Stronghold EUR: Up 0.7% in November driven by strong equity markets
Head of Equity Strategy
Summary: The Stronghold EUR came back in November after a disappointing October with gains of 0.7% while the benchmark delivered 1.1%. The portfolio has not changed much on its exposures during November with the most notable change being a 2 %-points shift between global momentum stocks and European small caps. Overall, the portfolio remains well balanced across many different asset classes and is well prepared for increased market volatility.
Last month’s performance update was missed due to unfortunate events, but we are now back with a fresh update on last month’s performance. Stronghold EUR was up 0.7% in October and 11.2% for the year compared to 1.1% and 7.4% respectively for the benchmark. The portfolio continues with a balanced risk profile and is quite diversified across many different asset classes. The portfolio has delivered 1% annualised outperformance against the benchmark since the inception in July 2017 which is satisfactory and the average loss in the worst weeks has been well contained within the model’s risk limits. Last month’s performance was driven by global equities printing news highs while the slightly higher interest rates cause minimal losses among the portfolio’s bond exposure.
The strategy has a reference benchmark consisting of 65 % global government bonds (EUR-hedged) and 35 % developed market equities (EUR hedged). Stronghold performance includes trading costs and management fee. Past performance does not guarantee future results, which may vary. The value of investments and the income derived from investments will fluctuate and can go down as well as up. A loss of capital may occur.
As the chart below shows the asset class weights have been fairly stable for almost two years with only significant changes around the fourth quarter of 2018 when equity markets fell almost 20%. During 2019 the model did increase risk a bit as tail risks diminished in financial markets allowing the model to increase risk.