Nasdaq

Nasdaq DW Global Momentum Q2 2021 commentary

SaxoSelect Commentaries
Saxo Bank

Instruments tradedStocks
Asset classesGlobal equities (including emerging markets, excluding US companies)
Investment style: Systematic investing based on stocks’ relative strength
Quarterly return7.2% (net of fees)
Annualised volatility (since inception)23% 

Market overview

Global markets continued higher during the second quarter, continuing the recovery from the global pandemic. Returns were strong across the board with all the major asset classes delivering positive returns.  The performance of equity markets has been very choppy this year. The returns of the broad benchmarks have been very strong, but under the surface we have seen quite a bit of rotation. The first quarter was characterized by a large laggard rally where areas of the market that had not performed well for a long time suddenly did very well. This was driven largely by hopes of a strong recovery as vaccination rates increased and COVID became less of a threat to the economy. The second quarter was characterized by a pullback in these trends. That has led to choppy performance from most factor strategies – momentum included. This potential transition period is global and will take some time to sort itself out. 

Part of the reason why markets have been so choppy is that it is so difficult to interpret data right now. We had artificially low numbers a year ago when the global economy was shut down due to the pandemic. As things return to normal, economic activity is snapping back. 

Commodities have also had a stellar year adding to the inflation story. Again, many people are arguing the high prices are transitory given we are still yet to return to full capacity after the economic shutdown. There will be an immediate impact on consumers’ wallets though as businesses are passing along higher input and labor costs. 

 

Portfolio performance (net of fees)

Apr4.6%
May1.9%
June0.6% 
Since inception (March 2006*)311.8%

* Performance prior to Nov 2017 occurred before the partnership with Saxo Bank A/S

Top 10 portfolio holdings (as of 30/06/21)
37.9 %of total portfolio

HoldingWeight (%)
ASML Holding N.V.5.3
BioNTech SE4.8
Danaos Corporation4.2
Louis Vuitton4.1
Sibanye Stillwater3.5
Himax Technologies, Inc.3.5
Logitech International S.A.3.4
CEMEX3.2
Embraer S.A.3.0
Companhia Siderúrgica Nacional2.9

Best-performing positions (note performance shown for the quarter reflects the performance of the security during the part of the quarter we owned it, not necessarily the performance of the security itself for the full quarter)

  • BioNTech SE (+105.04% Q2 2021) provides biotechnological solutions. The Company develops various types of treatments for cancer patients' tumors. BioNTech serves customers worldwide.

  • Danaos Corporation (+56.06% Q2 2021) owns a fleet of containerships.  The Company charters these vessels to liner companies.

  • Himax Technologies, Inc. (+53.06% Q2 2021) designs and manufactures integrated circuits.  The Company produces liquid crystal displays (LCD). 

  • Companhia Siderurgica Nacional S.A. (CSN) (+32.78% Q2 2021) manufactures iron and steel in Brazil. The Company operates mines, an integrated steel mill, service centres, ports, and railroads.  CSN manufactures and distributes hot-rolled, cold-rolled, and galvanized steel products to the automobile, auto parts, civil construction, electrical equipment, and packaging.

  • Embraer SA (+25.43% Q2 2021) manufactures and markets commercial, corporate, and defense aircraft. The Company also provides maintenance and repair services and markets spare parts for its jets.  Embraer markets its aircraft to commercial airlines mainly in the United States and Europe and to governments in Europe and Latin America. 

Worst-performing positions (note performance shown for the quarter reflects the performance of the security during the part of the quarter we owned it, not necessarily the performance of the security itself for the full quarter)

  • Koninklijke Philips NV (-11.25% for Q2 2021) is a health technology company focused on improving people's health across the health continuum from healthy living and prevention, to diagnosis, treatment, and home care. The Company offers products and services in diagnostic imaging, image-guided therapy, patient monitoring and health informatics. 

  • Makemytrip Ltd. (-12.89% for Q2 2021) offers travel services over the Internet.  The Company operates websites that allow travelers to research and plan trips and book airline tickets, hotels, packages, rail tickets, bus tickets, and rental cars. Makemytrip also offers access to travel insurance. 

  • 21Vianet Group, Inc. (-20.22% for Q2 2021) provides carrier-neutral Internet data center services. The Company hosts its customers' servers and networking equipment, as well as provides interconnectivity to enable customers to deliver data across the Internet. 21Vianet conducts business in Beijing, China. 

  • Vipshop Holdings Ltd. (-21.87% for Q2 2021) retails branded products at discount over the Internet. The Company retails through flash sales, in which limited quantities of an item are sold at deep discount for a specified period of time.

  • Xunlei Ltd. (-24.06% for Q2 2021) offers Internet media services. The Company provides network download, video playback, digital content, online game, and other related services.

Outlook

All the uncertainty and choppiness has resulted in the strategy having higher than normal turnover so far this year. It appears as if this will continue throughout the summer as well. The Nasdaq DW Global Momentum team’s methodology is designed to look for strength, and right now that strength has not been sustainable. The Nasdaq DW Global Momentum team has held up well considering the headwinds in the market. These periods of choppy action eventually resolve themselves one way or another and turn into trending markets. The strategy is designed to find and capitalize on those trends. 

Disclaimer

Any information found in this document, including performance information and statistics are subject to change. You can find the latest updated pricing information on the description page for each available portfolio. In providing this material Saxo Bank has not taken into account any particular recipient’s investment objectives, special investment goals, financial situation, and specific needs and demands and nothing herein is intended as a recommendation for any recipient to invest or divest in a particular manner and Saxo Bank assumes no liability for any recipient sustaining a loss from trading in accordance with a perceived recommendation. All investments entail a risk and may result in both profits and losses, and all capital is at risk. In particular investments in leveraged products, such as but not limited to foreign exchange, derivatives and commodities can be very speculative and profits and losses may fluctuate both violently and rapidly. Speculative trading is not suitable for all investors and all recipients should carefully consider their financial situation and consult financial advisors in order to understand the risks involved and ensure the suitability of their situation prior to making any investment, divestment or entering into any transaction. Any mentioning herein, if any, of any risk may not be, and should not be considered to be, neither a comprehensive disclosure of risks nor a comprehensive description of such risks. Any expression of opinion may not reflect the opinion of Saxo Bank and all expressions of opinion are subject to change without notice (neither prior nor subsequent).

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