The ability to capture trends through tactical positioning led to solid absolute and risk-adjusted performance last year for SSI Investment Management's SSI Flexible Allocation Portfolios, an all-ETF portfolio that won Envestnet's 2022 Asset Manager of the Year Award in the Multi-Asset Strategist category.
The boutique firm's 12-member portfolio management team, working together for more than two decades, uses a combination of fundamental analysis and quantitative research to generate consistent performance as they pursue broad market upside and protection against downside risks, Envestnet analysts note.
All three SSI Flexible Allocation Portfolios — conservative, moderate and moderately aggressive — outperformed their Morningstar peer groups in 2021, with the conservative and moderate portfolios also significantly surpassing their benchmarks.
A focus on U.S. equities, an underweight to core fixed income, and diversification in high-yield securities and bank loans, contributed to last year's success, Envestnet noted.
Portfolio manager Ken Raguse said the team combines risk management and flexible allocation strategy in a process that reduces risk based on the environment or increases risk to take advantage of opportunities, he added.
While their quantitative model is a big driver of their asset allocation, SSI's fundamental analysis proves important as well, Raguse said. In 2021, the quantitative model remained positive toward equity markets and the fundamental portfolio management team maintained an equity allocation above the benchmark throughout the year, Raguse said.
With the equity market generating strong returns last year, "managing the fixed income portion of the portfolio was more challenging," Raguse said, noting the S&P 500 produced a 28.7% return while the Bloomberg U.S. Aggregate Bond Index return was down 1.7%.
