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Smith & Williamson Managed Portfolio Service
Core Range - Investment Review
Q2 2020
For professional advisers’ use only
Please read the important information section
2
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Investment outlook
After very heavy falls in March 2020, global stock markets rallied strongly over
the three months to the end of June 2020. Moves to ease COVID-19 lockdowns
across the world, in combination with unprecedented fiscal and monetary support
from governments and central banks, have given markets a degree of confidence
that the global economy could rebound quite quickly – this is labelled by some
analysts as a ‘V-shaped’ recovery. It is important to remember that equities are a
forward-looking asset class and historically they have tended to bottom and
recover ahead of any upturn in the ‘real’ economy.
The recovery in risk assets has been broad based over the last three months:
Asset class returns, 3 months to 30 June 2020 Global equities – MSCI ACWI* (GBP) 18.7%
UK equities** (GBP) 8.8%
Gold (dollar spot price, USD) 10.6%
iBoxx Sterling Corporate Bond Index (GBP) 8.2%
ICE US High Yield Index (USD) 8.0%
Although the rally in stock markets has been encouraging, many equity markets
remain below their previous highs – for example, in the UK, the stock market is
still down by 19.6% for 2020 to date. However, it has been encouraging to see
other indices (such as the S&P 500 in the US) return to pre-COVID-19 levels.
Fixed income markets have been resilient over the quarter and the
calendar year to date, albeit underperforming the strong gains
registered by equities over the second quarter. In part, this resilience
reflects the fact that high-quality government bonds tend to benefit
from ‘safe haven’ flows whenever riskier assets such as equities are
volatile. This is one of the many reasons why we advocate portfolio
diversification. However, open-ended bond purchases by the US central
bank and expectations that interest rates will remain low for the next
few years have also helped to buoy the asset class over 2020 to date.
Corporate credit markets, which are riskier than high-quality
government bond markets, have also been boosted by the various policy
measures – including moves by the US central bank to buy high yield or
‘junk bonds’. It is hoped that very low interest rates, combined with
extensive and ongoing central bank buying of bonds, will keep corporate
borrowing costs low for companies, thus fostering an economic recovery
over the longer term. In commodity markets, oil has enjoyed a rally from
its mid-April lows. However, concerns remain that the combination of
COVID-19 (and the associated reduction in global travel) and the need to
address climate change could mean that demand for oil and related
products may not return to previous levels.
Source: Refinitiv Datastream/Smith & Williamson Investment Management LLP, data as at
30 June 2020 *All Country World Index **MSCI UK Investable Market Index
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Investment outlook
Even allowing for the second-quarter rally in equities, we are aware
that valuation reports do not all make pleasant reading, especially if
one looks at the start of 2020 level. However, please be assured that
we are working extremely hard to support all our clients. We continue
to use the decades of experience and considerable insight of our
investment team to help negotiate difficult markets.
Whatever the longer-term ramifications of the COVID-19 pandemic, we
believe firmly that active management and close coordination with our
clients will help to ensure we are well positioned to meet your needs
in the months and years to come.
Source: Refinitiv Datastream/Smith & Williamson Investment Management LLP, data as at 30 June 2020 *All
Country World Index **MSCI UK Investable Market Index
Stock markets are optimistic that a new business cycle has started
after a short, sharp recession. There is some evidence of this
happening with consumers spending in the shops again following the
easing of restrictions. For instance, UK underlying real retail sales
(excluding petrol and diesel) rebounded by a record +10% in the month
of May, after a -15% collapse in April, which means that shops have
recouped c.45% of revenue lost during COVID-19.
We see three reasons to believe that this business cycle could be
extended beyond an initial bounce in growth. First, the pandemic was
an exogenous event, rather than a domestic shock triggered by
economic imbalances, even if revenues in selected sectors such as
travel could take years to recover to pre-COVID-19 levels. Second,
deleveraging pressures are likely to be moderate given that the share
of global household liabilities in the economy has been lowered since
the 2008 Global Financial Crisis. Moreover, the US Federal Reserve’s
corporate credit facility launched in March reduces the need for firms
to trim debt levels. Third, significant monetary and fiscal policy,
coordinated between central banks and governments, provides an
effective means to boost the recovery. We estimate that the
combined monetary and fiscal stimulus of the major economies
announced so far is worth around 26% of GDP.
Given the disproportionate impact of COVID-19 on lower-income
households, combined with high unemployment rates, continued
accommodative policy support is likely to be necessary. With so much
economic uncertainty, including a host of political and geopolitical
risks, the recovery is unlikely to be smooth sailing. However, on
balance, we believe ongoing central bank and government support
should mitigate macro risks in the second half of 2020 to provide uplift
for equities.
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Source: Smith & Williamson Investment Management and Factset as at 30.06.20
David Amphlett-Lewis
Head of Passive Research,
Partner
James Burns
Head of Investment
Companies Research,
Partner
Genevra Banszky
von Ambroz, CAIA
Chair of Collective
Investments Group
Partner
The MPS team
Open Ended Funds
Investment Companies
Distribution Technology
Risk Graded
Strategic Asset
Allocation
Smith & Williamson
Research
Tactical Asset
Allocation
Security
Selection
Passives
The Process
Your Smith & Williamson Portfolio
The Result
Supported by a network of over 55
investment professionals responsible for
investment research.
Investment process
Past performance is not a guide to future performance.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Defensive DefensiveIncome
BalancedIncome
BalancedGrowth
Growth DynamicGrowth
Cash Bonds - Sovereign
Bonds - Index Linked Bonds - Corporate
Equities - Developing International Equities - Developed International
Equities - UK Alternatives
Property
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
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.
Defensive Portfolio Profile
Estimated yield** 2.17%
Portfolio expense estimate** 0.52%
Product mixAsset breakdownPast performance is not a guide to future performance.
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 30.06.20 . Benchmarks Update as at Jan 2019. Benchmark:
Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at 30.06.20 Source:
Smith & Williamson Investment Management, Financial Express and Morningstar. Pie chart data as at 30.06.20
% r
etu
rn
9.7%
52.2%
29.3%
8.8%
Cash Bonds Equities Alternatives
9.7%
22.5%
55.0%
12.8%
Cash Passive OEIC / Unit Trust Closed Ended
Asset Class Portfolio (%) Benchmark (%) Active (%)
Cash 9.7 15.0 -5.3
Sovereign 7.2 10.0 -2.8
Index Linked 10.5 8.0 2.5
UK Corporate 19.1 20.0 -0.9
Global High Yield 2.0 0.0 2.0
International Bonds 13.4 15.0 -1.6
Property 3.0 5.0 -2.0
Other Alternatives 5.8 0.0 5.8
UK 13.9 14.0 -0.1
North America 9.7 8.0 1.7
Europe 0.0 0.0 0.0
Japan 4.3 5.0 -0.7
Pacific 1.3 0.0 1.3
S&W 3 - Defensive portfolio profile
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Product mixAsset breakdown
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.
Defensive Income Portfolio Profile
Estimated yield** 2.50%
Portfolio expense estimate** 0.62%
Past performance is not a guide to future performance.
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 30.06.20. Benchmarks Update as at Jan 2019. Benchmark:
Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at 30.06.20
Source: Smith & Williamson Investment Management, Financial Express and Morningstar. Pie chart data as at 30.06.20.
% r
etu
rn
4.3%
40.6%
46.3%
8.7%
Cash Bonds Equities Alternatives
4.3%
14.2%
64.4%
17.1%
Cash Passive OEIC / Unit Trust Closed Ended
Asset Class Portfolio (%)
Benchmark
(%) Active (%)
Cash 4.3 10.0 -5.7
Sovereign 3.0 5.0 -2.0
Index Linked 9.6 8.0 1.6
UK Corporate 18.5 20.0 -1.5
Global High Yield 2.3 0.0 2.3
International Bonds 7.2 8.0 -0.8
Property 3.2 5.0 -1.8
Other Alternatives 5.6 0.0 5.6
UK 17.7 18.0 -0.3
North America 13.1 12.0 1.1
Europe 4.9 5.0 -0.1
Japan 5.4 5.0 0.4
Pacific 5.2 4.0 1.2
S&W 4 - Defensive Income portfolio profile
7
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
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.
Balanced Income Portfolio Profile
Estimated yield** 2.44%
Portfolio expense estimate** 0.72%
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 30.06.20. Benchmarks Update as at Jan 2019. Benchmark:
Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at 30.06.20
Source: Smith & Williamson Investment Management, Financial Express and Morningstar.. Pie chart data as at 30.06.20.
Product mixAsset breakdownPast performance is not a guide to future performance.
% r
etu
rn
1.9%
25.8%
64.3%
7.9%
Cash Bonds Equities Alternatives
1.9%10.0%
69.7%
18.4%
Cash Passive OEIC / Unit Trust Closed Ended
Asset Class Portfolio (%)
Benchmark
(%) Active (%)
Cash 1.9 5.0 -3.1
Sovereign 0.0 3.0 -3.0
Index Linked 4.7 4.0 0.7
UK Corporate 15.1 18.0 -2.9
Global High Yield 1.9 0.0 1.9
International Bonds 4.2 4.0 0.2
Property 3.8 5.0 -1.2
Other Alternatives 4.1 0.0 4.1
UK 20.8 22.0 -1.2
North America 19.6 18.0 1.6
Europe 5.2 5.0 0.2
Japan 7.4 6.0 1.4
Pacific 5.1 5.0 0.1
Emerging Markets 6.2 5.0 1.2
S&W 5 – Balanced Income portfolio profile
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
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.
Balanced Growth Portfolio Profile
Estimated yield** 2.09%
Portfolio expense estimate** 0.75%
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 30.06.20. Benchmarks Update as at Jan 2019. Benchmark:
Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at 30.06.20
Source: Smith & Williamson Investment Management, Financial Express and Morningstar. Pie chart data as at 30.06.20.
Product mixAsset breakdownPast performance is not a guide to future performance.
% r
etu
rn
1.5%15.3%
77.0%
6.2%
Cash Bonds Equities Alternatives
1.5%9.8%
69.9%
18.7%
Cash Passive OEIC / Unit Trust Closed Ended
Asset Class Portfolio (%) Benchmark (%) Active (%)
Cash 1.5 4.0 -2.5
Sovereign -- -- --
Index Linked 2.1 0.0 2.1
UK Corporate 9.4 10.0 -0.6
Global High Yield 1.8 3.0 -1.2
International Bonds 1.9 4.0 -2.1
Property 2.4 5.0 -2.6
Other Alternatives 3.8 0.0 3.8
UK 23.8 25.0 -1.2
North America 20.6 19.0 1.6
Europe 6.1 6.0 0.1
Japan 8.3 7.0 1.3
Pacific 9.9 8.0 1.9
Emerging Markets 8.4 9.0 -0.6
S&W 6 – Balanced Growth portfolio profile
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
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.
Growth Portfolio Profile
Estimated yield** 2.00%
Portfolio expense estimate** 0.82%
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 30.06.20. Benchmarks Update as at Jan 2019. Benchmark:
Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at 30.06.20
Source: Smith & Williamson Investment Management, Financial Express and Morningstar. Pie chart data as at 30.06.20.
Product mixAsset breakdownPast performance is not a guide to future performance.
% r
etu
rn
0.6% 3.4%
90.3%
5.7%
Cash Bonds Equities Alternatives
0.6% 7.1%
68.1%
24.2%
Cash Passive OEIC / Unit Trust Closed Ended
Asset Class Portfolio (%)
Benchmark
(%) Active (%)
Cash 0.6 0.0 0.6
Sovereign -- -- --
Index Linked -- -- --
UK Corporate 1.9 0.0 1.9
Global High Yield 1.6 4.0 -2.4
International Bonds 0.0 3.0 -3.0
Property 2.6 5.0 -2.4
Other Alternatives 3.1 0.0 3.1
UK 31.4 35.0 -3.6
North America 17.0 15.0 2.0
Europe 6.5 6.0 0.5
Japan 9.6 8.0 1.6
Pacific 14.0 12.0 2.0
Emerging Markets 11.7 12.0 -0.3
S&W 7 – Growth portfolio profile
10
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
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.
Dynamic Growth Portfolio Profile
Estimated yield** 1.91%
Portfolio expense estimate** 0.85%
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 30.06.20. Benchmarks Update as at Jan 2019. Benchmark:
Smith & Williamson Multi-Asset Composite Benchmark. **Estimated yield and Portfolio expense estimate (%) as at 30.06.20
Source: Smith & Williamson Investment Management, Financial Express and Morningstar. Pie chart data as at 30.06.20.
Product mixAsset breakdownPast performance is not a guide to future performance.
% r
etu
rn
0.5% 3.5%
93.6%
2.4%
Cash Bonds Equities Alternatives
0.5% 6.0%
63.9%
29.6%
Cash Passive OEIC / Unit Trust Closed Ended
Asset Class Portfolio (%)
Benchmark
(%) Active (%)
Cash 0.5 0.0 0.5
Sovereign -- -- --
Index Linked -- -- --
UK Corporate 1.2 0.0 1.2
Global High Yield 1.3 4.0 -2.7
International Bonds 1.0 0.0 1.0
Property 2.4 5.0 -2.6
Other Alternatives -- -- --
UK 19.4 20.0 -0.6
North America 12.9 10.0 2.9
Europe 6.5 6.0 0.5
Japan 7.9 6.0 1.9
Pacific 22.2 23.0 -0.8
Emerging Markets 24.7 26.0 -1.3
S&W 8 – Dynamic Growth portfolio profile
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Risk rated models annual risk and return since inception
Source: Factset/Morningstar Direct /Smith & Williamson as at 30.06.20.
MPS inception date 30.09.12.
Discrete data can be found on slides 12 and 13.
Performance calculated net of underlying holding charges and platform fees and gross of Smith & Williamson fee.
Including the Smith & Williamson fee will reduce returns. Past performance is not a guide to future performance.
%
12
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Performance - cumulative
Source: Factset as at 30.06.20
All figures total return only. *Launch date 30.09.12.
Benchmark: Smith & Williamson Multi-Asset Composite Benchmark.
Performance calculated net of underlying holding charges and platform fees and gross of Smith & Williamson fee.
Including the Smith & Williamson fee will reduce returns. Past performance is not a guide to future performance.
3 months 6 months 1 Year 3 Year 5 Year Since
launchBenchmar
k (%)
Benchmar
k (%)
Benchmar
k (%)
Benchmar
k (%)
Benchmar
k (%)
Benchmark
(%)
Defensive 3 6.57 6.63 -0.32 1.19 2.01 3.03 12.75 12.68 31.93 33.37 62.13 60.61
Defensive
Income4 8.67 9.13 -2.32 -0.63 0.51 1.80 12.52 13.11 31.78 36.43 76.79 71.97
Balanced
Income5 11.05 11.28 -3.84 -2.42 -0.23 0.59 12.41 12.74 36.12 40.24 84.58 78.86
Balanced
Growth6 13.91 12.67 -4.62 -4.20 -0.34 -0.93 14.16 11.32 41.70 40.81 99.33 80.95
Growth 7 15.00 13.47 -6.01 -6.78 -1.30 -3.54 13.12 9.25 43.72 40.34 105.86 79.02
Dynamic
Growth8 16.65 15.51 -6.46 -4.92 -2.29 -1.76 12.87 11.52 46.94 45.74 105.61 79.70
3 Year (%)
Since
launch
(%)
Portfolio
profile
Distribution
Technology
Risk score
3 months
(%)
6 months
(%)1 Year (%) 5 Year (%)
13
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Performance - annual
Source: Factset as at 30.06.20
All figures total return only. *Launch date 30.09.12.
Benchmark: Smith & Williamson Multi-Asset Composite Benchmark.
Performance calculated net of underlying holding charges and platform fees and gross of Smith & Williamson fee.
Including the Smith & Williamson fee will reduce returns. Past performance is not a guide to future performance.
30/06/2020 30/06/2019 30/06/2018 30/06/2017 30/06/2016
Benchmark
(%)
Benchmark
(%)
Benchmark
(%)
Benchmark
(%)
Benchmark
(%)
Defensive 3 2.01 3.03 6.07 5.56 4.20 3.61 9.74 7.06 6.63 10.55
Defensive
Income4 0.51 1.80 5.73 5.86 5.89 4.95 12.17 11.04 4.41 8.63
Balanced
Income5 -0.23 0.59 5.29 5.67 7.02 6.07 16.58 14.45 3.87 8.69
Balanced
Growth6 -0.34 -0.93 4.51 5.40 9.60 6.61 20.79 17.37 2.76 7.77
Growth 7 -1.30 -3.54 3.82 5.28 10.40 7.58 23.94 20.21 2.51 6.85
Dynamic
Growth8 -2.29 -1.76 5.17 5.39 9.83 7.71 25.74 23.08 3.54 6.17
30/06/2017 30/06/2016
1 Year to
Portfolio
profile
Distribution
Technology
Risk score
30/06/2020 30/06/2019 30/06/2018
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
S&W Range activity highlights – Past 12 Months
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: Smith & Williamson Investment Management as at 30.06.20
Name Reasons for trade Rationale Driver
Apr ‘20 Reduced AXA Sterling Index-Linked Held up well in sell-off, UK Linkers looking expensiveAllocation Macro
Apr ‘20 Bought iShares USD Corporate Bond USD corporate bonds looking attractive due to Federal Reserve bond buying programme Allocation Macro
Apr ‘20 Increased BlackRock Corporate Bond Recycling proceeds from index-linked bonds, attractive income levelsAllocation Macro
Apr ‘20 Sold UK Commercial Property REIT Outlook for commercial property uncertain, dividend suspended and NAV growth unlikelyAllocation Macro
Apr ‘20 Bought NB Uncorrelated Strategies Proceeds from BH Macro and part of property reallocation- bolstering hedge exposure Allocation Manager
Apr ‘20 Reduced BH Macro Profit taking after a very strong run in the market sell-off
Apr ‘20 Sold Man GLG Japan Core Alpha Exiting large cap value Japan equities- outlook better for growth style Switch
stylePerformance
Apr ‘20 Bought Jupiter Japan Income Proceeds from GLG Japan Core Alpha- offering a mixture of value and growth
Dec ’19 Reduced BlackRock Smaller Companies Profit taking on investment trust trading at a premium to net asset value Allocation Performance
Dec ’19 Bought SSGA SPDR Barclays Global Bond ETF Diversifying global bond currency exposure Allocation Macro
Dec ’19 Sold iShares USD Corporate Bond ETF Reducing exposure to the US dollar
Dec ’19 Bought Liontrust Special Situations Increasing market sensitivity to the UK equity allocationSwitch Style Macro
Dec ’19 Sold Janus Henderson UK Absolute Return Exiting low beta holding within UK equity allocation
Sep ’19 Sold Kames Investment Grade Bond Further management change reiterates concernsAllocation Manager
Sep ’19 Increased BlackRock Corporate Bond Reallocating capital from Kames into preferred alternative manager
Sep ‘19 Reduced Man GLG Japan Core AlphaReducing to recycle capital into higher yielding, more flexible alternative
Switch Style ManagerSep ‘19 Reduced JP Morgan Japan
Sep ‘19 Bought Jupiter Japan Income Introducing high yielding Japanese exposure
Sep ‘19 Reduced Miton Multi Cap Income Reducing position to manage liquidity concerns in small capSwitch Style Manager
Sep ‘19 Increased Man GLG Undervalued Assets Maintaing domestic UK exposure in larger cap names
15
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Stock stories
Past performance is not a guide to future performance.
iShares $ Corporate Bond
This Exchange Traded Fund offers diversified exposure to investment grade corporate bonds denominated in Dollars. It
aims to track the performance of the Markit iBoxx USD Liquid Investment Grade Index which itself measures the
performance of the most liquid US Dollar denominated, fixed rate, investment grade corporate bonds. There is a cap on
each individual issuer of 3% meaning the portfolio will be well diversified at all times. The Fund will not take any
exposure to currencies other than the US Dollar.
NB Uncorrelated Strategies
This open-ended fund run by Fred Ingham is focused on generating returns that are uncorrelated to equity and fixed
income markets. This is achieved through diversified hedge fund exposure by employing a multi-manager, multi-strategy
approach. Within the strategies, Neuberger not only seek managers who have exhibited minimal correlation to traditional
asset classes but also low correlation to each other. Neuberger have also negotiated an attractive fee arrangement, with
the underlying managers only receiving a fee based on performance (20% of gains over their individual high water mark),
meaning the Fund does not pay during periods of poor performance. The manager retains ultimate independent control
over the underlying hedge fund sub-advisors’ accounts giving the ability for rapid withdrawal or reallocation of capital
without the risk of suspension or dissent from the underlying hedge fund.
Ninety One UK Alpha
This open-ended fund run by Simon Brazier is a core UK equity proposition. The portfolio will have at least 50% exposure
to the FTSE 100 at all times through a diversified list of 50-90 holdings. Stock selection drives the process with an
emphasis on identifying company management able to re-invest retained earnings profitably, alongside a view that short-
term volatility in the market can lead to long-term valuation opportunities. There is no particular style bias, with the
portfolio containing a mixture of both value and growth stocks.
Artemis US Extended Alpha
An open-ended fund run by Will Warren, with a strong track record in both strong and weak markets. 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.
Jupiter Japan Income
This open-ended fund aims to provide long-term capital and dividend growth from companies that perform well regardless
of the macroeconomic environment. Growth and valuation considerations are evenly balanced and we find this flexibility
attractive. The philosophy of manager Dan Carter is focused on corporate governance improvements: the fund aims to
benefit from the return of capital to shareholders from cash generative (and cash heavy) companies, as management
teams become more shareholder friendly and accountable. There is a strong bias towards lower-beta domestically focused
stocks with competitive advantages and significant barriers to entry. The portfolio is typically fairly concentrated with
between 40 and 50 positions and tends to have a high active share.
Source: Smith and Williamson 30th June 2020
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
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. Smith & Williamson Investment Management
documents may contain future statements which are based on our current opinions, expectations and projections. Smith & Williamson Investment Management
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, Smith & Williamson Investment Management 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.
Smith & Williamson Investment Management LLP. Authorised and regulated by the Financial Conduct Authority (registration number is 580531).
Ref: 103420lw
Important Information
Appendix
18
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Awards
Past performance is not a guide to future performance.
Charity Times Awards 2018 – Winner, Investment Management
Citywealth Magic Circle Awards 2017 - Winner - Best Private Wealth Manager
Citywire Wealth Manager, Investment Performance Awards 2017 - Winner - Best Overall Large Firm
Investors Chronicle, Investment & Wealth Management Awards 2016 - Winner - Best Wealth Manager for Tax Efficiency and Advice
Private Asset Managers (PAM) Awards 2018 – Winner Investment Performance, Defensive Portfolios
Portfolio Adviser Wealth Management awards 2015 (Large Firm): Platinum Winners – Best Balanced Portfolio Manager and Best Aggressive Portfolio Manager
Spear’s Wealth Management Awards 2018 – Family Office Services Provider of the Year
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
Wealth Adviser Awards 2018 – Best High Net Worth Team
Wealth Adviser Awards 2018 – Best Wealth Manager - Charities
Wealth Adviser Awards 2015 - Winner - Best Multi-Family Office Asset Manager
Past performance is not a guide to future performance.
19
Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
MPS Range characteristics
3 –
Defensive
4 –
Defensive Income
5 –
Balanced Income
6 –
Balanced Growth
7 –
Growth
8 –
Dynamic Growth
S&W MAC allocation equity
weight27 44 61 74 88 91
DT long-term volatility
estimate (%) 1 5.5 7.4 9.6 11.6 13.7 15.8
Multi-Asset Composite
volatility (since launch) (%) 2,
3
4.9 6.0 7.4 8.8 10.2 11.2
S&W volatility (since launch)
(%) 2, 34.5 5.9 7.3 8.9 10.0 11.1
Multi-Asset Composite
volatility (1 Year) (%)37.2 9.7 12.1 13.8 15.7 16.4
S&W portfolio volatility (1
year) (%) 37.3 9.8 12.6 15.3 16.8 18.4
Underlying portfolio yield
estimate 42.17 2.50 2.44 2.09 2.00 1.91
Underlying portfolio expense
estimate (%) 40.52 0.62 0.72 0.75 0.82 0.85
Portfolio security count 3 26 31 30 31 30 30
1 Distribution Technology; Q2 2016 Capital Markets Assumption Update 2 Launch date as at 30.09.2012 3 Smith & Williamson Investment Management (unaudited) and Factset as at 30.06.20. 4 Smith & Williamson Investment Management (unaudited) and Morningstar as at 30.06.20.
Past performance is not a guide to future performance.
Past and predicted performance is not a guide to future performance.
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Smith & Williamson Investment Management
MPS Q2 2020 – Investment Review
Lucy MitchellAssociate Director
t: 020 7131 4811
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).
Contact us
Mickey MorrisseyPartner, Head of Retails Sales
t: 020 7131 4693
Mickey joined Smith & Williamson in December 2012 as
Head of UK IFA Sales and was appointed Head of
Distribution in July 2014. 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 PolnikSenior Business Development Manager
t: 020 7131 4628
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.
Matthew FinchAssociate Director
t: 020 7131 8975
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.