Nasdaq DW Global Momentum Q1 2024 commentary

Performance in USD as of 31/03/2024 and net of all costs including management fees. Relative strength is a calculation of the price trend of a stock or a financial instrument in comparison to another instrument, stock, or industry.

Market overview 

The Nasdaq Global Momentum Portfolio performed well in the first quarter (Q1) of 2024. With a net return of +10.54%, it surpassed its benchmark, the Nasdaq Global Ex United States Index, which finished the period “only” up by +3.79%.

The strong performance in Q1 was driven by several investments in Argentina, where significant political and economic changes are currently taking place, leading to positive market responses. Additionally, the exposure to Japanese companies played a key role in the performance, as various economic and political developments in Japan have boosted the performance of many Japanese companies over the past year. Lastly, there was also strong performance so far this year from South African companies in the Basic Materials sector.

Best performing positions*

(+67.87%) Banco Macro S.A. provides various banking products and services to retail and corporate customers in Argentina.

(+47.23%) Grupo Financiero Galicia S.A., a financial service holding company, provides various financial products and services to individuals and companies in Argentina.

(+44.81%) Tokyo Electron Limited, together with its subsidiaries, develops, manufactures, and sells semiconductor and flat panel display (FPD) production equipment in Japan, Europe, North America, Taiwan, China, South Korea, Southeast Asia, and internationally.

(+44.39%) Embraer S.A. designs, develops, manufactures and sells aircraft and systems in North America, Latin America, Asia Pacific, Brazil, Europe, and internationally.

(+42.35%) Nomura Holdings, Inc. provides various financial services to individuals, corporations, financial institutions, governments and governmental agencies worldwide.

Some exposures on the other hand reduced the portfolio’s gains, like China, which has shown weakness compared to many emerging markets. Despite an underweight position in China, some of the exposure there had a negative impact on the overall performance of the portfolio.

Worst performing positions*

(-14.49%) Companhia Paranaense de Energia - COPEL engages in the generation, transformation, distribution and sale of electricity to industrial, residential, commercial, rural and other customers in Brazil. This security ELPC is a spin off from ELP, which is why the company seems to appear twice in this list.

(-12.88%) Telefônica Brasil S.A., together with its subsidiaries, operates as a mobile telecommunications company in Brazil.

(-8.96%) Companhia Paranaense de Energia - COPEL engages in the generation, transformation, distribution and sale of electricity to industrial, residential, commercial, rural and other customers in Brazil.

(-7.95%) EHang Holdings Limited operates as an autonomous aerial vehicle (AAV) technology platform company in the People's Republic of China, East Asia, West Asia, Europe, and internationally.

(-6.81%) Vipshop Holdings Limited operates online platforms in the People's Republic of China. It operates in Vip.com, Shan Shan Outlets, and Others segments.

*The position may not have been held for the full quarter, but performance shown for the security is for the full quarter.

This portfolio includes 30-40 individual stocks from a wide range of stocks in both developed and emerging markets. The investment strategy uses a ranking system to measure the price progression (called momentum) of a large list of securities around the world. The goal is to focus on strong sectors and stocks and hold them within the portfolio as long as they remain strong. Similarly, the strategy also aims to identify weak sectors and securities to avoid those.

Top 10 portfolio holdings

Novo Nordisk

YPF SA

New Oriental Education & Technology Group Inc.

UBS Group AG

Banco Bilbao Vizcaya Argentaria S.A.

Mitsubishi UFJ Financial Group Inc.

ABB Ltd.

Embraer S.A.

BAE Systems plc

Cemex SAB de CV 

Outlook

The Nasdaq Global Momentum Portfolio had a strong 2023 and is now off to a strong start in 2024. Strength is observed in both emerging and developed markets. A key advantage of the strategy is the ability to invest in large, mid, and small cap companies that meet the relative strength criteria. Despite weakness in some broad areas of the global markets, such as China, the ability to be more granular and to have a more concentrated portfolio is expected to help seek out strong trends as we move forward.