DAILY SKETCH - Performance of our Active Invest funds over the last year has been significantly above their benchmarks

    • Daily sketch

Performance of our Active Invest funds is now well above average. As the table below shows, all three funds from the Active Invest family – Dynamic, Balanced and Conservative – have performed significantly better than their benchmarks since the beginning of this year and over the last 12 months.

DAILY SKETCH - Performance of our Active Invest funds over the last year has been significantly above their benchmarks

What are the key reasons for this highly above-average performance of our funds? First of all, the very conservative setting of interest rate risk paid off for the conservative bond component, respectively the very significant underweight in duration for Czech government bonds. In other words, Czech government bonds with long maturities have experienced significant losses in recent months while we have had a very little holding of these bonds in our portfolios. On the other hand we have significantly overweighted floating-rate notes (FRNs) and bonds with very short maturities in our portfolios. At the same time, these Czech government bonds fell significantly less than their counterparts with longer maturities. In addition, the corporate bonds we hold have performed very well over the last 12 months.

Secondly, in terms of the equity component, value stocks have been much more successful than growth stocks since the beginning of the year. At the same time, our funds are primarily focused on value stocks and tend to avoid growth stocks. Since the beginning of the year, the global stock value index, MSCI All Country World Value, has appreciated by 8%, while the global growth stock index, MSCI All Country World Growth, is only at zero.

We firmly believe that this outperformance of our portfolios against benchmarks should continue in the coming period as well. We believe that the performance of the equity component of our funds should be significantly helped by the significant overweight of the Central European region, which is practically the cheapest region in the world in terms of valuation and has lagged far behind global equity indices in the past year. We also believe that the relatively strong weakening of the US dollar, which we expect, should also help us significantly, mainly due to the unprecedented budget deficit of the US federal government.

 
 
Michal Stupavský
Investment Strategist at Conseq Investment Management, a.s.

 

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