Aphilion sfeer video
15 March 2019

Monthly Update: February 2019

  • After another strong month global equities have now regained all of 2018's losses, and then some... At the end of February the MSCI World Index stood 4.7% higher than at the beginning of 2018.

 

  • Most heard reason for investors' optimism is lessened trade tensions between the US and China, averting what could otherwise quickly escalate into a full-blown trade war.

 

  • Our funds continued to perform well, with positive absolute returns for the SIF and Balance, and outperformance for Equities.

 

Those waiting on the sidelines for markets to gradually bottom out and start their recovery after the sudden draw-down at the end of '18 were left behind by the market's quick recovery. In a period of only 5 weeks global equities recouped all the losses of 2018 and are now almost 5% higher than at the start of last year. Another confirmation that "buy and hold" is a hard-to-beat equity strategy... Stocks outperform in the long run to compensate for higher risks... and those risks are run by remaining invested.

Our L/S fund SIF has continued its recovery, but just like Balance there is a drag on performance coming from negative EUR interest rates. For Balance this is caused by almost all exposure being hedged back into short-term EUR deposits, synthetically through a combination of index and FX futures. For the time being the resulting -0.5% negative rate is still the price to pay for absolute safety. We had of course hoped that the outperformance of our stock selection would more than compensate for this, but this remains insufficient for the time being. One thing we are not planning on doing is raising the general risk level of the fund in an attempt to grab higher returns. As you well know: a change of course like that almost never works out well...

 

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