Our positioning: We remain cautious

Economic data has recovered quickly thanks to the relaxation of lockdown measures. Over the coming weeks, it will become more difficult to meet investors’ high economic expectations. We retain cautious positioning in our portfolios, but are taking profits from gold.

Tesla and co. are soaring

The share prices of well-known tech giants, such as Amazon, Apple, Facebook, Netflix and Tesla, give no indication that we are in a global recession. The prices of the ten companies in the FANG+ index – which includes the two Chinese Internet giants Alibaba and Baidu, in addition to the equities mentioned above – have almost doubled since March. Prices rose especially sharply again last month.

The performance of these equities is typical of current developments on the stock exchanges. It is not optimism about the economic situation that is driving prices up, but rather the lack of alternatives, the search for the winners of the future and the fear of losing out on equity price gains. In fact, professional investors do not appear to be particularly optimistic. According to the monthly survey carried out by the American Association of Institutional Investors, only 30 percent expect significant price rises over the coming months. The percentage of optimists was not much lower during the stock market crash in the spring.

The outlook of the US bond markets seems downright pessimistic.

The lack of optimism has recently been reflected in equities in the industry, finance and luxury goods sectors, which are heavily dependent on economic trends. They have made significantly lower price gains over recent weeks than the tech equities. The performance of real estate investments traded on the stock exchanges is also subdued. The outlook of the US bond markets seems downright pessimistic. Long-term real interest rates, which have historically been the best reflection of the economy, are at a record low.

Economic recovery will lose momentum

We also anticipate that the economic situation will remain challenging. While the relaxation of lockdown measures over recent weeks has seen many economic indicators recover strongly, there is uncertainty over how the situation will develop. A rapid recovery to pre-crisis levels is not expected – on the contrary, we increasingly anticipate unpleasant surprises.

This means that an overall defensive positioning of the portfolios is advisable. In the portfolios entrusted to us, we are cautiously positioned in equity investments and prefer the defensive Swiss market to the European, UK and emerging markets. We are also continuing to hold investments in gold and the Japanese yen.

Profit-taking from gold investments

We have once again made two changes to our positioning this month. Firstly, we are taking profits made on gold investments. In April, we decided to increase the gold quota in the portfolios again. This took the level of gold investments in our portfolios to twice that in the neutral investment strategy. The price of an ounce of gold has since risen by just under 10 percent. With our first reduction, we are realizing some of the gains made, but maintain an overweight position.

We are also reducing the underweight position of equities in emerging markets. Because these equities are heavily dependent on the international economic situation, we reduced them significantly in the spring. This strong positioning is no longer advisable in our view. This also allows our portfolios to benefit from a weaker dollar. Equities from emerging markets benefit from a potential weakening of the dollar more than any other asset class.

Performance of asset classes

Currencies 1 month in CHF YTD in CHF 1 month in LC YTD in LC
Currencies
EUR
1 month in CHF
0,5%
YTD Year-to-date: since the start of the year in CHF

-0,8%

1 month in LC Local currency
0,5%
YTD Year-to-date: since the start of the year in LC Local currency
-0,8%
Currencies
USD
1 month in CHF
-0,6%
YTD Year-to-date: since the start of the year in CHF
-2,2%
1 month in LC Local currency
-0,6%
YTD Year-to-date: since the start of the year in LC Local currency
-2,2%
Currencies
JPY
1 month in CHF
-0,5%
YTD Year-to-date: since the start of the year in CHF
-1,0%
1 month in LC Local currency
-0,5%
YTD Year-to-date: since the start of the year in LC Local currency
-1,0%

Equities 1 month in CHF YTD in CHF
1 month in LC YTD in LC
Equities
Switzerland
1 month in CHF
3,9%
YTD Year-to-date: since the start of the year in CHF
0,4%
1 month in LC Local currency

3,9%

YTD Year-to-date: since the start of the year in LC Local currency
0,4%
Equities
World
1 month in CHF
2,6%
YTD Year-to-date: since the start of the year in CHF
-4,3%
1 month in LC Local currency
3,2%
YTD Year-to-date: since the start of the year in LC Local currency
-2,1%
Equities
USA
1 month in CHF
2,8%
YTD Year-to-date: since the start of the year in CHF
-0,8%
1 month in LC Local currency
3,4%
YTD Year-to-date: since the start of the year in LC Local currency
1,4%
Equities
Eurozone
1 month in CHF
3,9%
YTD Year-to-date: since the start of the year in CHF
-9,8%
1 month in LC Local currency
3,4%
YTD Year-to-date: since the start of the year in LC Local currency
-9,0%
Equities
United Kingdom
1 month in CHF
-0,7%
YTD Year-to-date: since the start of the year in CHF
-22,9%
1 month in LC Local currency
0,1%
YTD Year-to-date: since the start of the year in LC Local currency
-16,6%
Equities
Japan
1 month in CHF
-1,0%
YTD Year-to-date: since the start of the year in CHF
-7,3%
1 month in LC Local currency
-0,5%
YTD Year-to-date: since the start of the year in LC Local currency
-6,4%
Equities
Emerging markets
1 month in CHF
5,7%
YTD Year-to-date: since the start of the year in CHF
-6,9%
1 month in LC Local currency
6,3%
YTD Year-to-date: since the start of the year in LC Local currency
-4,8%

Fixed income 1 month in CHF YTD in CHF
1 month in LC YTD in LC
Fixed income
Switzerland
1 month in CHF
0,5%
YTD Year-to-date: since the start of the year in CHF
-0,3%
1 month in LC Local currency

0,5%

YTD Year-to-date: since the start of the year in LC Local currency
-0,3%
Fixed income
World
1 month in CHF
0,7%
YTD Year-to-date: since the start of the year in CHF
1,9%
1 month in LC Local currency
1,3%
YTD Year-to-date: since the start of the year in LC Local currency
4,2%
Fixed income
Emerging markets
1 month in CHF
1,3%
YTD Year-to-date: since the start of the year in CHF
-3,2%
1 month in LC Local currency
2,0%
YTD Year-to-date: since the start of the year in LC Local currency
-1,1%

Alternative investments 1 month in CHF YTD in CHF
1 month in LC YTD in LC
Alternative investments
Swiss real estate
1 month in CHF
-1,4%
YTD Year-to-date: since the start of the year in CHF
-2,9%
1 month in LC Local currency

-1,4%

YTD Year-to-date: since the start of the year in LC Local currency
-2,9%
Alternative investments
Gold
1 month in CHF
4,5%
YTD Year-to-date: since the start of the year in CHF
16,7%
1 month in LC Local currency
5,1%
YTD Year-to-date: since the start of the year in LC Local currency
19,3%

Our positioning – Swiss focus

Liquidity TAA old TAA new
Liquidity
CHF
TAA old Tactical asset allocation: short- to medium-term positioning
3.0%
TAA new Tactical asset allocation: short- to medium-term positioning
3.0%
Liquidity
JPY
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Liquidity
Total
TAA old Tactical asset allocation: short- to medium-term positioning
5.0%
TAA new Tactical asset allocation: short- to medium-term positioning
5.0%

Equities
TAA old TAA new
Equities
Switzerland
TAA old Tactical asset allocation: short- to medium-term positioning
28.0%
TAA new Tactical asset allocation: short- to medium-term positioning
28.0%
Equities
USA
TAA old Tactical asset allocation: short- to medium-term positioning
8.0%
TAA new Tactical asset allocation: short- to medium-term positioning
8.0%
Equities
Eurozone
TAA old Tactical asset allocation: short- to medium-term positioning
4.0%
TAA new Tactical asset allocation: short- to medium-term positioning
4.0%
Equities
United Kingdom
TAA old Tactical asset allocation: short- to medium-term positioning
0.0%
TAA new Tactical asset allocation: short- to medium-term positioning
0.0%
Equities
Japan
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Equities
Emerging markets
TAA old Tactical asset allocation: short- to medium-term positioning
1.0%
TAA new Tactical asset allocation: short- to medium-term positioning
3.0%
Equities
China
TAA old Tactical asset allocation: short- to medium-term positioning
1.0%
TAA new Tactical asset allocation: short- to medium-term positioning
1.0%
Equities
Total
TAA old Tactical asset allocation: short- to medium-term positioning
44.0%
TAA new Tactical asset allocation: short- to medium-term positioning
46.0%

Fixed income TAA old TAA new
Fixed income
Switzerland
TAA old Tactical asset allocation: short- to medium-term positioning
19.0%
TAA new Tactical asset allocation: short- to medium-term positioning
19.0%
Fixed income
World
TAA old Tactical asset allocation: short- to medium-term positioning
10.0%
TAA new Tactical asset allocation: short- to medium-term positioning
10.0%
Fixed income
Emerging markets
TAA old Tactical asset allocation: short- to medium-term positioning
6.0%
TAA new Tactical asset allocation: short- to medium-term positioning
6.0%
Fixed income
Inflation-protected bonds
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Fixed income
Total
TAA old Tactical asset allocation: short- to medium-term positioning
37.0%
TAA new Tactical asset allocation: short- to medium-term positioning
37.0%

Alternative investments TAA old TAA new
Alternative investments
Swiss real estate
TAA old Tactical asset allocation: short- to medium-term positioning
5.0%
TAA new Tactical asset allocation: short- to medium-term positioning
5.0%
Alternative investments
Gold
TAA old Tactical asset allocation: short- to medium-term positioning
9.0%
TAA new Tactical asset allocation: short- to medium-term positioning
7.0%
Alternative investments
Total
TAA old Tactical asset allocation: short- to medium-term positioning
14.0%
TAA new Tactical asset allocation: short- to medium-term positioning
12.0%
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