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15 April 2019

Monthly Update: March 2019



  • Economic data continues to point to a slowing global economy, driving long term rates back into negative territory in the Eurozone.


  • Following the ECB in February, the Fed has now also adopted a decidedly more dovish tilt, with no more rate rises expected for the remainder of the year.


  • These were counteracting forces for global equities but, for the time being, the latter got the upper hand and most regional indices ended the month with gains of 1 to 2%.


Global equity markets more than made up for 2018's terrible ending in the first quarter of '19. Those who went to the trouble of examining what was going on at the end of last year seem to have wasted their time: without any major shifts in the news flow we are right back where we were before the downturn started.

If stock markets are seemingly this irrational, doesn't that create big opportunities for active investors like Aphilion to play these moves? If 2018's downturn was more or less arbitrary shouldn't it be possible to take positions on its reversal? Unfortunately this is only partly the case. Yes: our models performed poorly in the final quarter of '18, when stock price volatility rose, and a lot better in the first quarter of this year, when lots of these price movements were reversed. But just as often we see such movements not being reversed. Volatility does not equal or entail irrationality . Often it just means we don't yet understand what's going on. Strange movements are often precursors to shifts in company fundamentals which stock prices are good at anticipating. In this case active managers have less to exploit... although there's always something.

Best Regards,

Jan Holvoet, Nico Goethals, Xavier Boussemaere
Fund Managers,
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