Monthly Update: December 2016
Our global equity fund Aphilion Q² - Equities recently marked its 15th anniversary. It was an interesting era to start: the fund was launched in the period after the dot-com bubble burst, and also just a few months after the 9/11 attacks. In those first years, the world economy was stimulated by solid growth in the emerging markets, until markets peaked in 2007 after the first signs of troubles in the US real estate market. It resulted in a heavy financial crisis, and only in early 2009 did the markets find a bottom. The ensuing recovery after this shock was severely interrupted by a sovereign debt crisis in the summer of 2011. So it seems fair to say that markets experienced quite a lot of headwinds and turbulence in the past 15 years, but all in all, it has proven to be a rewarding period for our investors...
In its first fifteen years, our long only fund managed to achieve an average annualized performance of +7.8% vs. +2.5% for the benchmark. This difference was made in both bullish and bearish markets. In the end, 2016 turned out to be a good year for global equity. Aphilion Q² - Equities gained 3.9% during the month of December, with 2016 returns coming in at +6.7%.
There was a lot of attention for the political agenda in the past year, considering several political stumbling blocks like Brexit, the divisive US presidential race or the constitutional referendum in Italy. Markets did not require much time before re-calibrating and buying in the period "post-truth". The year ended on a strong note, especially for US equities as the Trump-driven reflation theme buoyed markets. Once again, Europe was the worst performing region: the Stoxx Europe 600 index lost 1.2% in 2016.
The defensive version of Equities, Aphilion Q² - Balance, was not able to mitigate the yearly loss (-3.1%) in the month of December (-0.2%). The equity market hedge has remained stable at around 80% throughout the year. Balance is a defensive offering tailored to buy-and-hold investors, who wish to lessen their exposure to general equity market risk, without giving up on the Q² selection and its potential outperformance.