LCI Annual Strategy Review December 2023
Performance Overview
2023 was a strongly equity-driven year across all LCI multi-asset strategies. Global equity markets rebounded sharply after the 2022 selloff, led by North American equities (S&P 500 +26%) and Eurozone equities. Fixed income also recovered partially from 2022 losses, with high yield and corporate bonds contributing meaningfully, though gains were modest compared to equities. Currency effects were divergent: CHF and EUR strength versus major trading partners created headwinds for unhedged foreign positions in CHF- and EUR-based strategies, while USD-based strategies benefited from a weaker dollar enhancing returns on non-USD holdings. All 18 LCI strategies finished the year ahead of their respective benchmarks.
Performance - 2023
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 | +5.6% | +2.2% | +1.6% | +1.5% | LCI Yield CHF SE | +5.1% | +1.7% | +2.5% | +2.5% | |
| LCI Balanced CHF S | +7.9% | +4.7% | +3.5% | +2.7% | LCI Balanced CHF SE | +6.9% | +3.8% | +4.0% | +3.3% | |
| LCI Growth CHF S | +10.1% | +4.7% | +5.3% | +3.2% | LCI Growth CHF SE | +8.7% | +3.2% | +5.5% | +3.5% | |
| LCI Yield EUR S | +9.9% | +3.3% | +3.0% | +2.1% | LCI Yield EUR SE | +8.5% | +2.0% | +3.9% | +3.0% | |
| LCI Balanced EUR S | +12.9% | +5.1% | +5.1% | +3.2% | LCI Balanced EUR SE | +11.0% | +3.2% | +5.7% | +3.8% | |
| LCI Growth EUR S | +16.1% | +6.4% | +7.2% | +4.3% | LCI Growth EUR SE | +13.5% | +3.8% | +7.4% | +4.5% | |
| LCI Yield USD S | +11.4% | +2.6% | +4.5% | +1.4% | LCI Yield USD SE | +10.4% | +1.6% | +5.3% | +2.2% | |
| LCI Balanced USD S | +15.4% | +5.7% | +6.4% | +2.6% | LCI Balanced USD SE | +13.6% | +3.9% | +6.9% | +3.1% | |
| LCI Growth USD S | +19.4% | +6.7% | +8.2% | +3.0% | LCI Growth USD SE | +16.8% | +4.0% | +8.4% | +3.1% | |
Returns in reference currency; SI = since inception (annualised). Positive figures in green, negative in red. Source: La Côte Invest.
Since-Inception Cushions
All 18 strategies are ahead of their benchmarks since inception. The range spans +1.4% p.a. (LCI Yield USD S) to +4.5% p.a. (LCI Growth EUR SE). USD Growth strategies lead in absolute return terms (8.2–8.4% p.a.), while CHF Yield strategies show the narrowest cushions — reflecting the near-zero benchmark returns of the UBS CHF Yield fund since 2016. SE sleeves consistently lead their S sleeve equivalents since inception across all currencies and risk profiles.
Best and Worst Contributors
Best contributors (sub-asset class, average across 18 strategies, 12M):
North American Equities: ~+4.8% average (dominant driver — US equity rebound in 2023)
Eurozone Equities: ~+2.2% average (strong recovery in European equities)
High Yield Bonds: ~+0.8% average (credit spreads tightened through the year)
Worst contributors (all strategies had net positive sub-class contributions except):
Real Estate (SE sleeves): ~-0.5% average (listed real estate underperformed as rates stayed elevated)
Asia Pacific Equities (CHF strategies): marginal negative drag at sub-class level from Indonesia exposure
All other sub-asset classes — including Corp Bonds, EM Bonds, and Govt Bonds — contributed positively. There were no significant negative contributors outside of listed Real Estate in the SE sleeves.
Best and Worst Performers
Best performers: iShares MSCI Brazil UCITS ETF (DE): +20.3% in CHF terms, +27.9% in EUR, +32.2% in USD. Brazil equities surged in 2023 on commodity strength (oil, iron ore), Petrobras dividend news, and improving macro sentiment. It was the top-performing single security across all 18 LCI strategies.
Worst performers: UBS Global Real Estate Funds EURh Q-acc: -9.7% in EUR terms (-8.0% USDh equivalent). Listed real estate globally underperformed in 2023 as higher-for-longer interest rate expectations compressed REIT valuations. Note: S sleeves do not hold real estate; this entry affects SE sleeves only. For CHF strategies (S sleeves), the laggard was Amundi MSCI Indonesia ETF at -3.0% in CHF terms. Zero-weight and matured structured product lines have been excluded from rankings.
FX Impact
CHF strategies: Strong CHF was the largest FX headwind. USD positions cost -1.2% to -2.7% depending on sleeve and risk profile, with JPY, EUR, and GBP adding further drag. Total FX impact ranged from -1.8% (Yield S) to -4.0% (Growth SE).
EUR strategies: EUR strength vs USD cost -0.9% to -1.4%, while CHF and GBP exposures provided small offsets. Net FX: -1.0% to -1.6%.
USD strategies: The weaker dollar in 2023 was a tailwind. EUR, CHF, and GBP positions all contributed positively; JPY was the only drag. Net FX: +0.3% to +0.9%.
Portfolio Changes
Minimal activity across the year. CHF-denominated strategies (all six) executed a single Fixed Income duration rotation in January 2023: Corporate Bonds trimmed and Short Term Bonds raised in matching size, resulting in net 0 asset class impact. This shortened duration within the fixed income sleeve at a time of elevated rate uncertainty. EUR and USD strategies held all sub-class weights stable throughout 2023 — no material rebalancing.
Editorial Note
2023 vindicated LCI’s persistent equity overweight: the risk-on environment, driven by AI enthusiasm and resilient US growth, rewarded strategies running above-benchmark equity exposure. The absence of any major asset allocation shift in EUR/USD strategies reflected confidence in the existing positioning — a decision well-rewarded by year-end. CHF strategies’ January duration trim within fixed income provided a small buffer, though FX headwinds from CHF strength remained the dominant performance detractor relative to USD/EUR peers. Looking at the since-inception picture, all 18 strategies now carry meaningful cushions — confirming the long-term value of LCI’s active tilt toward North American and emerging market equity within multi-asset sleeves.
