“The fixed income portion of SSI’s flexible allocation portfolios outperformed the benchmark and generated positive returns in 2021. SSI’s active approach on the fixed income side resulted in exposure to multiple differentiated asset classes and sensitivity at significantly lower interest rates – duration – than the Bloomberg Aggregate Bond Index,” he said.
SSI’s flagship moderate portfolio returned 17.17% last year, falling in the 11th percentile of its peer group, represented by the Morningstar Allocation category – 50% to 70% equities, which includes 569 wallets, Ragusa said. The moderate portfolio benchmark, 60% S&P 500 / 40% Bloomberg US Aggregate Index, returned 15.86% in 2021, while the Morningstar peer category returned 13.06%, he noted.
This differentiated positioning on the fixed income side added to alpha, Raguse said. The team replaced portions of traditional fixed-income securities, such as US Treasuries and investment-grade bonds, with the First Trust Senior Loan ETF, which returned 3.9% in 2021, and the FPE, or First Trust Preferred Securities and Income ETF, a floating preferential ETF. investment, produced a return of 5.2% last year, explained Raguse.
He described the team as constrained tactical managers: “And by that, I mean, we’re not trying to make calls on market lows or highs. It’s a very disciplined process that systematically adjusts over time.
“So what we do is look at the quantitative output, take that output as a team fundamental and evaluate it, and then systematically adjust the portfolio over time. And as the environment changes, if there are substantial changes in the environment, there will be big changes in the portfolio. But it’s a predictable and consistent process that can be repeated over time,” Raguse added.
Title: Administrator; Years with the company: 27; Years in financial services: 30; Investment/asset class: multi-asset strategist; Wealth management company: SSI Investment Management; Year of creation of the company: 1973; Number of employees: 30; Assets under management as of April 30, 2022: $2.3 billion