LCI Annual Strategy Review December 2019
Performance Overview
2019 was a broadly risk-on year and every LCI strategy posted a double-digit or high-single-digit gain. Equity was the dominant engine — US and European large caps led, with the S&P 500 complex and Euro Stoxx names among the strongest single positions — while credit (corporates, high yield, EM debt) added a steady second leg as spreads tightened and rates fell. The gold and real-assets overlay in the SE sleeves contributed a further leg of return. Government bonds were the only consistent drag, contributing roughly flat to mildly negative. Currency was a tale of two reference currencies: EUR-based sleeves enjoyed a USD tailwind, CHF-based sleeves gave back ~40–70 bps to franc strength, and USD sleeves were broadly currency-neutral.
Performance - 2019
Semi-Passive (S) | Active-Enhanced (SE)
| Semi-Passive (S) | Active-Enhanced (SE) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Strategy | 12M | vs Bench | p.a. SI | vs Bench SI | Strategy | 12M | vs Bench | p.a. SI | vs Bench SI | |
| LCI Yield CHF S | +9.1% | +0.4% | +3.6% | +1.5% | LCI Yield CHF SE | +10.6% | +1.8% | +4.5% | +2.3% | |
| LCI Balanced CHF S | +14.2% | +2.7% | +5.5% | +3.0% | LCI Balanced CHF SE | +14.7% | +3.2% | +6.0% | +3.5% | |
| LCI Growth CHF S | +19.4% | +3.6% | +7.4% | +2.9% | LCI Growth CHF SE | +18.8% | +3.1% | +7.5% | +3.1% | |
| LCI Yield EUR S | +12.2% | +3.2% | +4.2% | +1.6% | LCI Yield EUR SE | +12.8% | +3.8% | +4.9% | +2.3% | |
| LCI Balanced EUR S | +17.5% | +5.4% | +6.0% | +3.5% | LCI Balanced EUR SE | +17.0% | +4.9% | +6.4% | +3.8% | |
| LCI Growth EUR S | +23.0% | +7.7% | +7.9% | +3.2% | LCI Growth EUR SE | +21.5% | +6.2% | +7.9% | +3.2% | |
| LCI Yield USD S | +14.7% | +2.2% | +6.3% | +1.3% | LCI Yield USD SE | +14.8% | +2.3% | +6.9% | +1.9% | |
| LCI Balanced USD S | +18.8% | +4.0% | +8.0% | +3.0% | LCI Balanced USD SE | +18.1% | +3.3% | +8.3% | +3.3% | |
| LCI Growth USD S | +22.8% | +4.1% | +9.6% | +2.0% | LCI Growth USD SE | +21.3% | +2.6% | +9.6% | +2.0% | |
Returns in reference currency; SI = since inception (annualised). Positive figures in green, negative in red. Source: La Côte Invest.
Since-Inception Cushions
Four full years in (since Jan 2016), every strategy is comfortably ahead of its benchmark on an annualised basis. The since-inception annualised edge ranges from roughly +1.3% p.a. (Yield USD S) to +3.8% p.a. (Balanced EUR SE), with the SE (active-enhanced) sleeve ahead of its S (semi-passive) twin in every family. Annualised returns since inception span +3.6% p.a. (Yield CHF S) to +9.6% p.a. (Growth USD). The cushion is widest in the Balanced sleeves and narrowest in the USD Yield pair, where the benchmark itself returned strongly.
Best and Worst Contributors
(Sub-asset-class level, direction averaged across strategies; contribution varies widely by sleeve — figures omitted because contribution = weight x return and is dominated by the high-equity Growth sleeves.)
Best contributors: North American Equities was the single largest contributor in essentially every strategy, followed by Eurozone Equities; in the SE sleeves Gold was consistently among the top three. Asia Pacific Equities, Swiss Equities and the corporate/high-yield credit blocks were reliably additive across the board.
Worst contributors: nothing was a meaningful detractor in 2019 — even the weakest sub-asset classes were only marginally negative or flat. Government Bonds were the softest line, contributing roughly flat to slightly negative in the CHF sleeves, and short-dated Swiss and EUR government paper was the only place the year cost a few basis points.
Best and Worst Performers
Best performers: US and Swiss equity ETFs led — Xtrackers MSCI USA (+35.0%), UBS MSCI Switzerland 20/35 (+34.6%) and iShares Core S&P 500 (+33.7%) topped the held book, with iShares MSCI Canada (+29.6%) and Euro Stoxx 50 (+29.5%) close behind.
Worst performers: in a year where almost everything rose, the “worst” lines were simply the lowest-returning defensive holdings — short-dated Swiss domestic government bonds (-0.6%) and sustainable development bank bonds (-0.4%) — not genuine losers. (Zero-weight placeholder lines and any return below -35% were excluded as bad prints; none were present this year.)
FX Impact
CHF sleeves: franc strength was a headwind, costing roughly -0.4% to -0.7%, driven mainly by unhedged USD (~-0.3% to -0.4%) and EUR exposure. EUR sleeves: the euro’s weakness was a tailwind of roughly +0.8% to +1.6%, almost entirely from USD-denominated holdings. USD sleeves: broadly currency-neutral (within +/-0.1%), with a small EUR drag offset by minor JPY/CHF/GBP gains.
Portfolio Changes
The most visible rotation occurred at the start of the window (January 2019), as the models moved out of broad Global Equity placeholders into specific regional sleeves — adding Asia Pacific, Latin American and other regional equity exposure — while keeping overall equity weight broadly stable. Within fixed income, allocations stayed close to target, with only minor rebalancing across corporate, high-yield and government blocks. The semi-passive S sleeves saw little to no change through the year.
Editorial Note
2019 was an unusually friendly regime: equities and bonds rose together as central banks pivoted dovish, so the main job was to stay invested and let the equity overweight work. The active-enhanced SE sleeves earned their keep through the gold and real-assets overlay and tighter regional equity selection, beating their semi-passive twins in every family. The standout caution for the record is how little the defensive bond core contributed — a reminder that the since-inception cushion was built in years like this one, and that the next regime is unlikely to be as generous.
