Saxo Morningstar Moat EUR Q2 2023 commentary

SaxoSelect Commentaries
Instruments tradedStocks
Asset classesGlobal equities (excluding emerging markets)
Investment style High quality stocks that are priced at a discount to fair value
Dividend Yield
Quarterly return
2.75% (net of fees)
Annualised volatility (since inception)

Market overview

Quarter at a glance

  • There has been a diverse range of outcomes in the second quarter of 2023 with generally positive results.
  • Economic data continues to be resilient, following recent interest rate rises. The prospect of peak rates is supporting markets, along with inflation retreating. This is happening at different speeds around the world though, causing regional performance differences. 
  • Artificial intelligence created a new wave of enthusiasm among investors in the second quarter. 

Important Perspective

The second quarter of 2023 saw a wide range of outcomes, generally positive, with some remarkably strong assets.

Once again, inflation and interest rates played a prominent role, with inflation retreating at different speeds across the world as interest rates near their expected peaks. Economic resilience was another major theme for the quarter, with stronger than expected growth. 

The hype surrounding artificial intelligence has been extraordinary, specifically regarding natural language processing tools such as ChatGPT. This is driving stocks that may stand to benefit from the unlocking of growth and disruption, as investors wrestle to understand the winners and losers. In part due to this, there has been an unusually high concentration in a small number of companies dominating the index returns. The “magnificent seven” was a new term coined to celebrate the dominance of a selected few winners. 

Resulting from the above, large U.S. growth stocks moved significantly higher, while smaller value stocks lagged. Financials, healthcare, and utilities have all struggled in this environment—but commercial real estate has been the real sore point, with vacancy rates rising. 

Yet, for all the talk about stocks, it is defensive assets that have seen the biggest fundamental shift—and higher than usual volatility. 

Bonds delivered mixed results in the second quarter, again heavily influenced by changes in rates and inflation. The banking turmoil did not roll over into other industries or markets—as feared—creating a tailwind for riskier bonds like corporate high yield. 

Among currencies, the big story has been Japanese yen weakness, with relatively low interest rates and inflation persisting in the region. Other major currencies, such as the U.S. dollar, saw only modest movements for the quarter.

Portfolio performance (net of fees)

Inception (December 2016)

Top 10 portfolio holdings (as of 30/06/2023)

NameWeight (%)
Equitrans Midstream Corp5.49
Grifols SA ADR4.23
Uber Technologies Inc4.15
AGL Energy Ltd3.99
BorgWarner Inc3.82
GN Store Nord A/S3.78
Rocket Companies Inc Ordinary Shares Class A3.45
Taiwan Semiconductor Manufacturing Co Ltd ADR3.41

Top Performers

  • Equitrans Midstream Corp, Uber Technologies Inc, AGL Energy Ltd, TransUnion, Grifols SA ADR

Worst Performers

  • Just Eat NV, Alibaba Group Holding Ltd ADR,  Warner Bros. Discovery Inc Ordinary Shares - Class A, Worldline SA, International Flavors & Fragrances Inc


Given the recent gains, it is healthy to question the likelihood of continued strength. Is it time to batten down the hatches or raise the sail? Markets go up and down, usually supported by the fundamentals of higher profits and economic prosperity beneath them. 

Yet we live in a world of continued uncertainty. Many market commentators are saying this rally marks the start of a new bull market and investors should jump into equities to ride this wave. But others argue that it’s a bear market rally and investors should get out of stocks while the getting is good.

The question for investors isn’t whether to raise the sails and ride the tailwind of a new bull market, or to batten down the hatches, but rather how to best position their portfolios based on today’s valuations.


Saxo Markets provides personal portfolio management via its SaxoSelect service. Before entering any managed portfolio, we must first take into account your investment objectives, goals and financial situation. 

This material should be considered as a marketing communication under the Financial Conduct Authority’s rules. Saxo Capital Markets UK Limited (SCML) undertakes reasonable efforts to ensure that any information published in this communication is reliable. SCML makes no representation or warranty, and assumes no liability, for the accuracy or completeness of any information contained in this communication. 

Investing in financial products always involves risk. As a general rule, you should only invest in financial products if you understand the risks associated with them. Investing in a portfolio with currency that differs from the base currency of your account carries the risk of exposure to changes in the rate of exchange between them. See the full Managed Portfolio Disclaimer for more information. Past performance is not a guide to future performance.

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