atomos marks one full year of new investment proposition

Financial planning-led wealth manager atomos is celebrating the first full year of its revamped investment offering. atomos wanted to adopt a more global approach to investing than other wealth managers which choose to keep a bias to their home market. To achieve this, atomos formed a strategic alliance with asset manager WTW to create a new investment solution. By introducing a broader set of investments into portfolios, atomos hoped its investment team would be better able to respond to market movements and generate more consistent returns for clients.

WTW 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.

Impact on performance

This new approach is already starting to bring tangible benefits to atomos’ clients. The firm is pleased to report strong positive returns for all six of its 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 of 7.3%.

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. atomos typically holds these assets in portfolios to protect the value of the portfolio when mainstream equity and bond markets are not performing as well, but accepts that in periods of strong performance they are unlikely to keep pace;
• dynamic positioning to reduce equity market exposure where portfolio positioning was more defensive in nature. Portfolios held a small underweight to equities in favour of more US government bonds which detracted over the year.

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 to our clients in the long run.”

Past performance is not a reliable indicator of future returns. Please refer to Notes to Editors below for more information on performance data.