Gutmann Portfolio Management Report
With a steady hand.
Stock and bond prices took off like racehorses from the starting gate in January. In March, however, dark clouds appeared on the investment horizon and the bank run on the Silicon Valley Bank left no one untouched.
You find a short version of the decisions we have made in Gutmann Portfolio Management and our market assessments below, or click on the download link to read the quarterly report in full in PDF format.
Entering 2023 with optimism.
Investments in equities.
In mid-September of 2022, we invested more in equities and, in return, reduced the proportion of bonds in the asset management portfolios.
Convictions were tested.
Bank failure in March.
On March 10, U.S. authorities declared Silicon Valley bank SVB insolvent. the institution was number 16 in the U.S. in terms of size. On Sunday, March 19, Credit Suisse, the major Swiss bank in distress, was taken over by its competitor UBS.
Act with calm.
Gains in equities and bonds.
Both equity and bond strategies of the Gutmann portfolio management closed the quarter on a positive note. Once again, navigating through the storm with a steady hand at the helm paid off.
Gains in equities and bonds.
Since last summer, a trend has manifested itself. Yields on short-term bonds have climbed steadily. Two-year German and Austrian government bonds rose up to 3.3%. Their counterpart in the USA even topped 5%. In the face of these developments, it is all the more astonishing that the stock markets resisted this headwind and ended the past quarter with performance gains.
No one can seriously predict how the prices of stocks and bonds will develop over the next few months. However, we know the earnings of companies, which are published on a quarterly basis, and we know the interest rate landscape. The fourth-quarter 2022 corporate earnings released earlier this year were down. But that did not come as a surprise.
It was important for us to see that the companies in the Gutmann equity strategies were able to raise their prices in an inflationary environment and maintain their market position. Speaking of inflation. Even good companies must pay higher interest rates in the current environment. This is positive for corporate bonds, the most important component of Gutmann's bond strategy. Bonds issued by companies with good credit ratings are again paying around 4% for 5 years. With expected average inflation of 2.5% over the next 5 years traded on the markets, this is quite attractive.
Gutmann focuses on quality in equities and bonds. Companies are at the heart of both major asset classes. We are deeply convinced that entrepreneurship is the best way to grow wealth in real terms.
Coped extremely well with the volatile period.
Gutmann's equity strategies coped extremely well with the volatile period. Less than 6% of the Gutmann Core Equities strategy is invested in banks. In the Gutmann Global Dividends strategy, the figure is a good 3%. These strategies include two US institutions, JP Morgan and Bank of America. Both are G-SIBs. The Gutmann Pure Innovation strategy does not hold any bank shares. The Gutmann Core Equities strategy is the heart of the equity portfolio. The strategy performed well in the turbulent environment. Systematic adjustment of the asset allocation every 3 months creates a balance that avoids high concentration in individual stocks and themes.
The Gutmann World Equity Portfolio is based on a solid foundation of different equity strategies. Stock selection is determined by the quality of the companies' business models and the most important topics for the future.
Prepared for different scenarios.
In Gutmann's mix of bonds and equities, no quick and drastic action was required even in the most turbulent period of the weeks in March. Good risk management and a disciplined focus on quality enabled prudent activities.
The first quarter showed once again that developments such as a sudden bank run are unpredictable. A look at our stock and bond portfolios showed that we were well prepared. We cannot spare our clients market fluctuations. Rather, it is important to avoid permanent capital losses.
We cannot promise that the stocks and bonds of companies, banks, municipalities, agencies, and sovereigns we select will never be affected by threatening developments. But our disciplined focus on quality increases the likelihood that such events will remain a rarity. Our first imperative is to protect our clients’ assets. The second imperative is to increase wealth in real terms. Whatever we do to achieve this must not conflict with the first imperative.
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This is a marketing information. Investment in financial instruments respectively investment funds is subject to market risks. Past performance is not indicative of future returns. Forecasts are not necessarily indicative of future results.
Gutmann Global Bonds Strategy may invest mainly in categories of assets other than securities or money market instruments.
Due to the composition of the portfolio and the used portfolio management techniques the Gutmann Core Equities, Gutmann Global Dividends, Gutmann Pure Innovation and the Nippon Portfolio under certain circumstances can show an increased volatility, i.e. the value of units may be exposed to high up- and downturns within short periods of time.
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