atomos marks one full year of new investment proposition  

As we celebrate the first full year of our revamped investment offering, we wanted to talk you through some of the changes we’ve made and how they have driven performance on our portfolios over the last 12 months.  

atomos wanted to adopt a more global approach to investing than those other wealth managers which chose to keep a bias to their home market. To achieve this aim, we formed a strategic alliance with asset manager WTW to create a new investment solution. By introducing a broader set of investments into portfolios, we hoped the investment team would be better able to respond to market movements and generate more consistent returns for you.   

WTW is a global asset manager that manages billions of pounds of pension savings worldwide. It has investment specialists located all over the world, bringing many diverse perspectives to its investment thinking. atomos’ investment team curates portfolios, using WTW’s cutting-edge research to inform their thinking. We think of WTW as the engine powering your atomos portfolio. 
 

Impact on performance  

This new approach is already starting to bring tangible benefits. We are pleased to report strong positive returns for all six of our model portfolios over one year. Each model portfolio outperformed its respective Investment Association sector benchmark over 2023. The atomos Growth portfolio, for example, more than doubled the benchmark return to deliver 14.8% versus the IA Flexible Investment sector return 7.3%. Of course, as with any form of investing, past performance is not a reliable indicator of future performance. Performance is not guaranteed and you could get back less than you originally invested. 

To look at 2023’s performance in more detail - the model portfolios benefited from strong returns delivered by equity markets, with the ‘Magnificent Seven’ group of stocks playing a key role in driving these returns. They also benefited from elevated bond yields, particularly given the attractive yields on offer (meaning lower pricing of bonds) when they were purchased at the end of 2022.   

The key drivers of outperformance have been:
  

• the global diversification of the equity and bond layers of the portfolio as global markets outperformed the UK (where the peer universe has more of a home bias). The global diversification meant that the portfolios were more broadly exposed to different geographies and sectors, leading to a higher allocation to the US, and therefore the Magnificent Seven, in the equity space;  

• active management within the equity and listed infrastructure layers generating returns above the market indices due to skill in picking stocks that have outperformed over the year;  

• dynamic positioning to US government bonds through favouring investments in long-dated US government bonds relative to broader global government bonds which paid off in the final quarter of the year as interest rates fell particularly in the US, which increases the value of the US government bonds;  

It wasn’t all good news and there were areas of the portfolios which detracted value over the year. The key detractors to performance were:
  

• asset class diversification where alternative assets (listed real estate and listed infrastructure) underperformed mainstream equity markets. This was as expected given the particularly strong performance of mainstream assets. We typically hold these assets in portfolios to protect the value of the portfolio when mainstream equity and bond markets are not performing as well, but accept that in periods of strong performance they are unlikely to keep pace;  

• dynamic positioning to reduce equity market exposure where our portfolio positioning was more defensive in nature. We held a small underweight to equities in favour of more US government bonds which detracted over the year.  

Our investment specialists are very experienced, but we don’t have a crystal ball so we can’t say for sure which investments will perform well or badly in years to come. Our strategy is to remain well diversified across a range of investments to manage risk, and to base our investment selection on thorough research.  

Haig Bathgate, Head of Investments at atomos, said: “We are delighted that our new and improved investment service has got off to a great start. With the first full year under our belt, our change of approach looks to be paying off. We remain firm in our conviction that globally-focused, active investing with careful risk management will give us the best chance of delivering consistent returns for you in the long run.”  

 Source: atomos 

Past performance is not a reliable indicator of future returns. Capital is at risk and you could get back less than you put in. 

Performance data from 1 January 2023 is the live performance of the model portfolios. The three- and five-year performance data to 31 December 2022 is backtested performance of the model portfolios. Backtested data is not the past performance of an actual portfolio and is not a forecast of expected future returns. It is an illustration, solely reflecting the actual historic performance of investing in a portfolio comprising the underlying funds, with fixed weight allocations. Where past performance data is not available at the required dates for any underlying funds, a suitable proxy has been used.   

All underlying returns sourced from investment managers are in local currency terms. All fixed income other than LD EMD (Local Currency Emerging Market Debt) and 30% of the passive and smart-beta equity allocation is assumed to be GBP hedged.   

Both live and backtested performance is net of an assumed total OCF of 90bps. The Model Portfolio performance is quoted net of investment and advisory service charges. Whilst the fund level OCF of the underlying portfolio investments is taken into account, returns do not take account of the weighted average cost of underlying manager charges paid directly to fund managers, platform, product provider or adviser fees. 

Important Information

This communication should not be considered financial advice or a recommendation to invest. Information is provided to give an indication of the investment. It is not an offer or invitation to buy or sell securities in the models or any other security or investment. Past performance is not a reliable indicator of future returns. The value of investments, and any income from them, can go down as well as up. Capital is at risk and you could get back less than originally invested. 

If you are unsure whether investment in the models is suitable, you should seek independent advice from a regulated financial adviser. The models should be considered a medium to long term investment, with a minimum investment period of at least five years.  

There is no guarantee the models will meet their objectives. The models are subject to risks which may affect the value of an investment. Portfolios are exposed to stock markets: market conditions can change rapidly, and prices can be affected unpredictably by a number of factors. The models may make investments denominated in currencies other than sterling and exchange rate movements can affect the return of the investment.