Quarterly report Q1/2021
In the rush of the 2020 year-end rally, markets continued to soar at the beginning of the quarter before a small consolidation at the end of January. Hopes of an end to lockdowns, significant progress in the vaccination against the corona virus and a further USD 1.9 trillion corona aid package from the new US President Joe Biden then continued to boost the markets. The DAX even pulverized its old record highs and once again set an exclamation mark. The temporarily high volatility returned to very moderate levels towards the end of the quarter.
In the first quarter, our equity fund achieved a gain of 8.00% in Swiss francs and 5.96% in euros. The difference is due to the appreciation of the Euro, especially in February. As of 01.04., the euro-franc exchange rate was 1.112. In comparison, the major indices: DAX +9.99%, the STOXX600 (Europe) +7.97%, the S&P500 (USA) +11.34% and the MSCI World (worldwide) +8.75% (all values in euros).
Our bond fund posted a gain of 2.1% in Swiss francs and -0.12% in euros in the first three months of the year, whereas the Bloomberg Barclays Global High Yield Total Return Index Value Hedged EUR posted a negative performance of -0.65%. On March 18, our fund distributed an amount of 5.60 Swiss francs/unit, resulting in a payout yield of approximately 4.5%.
In this context, we are particularly proud of another award. After the Thomson Reuters Lipper Award two years ago, the fund now won the German Fund Award in the category bond funds global with the rating “outstanding“. For every investor the certainty of having invested in an excellent investment, for us a nice confirmation that we are absolutely on the right track with our strategy.
We extended our hedges again until mid-February and then let them run into the rising market at the end of the quarter. Even though the hedges have put some pressure on performance, we believe they are essential in the current market environment.
In the first two months, our small caps in particular performed well and contributed to performance. After our positions in oil, which we built up towards the end of the year, performed well, we decided to take some money off the table here and lock in profits. For the same reason, we did the same with the Technology and Materials sectors. We invested the freed-up capital primarily in Consumer Staples.
In the banking and insurance sectors, as in automobiles, we have left the weighting per se almost unchanged, although we have rotated the individual stocks within the sectors. Gold has clearly underperformed, as is typical in such market phases, and currently has a weighting of around 3% in the portfolio.
All in all, the much more cyclical positioning at the beginning of the year gave way to a somewhat more defensive orientation during the quarter.
Crash prophets are currently in high season. This is not surprising when one considers that the DAX has gained a whopping 80% since the lows in March 2020. Of “epic financial bubbles”, “extreme overvaluations”, “explosive price increases” and even “hysteria” can be read and heard. More and more experts are coming on the scene to warn of a big crash. So is the party drawing to a close and is the big bang just a matter of time?
First, the valuations. It is true that some companies have reached impressive levels, and this can be a legitimate cause for concern. The record levels reached in some cases on the stock exchanges suggest a huge upswing, but by no means all companies in this world are trading at all-time highs. Rather, the record-breaking performance of various indices has been driven by individual sectors that have seen disproportionate gains in value. In other words, there is still room for improvement across the board.
Second, interest rates. Even though there have been slight increases since the beginning of the year, the landscape per se is still the same. This is because real interest rates remain negative and continue to destroy savings and retirement provisions. Already at the end of 2019, our statement was “Those who cannot handle price fluctuations will find it very difficult to make money in the coming years.” Nothing has changed in this regard to date.
Third, the states and the central banks. The old stock market adage “Don’t fight the FED” applies, never position investments against the central bank. Because at the end of the day, the central bank has the deeper pockets -- always. In recent months, central banks around the world have once again demonstrated what they are capable of. Namely, to flood markets with liquidity as rarely before, which in the end resulted in sharply rising stock market prices. Are support funds, Corona bailouts and rescue packages paving the way to inflation and demonetization? Very likely in the medium term. Investments in assets that offer some protection against inflation, such as equities, therefore make a lot of sense.
Three reasons, then, why the markets can continue to rise. Nevertheless -- we are anything but risk-blind. The positioning of many investors, whether private or professional, can undoubtedly be described as “risk-on”. We are fully aware that the ice on which we all move has become significantly thinner. With a healthy mix of investments on the one hand and hedges on the other, we continue to live up to our principle: to achieve substantial and sustainable growth for our customers’ assets while offering the greatest possible security and continuity.
The fund award we have received is proof of our success. You too can back the winner!
If you have any questions, no matter what kind: Feel free to contact us at any time, we are here for you. In person, by phone or digitally, conveniently and easily from home!
This document has been designed and produced by Wydler Asset Management AG, however, we do not assume any liability for the topicality, correctness and completeness.
The information has been compiled and prepared with the utmost care and has been obtained from our own or publicly available sources believed to be reliable. Own representations and explanations are based on the respective assessment of the author at the time of their preparation, also with regard to the current legal and tax situation, which may change at any time without prior notice.
The contents of this document do not constitute a recommendation for action, nor do they replace individual investment advice or individual, qualified tax advice. The information presented does not constitute a decision-making aid for economic, legal, tax or other advisory issues, nor should investment or other decisions be made solely on the basis of this information. In particular, it does not constitute a recommendation, an offer, a solicitation to buy/sell investment instruments or to engage in transactions or other legal acts.
Wydler Asset Management AG assumes no liability for any damages or losses arising directly or indirectly from the distribution or use of this document or its contents. The graphs or indications of performance illustrate past performance. Future values may be lower as well as higher.
The reproduction, adaptation, distribution and any kind of exploitation outside the limits of copyright are reserved only for the Wydler Asset Management Group, exceptions require the written consent of the company.
For detailed product-specific information and notes on the opportunities and risks of our funds, please refer to the current sales prospectuses, the investment conditions, the key investor information and the annual and quarterly reports, which you can obtain from us free of charge in German. These documents form the sole binding basis for the purchase of the funds.
Status of all information, representations and explanations: July 1, 2021, unless otherwise stated.
Wydler Asset Management AG, Korporationsweg 13c, 8832 Wilen b. Wollerau, Schweiz
Tel. +41 44 575 18 11, www.wydlerinvest.ch, E-Mail: firstname.lastname@example.org, Chief Executive Officer: Frank Ramsperger
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