LCI Annual Strategy Review December 2020
Performance Overview
2020 was a V-shaped year for risk assets: a violent COVID drawdown in February-March followed by a powerful, liquidity-fuelled recovery led by US mega-cap and Asian (Korea, India, Japan) equity. Across the 18 LCI strategies the year’s return was carried by the equity sleeve — North American equities were the single largest contributor in every strategy — supported by a strong fixed-income core (investment-grade and government bonds positive everywhere) and, in the active-enhanced (SE) sleeves, by gold and listed alternatives. The active-enhanced sleeves beat their semi-passive (S) twins in all six families, the gold / private-equity / real-estate overlay adding a clear extra leg of return. Currency was the year’s main swing factor: CHF and EUR strength weighed on the unhedged book of the CHF and EUR sleeves, while a weaker USD was a tailwind for the USD sleeves. Relative to benchmark the picture was mixed by currency — CHF and USD strategies beat, while the EUR strategies trailed strong UBS / peer reference funds.
Performance - 2020
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 | +3.1% | +1.3% | +3.5% | +1.4% | LCI Yield CHF SE | +4.9% | +3.1% | +4.6% | +2.5% | |
| LCI Balanced CHF S | +3.7% | +0.3% | +5.1% | +2.4% | LCI Balanced CHF SE | +5.5% | +2.0% | +5.9% | +3.2% | |
| LCI Growth CHF S | +4.1% | +2.4% | +6.7% | +2.8% | LCI Growth CHF SE | +5.9% | +4.2% | +7.2% | +3.3% | |
| LCI Yield EUR S | +2.1% | -0.9% | +3.8% | +1.1% | LCI Yield EUR SE | +3.8% | +0.8% | +4.7% | +2.0% | |
| LCI Balanced EUR S | +2.5% | -3.1% | +5.3% | +2.1% | LCI Balanced EUR SE | +4.2% | -1.4% | +6.0% | +2.8% | |
| LCI Growth EUR S | +2.7% | -1.2% | +6.8% | +2.3% | LCI Growth EUR SE | +4.5% | +0.6% | +7.2% | +2.7% | |
| LCI Yield USD S | +8.9% | +2.3% | +6.8% | +1.5% | LCI Yield USD SE | +10.6% | +3.9% | +7.6% | +2.3% | |
| LCI Balanced USD S | +10.7% | -0.3% | +8.5% | +2.3% | LCI Balanced USD SE | +12.1% | +1.1% | +9.0% | +2.8% | |
| LCI Growth USD S | +12.1% | +3.2% | +10.1% | +2.2% | LCI Growth USD SE | +13.4% | +4.5% | +10.3% | +2.5% | |
Returns in reference currency; SI = since inception (annualised). Positive figures in green, negative in red. Source: La Côte Invest.
Since-Inception Cushions
Annualised since-inception returns (5 years, since Jan 2016) range from 3.5% p.a. (LCI Yield CHF S) to 10.3% p.a. (LCI Growth USD SE), rising with the risk profile and strongest in the USD families. Every one of the 18 strategies is ahead of its benchmark since inception, by roughly 111 to 330 bps p.a. — the cushion is widest in the SE sleeves and in the CHF/USD families, narrowest in the EUR Yield S sleeve.
Best and Worst Contributors
Sub-asset-class level, direction averaged across strategies; contribution varies widely by sleeve.
Best contributors: North American equities were the dominant positive contributor across all 18 strategies, followed by the broader Asia Pacific bucket (Korea, India, Japan). The investment-grade and government bond core contributed positively in every strategy, and in the SE sleeves gold was a large, consistent add (with listed real estate and private equity also positive).
Worst contributors: only two buckets were net-negative on average — UK equities and Latin American equities detracted in essentially every strategy, reflecting a weak FTSE and a hard-hit Brazil; emerging-market bonds were marginally negative in a few EUR sleeves. No major sign-flips by reference currency at the sub-class level this year.
Best and Worst Performers
Security level, 12M compounded return in each strategy’s reference currency.
Best performers: the Amundi MSCI Korea ETF was the standout holding everywhere, returning roughly +29% in CHF/EUR terms and about +42% in USD terms; US equity ETFs (Xtrackers MSCI USA, iShares Core S&P 500) and, in the SE sleeves, gold (+14% to +24%) rounded out the top of the list.
Worst performers: the iShares MSCI Brazil ETF was the weakest position in every strategy (about -20% in USD to -27% in CHF/EUR), with the Amundi MSCI Indonesia ETF and the SPDR FTSE UK All-Share ETF also among the laggards. No positions were excluded — there were no matured/expired structured products or bad-print lines in the 12M window.
FX Impact
Currency was a material drag for the CHF and EUR sleeves and a tailwind for the USD sleeves. CHF strength cost the CHF strategies roughly -1.4% to -3.0% over the year (USD the largest single drag); EUR strength cost the EUR strategies about -2.5% to -4.1% (again USD-driven). For the USD sleeves a weaker dollar added roughly +0.6% to +2.4%, led by EUR exposure. The S sleeves, with larger unhedged blocks, generally saw a bigger FX swing than their SE twins.
Portfolio Changes
Sub-asset-class allocations were held at their strategic targets through the year: the weight of every sub-asset class at end-December 2020 matched its start-of-year weight, so there was no material net rotation across the 12M window. Activity over the year was at the security-selection and rebalancing level (and, in the SE sleeves, the standing gold / private-equity / real-estate overlay) rather than in tactical asset-allocation shifts.
Editorial Note
A textbook risk-on recovery year in which staying invested and the equity/US-Korea tilt paid off, while the SE overlay (gold and listed alternatives) delivered the year’s clearest source of relative outperformance over the S sleeves. The one soft spot was the EUR families, which trailed strong UBS / peer benchmarks despite solid absolute returns. Five years in, all 18 strategies remain comfortably ahead of benchmark on an annualised basis.
