UK list but maintaining UK dividend income Allocation Performance Apr 18 Increased Troy Income & Growth Trust Refocusing UK list but maintaining UK dividend income Apr 18 Reduced Baillie Gifford Japan Trust Profit taking as lead manager retires and trading at premium to NAV Switch Apr 18 Increased MAN GLG Japan Core Alpha Maintaining a balance between growth and value managers in Japanese allocation Style Valuation 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

14 Stock stories Sequoia Economic Infrastructure Income BH Macro Miton UK Multi-Cap Income An investment company which was launched in 2015 and focused on infrastructure-related lending opportunities. The vehicle, management by a highly experienced team, owns an internationally and sectorally diversified portfolio of public and private economic infrastructure debt positions, and targets an annual IRR of 7-8%. Infrastructure debt has the benefit of generally lower default rates and higher recovery rates versus the broader corporate bond market and therefore the returns tend to have a low correlation with wider corporate bond markets. Additionally, over half of the securities are floating rate. This is a closed-ended fund that gives exposure to the Brevan Howard Master Fund, a global macro hedge fund. 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. 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. The past few years have been a tough time for this type of strategy but we feel the current market environment could be far more suited to them. This fund invests in UK companies with a wide range of market capitalisations but has a long-term bias toward small and mid caps. It takes a differentiated approach to its peers, focusing on businesses with growing dividends rather than migrating towards the traditional large, blue chip holdings that are commonplace in UK income portfolios. An added attraction is a FTSE 100 Put option that is held which will provide downside protection to the portfolio if there is a major fall in the UK markets. Man GLG Japan Core Alpha Artemis US Extended Alpha This is a pure value Japanese equity fund with a contrarian bias at both the stock and sector level. It has been managed by Stephen Harker since its inception in Mega caps tend to be well represented; about 40% of the fund is invested in the Topix's top 30 companies and only 25% of the portfolio can be found outside the top 100 members. Stock selection is primarily driven by valuation metrics and their levels relative to historic averages. Valuation is also a key consideration in terms of the sell discipline. An open-ended fund run by Stephen Moore, with a strong track record dating back to his time at Threadneedle. He has the ability to go both long and short of stocks with the fund being run on a 130/30 basis and giving typical gross exposure of 160%. We believe the ability to profit from falling prices could add additional value at a time when the US market looks more expensive than most of its developed peers. The portfolio is well diversified with between 60 and 95 long positions and 50 and 95 shorts. 14

15 Appendix

16 Awards Citywire Wealth Manager, Investment Performance Awards Winner - Best Overall Large Firm Citywealth Magic Circle Awards Winner - Best Private Wealth Manager Investment and Wealth Management Awards Winner - Best Wealth Manager for Tax Efficiency and Advice Wealth Adviser Awards Winner - Best Multi-Family Office Asset Manager STEP award 2014/15: Winner of the Private Client Multi-Family Office Team of the Year STEP awards 2013/14: Winner of Investment Team of the Year Portfolio Adviser Wealth Management awards 2015 (Large Firm): Platinum Winners Best Balanced Portfolio Manager and Best Aggressive Portfolio Manager Portfolio Adviser Wealth Management awards 2014 (Large Firm): Platinum Winner Best Absolute Return Portfolio Manager. Gold Winner - Best Aggressive and Best Cautious Portfolio Manager 16

17 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 4 Underlying portfolio expense estimate Portfolio security count Distribution Technology; Q Capital Markets Assumption Update 2 Launch date as at (unaudited) and Factset as at (unaudited) and Morningstar as at

18 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). Matthew Finch Associate Director t: e: matthew.finch@smithandwilliamson.com Matthew joined Smith & Williamson as an Associate director in September 2017 to develop further the Managed portfolio service offered via platforms as well as our Discretionary fund management (DFM) offering. Matthew works closely with financial intermediaries based in both London and the south east. Previously Matthew was Associate director at Barings for nine years and prior to that worked at Credit Suisse Asset Management for seven years. 18

19 Disclaimer The value of investments can go down as well as up and investors may not receive back the original amount invested. 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. Defaqto is an independent financial research and software company specialising in rating, comparing and analysing financial products and funds. Issued by which is a trading name of LLP. Authorised and regulated by the Financial Conduct Authority (registration number is ). Ref: 86818hp 19