Model Portfolios Outdistance Benchmarks in 1Q22 and Since Inception
As exhibited in the following data table, Solyco Wealth’s four model portfolios, which offer investors solutions across the risk spectrum, outperformed their benchmarks after fees in 1Q22 and since inception (9/8/2021). Performance for the Moderate and Moderately Aggressive models exceeded that of the S&P 500 since inception while performances for each of the for portfolios after fees exceeded that of the S&P 500 since the first of the year.
Solyco Wealth Model Portfolio Performance, After Fees, Since Inception and 1Q22
| Period Performance | Model Portfolios | Major Indices | ||||
| Conservative | Moderate | Moderately Aggressive | Agressive | S&P 500 | Bloomberg Fixed Income ETF | |
| Since Inception | -1.35% | 1.64% | 4.97% | 0.92% | 1.03% | -6.48% |
| vs. Benchmark | 3.67% | 6.39% | 9.23% | 4.89% | ||
| vs. S&P 500 | -2.38% | 0.61% | 3.94% | -0.11% | ||
| Year-to-Date/1Q22 | -2.83% | -0.20% | 1.83% | -1.52% | -4.84% | -5.80% |
| vs. Benchmark | 1.98% | 4.76% | 6.68% | 3.47% | ||
| vs. S&P 500 | 2.02% | 4.65% | 6.67% | 3.32% | ||
| Equity Portion Since Inception | 3.57% | 8.25% | 8.97% | 2.00% | ||
| vs. S&P 500 | 2.54% | 7.23% | 7.94% | 0.97% | ||
| Fixed Income Since Inception | -2.53% | -3.37% | -0.45% | -6.45% | ||
| FI vs. B-berg FI ETF | 3.95% | 3.11% | 6.04% | 0.04% | ||
| Equity Portion YTD/1Q22 | -3.12% | 3.49% | 3.78% | -1.11% | ||
| vs. S&P 500 | 1.73% | 8.33% | 8.63% | 3.74% | ||
| Fixed Income YTD/1Q22 | -2.73% | -3.39% | -1.28% | -5.70% | ||
| FI vs. B-berg FI ETF | 3.07% | 2.40% | 4.51% | 0.10% | ||
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 31, 2022.
The above table reflects a 1% annual management fee, or 0.56% since exception and 0.24% year-to-date through 3/31/2022.
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.
Relatively strong equity performances benefited Solyco Wealth’s model portfolios across all four strategies with stock picks in the Moderately Aggressive and Moderate models performing particularly well. Fixed income allocations, generally, remained challenged in both the since inception and the 1Q22 time periods.
In the Aggressive model allocations to Shopify, YETI, and Viatris hampered performance while positive contributions from Earthstone, Schlumberger, Sociedad de Quimica y Minera, and Vertex Pharma, offset those headwinds. In the Moderately Aggressive portfolio positive contributions from Schlumberger, Pioneer Natural Resources, Sociedad de Quimica y Minera, and Vertex Pharma, easily made up for the downside moves from Nike, Comcast, Autodesk, and American Tower. Similarly, the Moderate model experienced negative contributions from its holdings in Comcast, Taiwan Semi, and Blackrock, that Schlumberger, Pioneer Natural and Lockheed Martin more than made up for. Unfortunately, the 20% overall allocation to equities in the Conservative model proved insufficient to offset the fixed income headwinds presented from its longer duration and international debt allocations despite outsized upside benefits from Lockheed Martin, Schlumberger, and TotalEnergy.
Volatility probably will remain elevated as compared to 4Q21 until the Ukraine-Russia situation concludes. No guesses as to when that happens, however… Barring a significant escalation of the conflict, we anticipate asset market volatility not approaching the levels experienced in late February and early March, though. The fact that the Fed commenced their cycle of interest rate increases and that the rate of increase of consumer expenditures appeared to slow, if only modestly, late in 1Q22, lend some confidence to this expectation for reduced volatility.
For the time being remaining overweight Energy and Health Care equities appears to be a good idea. Potentially adding to Industrials stocks if inflation actually slows, supply chains loosen up, and infrastructure spending rotates up the Federal agenda presents a possibility for additional capital deployment heading into Summer 2022 as well. Increased fixed income and cash holdings appear to only be solid investing ideas if the Ukraine situation re-escalates or another crisis arises, which we decidedly hope is not the case.
As always, please give us a call if you’d like some help defining and meeting your financial and investing goals: (713) 444-3560.