Model Portfolios Outperform S&P 500 by as Much as 6.99%
Over their first six months in existence Solyco Wealth’s four model portfolios outperformed the S&P 500 by between 349 basis points and 699 basis points, after fees, as shown in the following table. Solyco Wealth’s four model portfolios accommodate investing comfort levels ranging from Conservative through Aggressive. Each portfolio holds 33 to 35 well-research positions diversified across individual equities and fixed income-focused exchange traded funds (ETFs).
Solyco Wealth 6-Month/Since Inception Returns and Comparisons by Strategy, (9/8/21 Inception to 3/8/22)
| Strategy | Return, Net of Fee | Return, Prior of Fee | ||||
| Inception to 3/8/22 | Benchmark | Strategy +/- Benchmark | Inception to 3/8/22 | Benchmark | Strategy +/- Benchmark | |
| Conservative | -2.70% | -5.46% | 2.76% | -2.20% | -5.46% | 3.26% |
| Moderate | -1.55% | -7.60% | 6.06% | -1.04% | -7.60% | 6.56% |
| Moderately Aggressive | -0.10% | -9.14% | 9.04% | 0.41% | -9.14% | 9.54% |
| Aggressive | -3.60% | -11.28% | 7.68% | -3.10% | -11.28% | 8.18% |
| Russell 3000 Index | -8.99% | |||||
| S&P 500 | -7.09% | |||||
| MSCI World ex-US Index | -15.57% | |||||
| Bloomberg US Agg Bond Index | -4.62% | |||||
Past Performance Is Not Indicative of Future Results
Solyco Wealth used Morningstar Direct to calculate the above returns for since inception and 6-mpnth period from September 8, 2021, through March 8, 2022.
The above table reflects a 1% management fee, or 0.083% per month, equal to 0.50% for the since inception/6-month period.
Actual client investment performance likely will differ from respective model portfolio performance due to several factors including: 1) Timing of securities purchases and sales, 2) Dividend reinvestment choices, 3) Securities held outside the model portfolio, 4) Weighting differentials for certain securities relating to whole versus partial share accounting, 5) Timing and pricing of rebalancing actions, and other minor factors.
Conservative benchmark = total returns for 10.0% Russell 3000 Index, 65.0% Bloomberg US Aggregate Bond Index, and 10.0% MSCI World ex-US Index and 15.0% cash allocations.
Moderate benchmark = total returns for 22.5% Russell 3000 Index, 45.0% Bloomberg US Aggregate Bond Index, and 22.5% MSCI World ex-US Index, and 10.0% cash allocations.
Moderately Aggressive benchmark = total returns for 32.5% Russell 3000 Index, 25.0% Bloomberg US Aggregate Bond Index, and 32.5% MSCI World ex-US Index, and 10.0% cash allocations.
Aggregate benchmark = total returns for 45% Russell 3000 Index, 5.0% Bloomberg US Aggregate Bond Index, 45% MSCI World ex-US Index, and 5.0% cash allocations.
Earthstone Energy (+72.3%), Pioneer Natural Resources (+67.3%), and Schlumberger (+63.2%), from the Energy sector, paced portfolios’ performances, as they have since inception. While Total Energy (+15.3%), a Paris-based international oil & gas producer, outperformed for the first five months of the portfolios’ existences, its Russian exposure resulted in the depletion of much of its pre-February performance. An ancillary energy play with significant complementary agricultural minerals production, Sociedad Quimica y Minera de Chile (+40.7%), which ranks among the largest lithium producers in the world, also supported upside performance. Solyco Wealth maintains its Energy overweight, which it established upon inception.
Health Care marks the other overweight sector for Solyco Wealth’s portfolios. Upside holdings in this sector, AbbVie (+38.4%), Vertex Pharmaceuticals (+24.2%), CVS (+19.5%), Cigna (+6.9%), NuVasive (+7.7%), Humana (+3.0%), and Johnson & Johnson (-0.8%), each outperformed the S&P 500. The only underperforming Health Care stock in any of the portfolios, Abbott Laboratories (-8.9%) just missed the S&P 500’s -7.1% total return for the past six months.
Lockheed Martin (+30.5%), Chubb (+9.7%), Travelers (+8.0%), and Citizens Financial Group (+8.0%), round out upside performers from Solyco Wealth’s equity selections. A difficult past six months for the fixed income universe amidst inflation and the prospect of rising interest rates, upside from this asset class was more difficult to come by than in the Energy and Health Care sectors. Nonetheless, Solyco Wealth holdings Ares Capital (+6.2%) and Hercules Capital (+7.2%), which trade as equities but provide private credit services to small- and mid-cap companies aided performance for the three model portfolios that hold them.
Major detractors for Aggressive portfolio performance include Shopify (-62.2%), YETI (-39.5%), and Viatris (-31.0%). Across the portfolios, American Tower (-23.1%), Comcast (-22.8%), ServiceNow (-21.6%), and Amazon (-22.5%), presented stiff headwinds as well. Out of the fixed income universe the Vanguard Emerging Markets Government Bond ETF (-13.3%) and the iShares iBoxx $ Investment Grade Corporate Bond ETF (-8.4%) more than offset the aforementioned positive contributions from the Ares and Hercules holdings.
Given the volatility with which 2022 commenced, we thought it useful to include model portfolio performance statistics for the year to date. While outperformance versus benchmark for the four portfolios ranged from 113 basis points for the Conservative portfolios to 517 basis points for the Aggressive portfolio, the range out upside versus the S&P 500 accelerated for the year-to-date period to between 525 basis points and 814 basis points. Largely, the same stocks and sectors drove upside for the YTD period as for the since-inception period with the major impeders of performance remaining consistent across time periods as well. Winners kept winning while losers continued to lose.
Solyco Wealth Year-to-Date Returns and Comparisons by Strategy, (1/1/22 Inception to 3/8/22)
| Strategy | Return, Net of Fee | Return, Prior of Fee | ||||
| 1/1/22 to 3/8/22 | Benchmark | Strategy +/- Benchmark | 1/1/22 to 3/8/22 | Benchmark | Strategy +/- Benchmark | |
| Conservative | -4.12% | -5.25% | 1.13% | -3.94% | -5.25% | 1.31% |
| Moderate | -4.97% | -7.79% | 2.82% | -4.79% | -7.79% | 3.00% |
| Moderately Aggressive | -4.90% | -9.66% | 4.76% | -4.71% | -9.66% | 4.95% |
| Aggressive | -7.02% | -12.19% | 5.17% | -6.83% | -12.19% | 5.36% |
| Russell 3000 Index | -12.79% | |||||
| S&P 500 | -12.26% | |||||
| MSCI World ex-US Index | -13.86% | |||||
| Bloomberg US Agg Bond Index | -3.98% | |||||
Past Performance Is Not Indicative of Future Results
Solyco Wealth used Morningstar Direct to calculate the above returns for the year-to-date (1/1/2022 to 3/8/2022) returns presented above.
Fees assumed in above table reflect 1% annual management fee over 66 days (18 % of a year), or 0.18%..
Actual client investment performance likely will differ from respective model portfolio performance due to several factors including: 1) Timing of securities purchases and sales, 2) Dividend reinvestment choices, 3) Securities held outside the model portfolio, 4) Weighting differentials for certain securities relating to whole versus partial share accounting, 5) Timing and pricing of rebalancing actions, and other minor factors.
Conservative benchmark = total returns for 10.0% Russell 3000 Index, 65.0% Bloomberg US Aggregate Bond Index, and 10.0% MSCI World ex-US Index and 15.0% cash allocations.
Moderate benchmark = total returns for 22.5% Russell 3000 Index, 45.0% Bloomberg US Aggregate Bond Index, and 22.5% MSCI World ex-US Index, and 10.0% cash allocations.
Moderately Aggressive benchmark = total returns for 32.5% Russell 3000 Index, 25.0% Bloomberg US Aggregate Bond Index, and 32.5% MSCI World ex-US Index, and 10.0% cash allocations.
Aggregate benchmark = total returns for 45% Russell 3000 Index, 5.0% Bloomberg US Aggregate Bond Index, 45% MSCI World ex-US Index, and 5.0% cash allocations.