Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
You can access all of our platforms from a single Saxo account.
Stronghold EUR: Up 0.7% in November driven by strong equity markets
3 minutes to read
Peter Garnry
Chief Investment Strategist
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.
Since the last update two months ago the portfolio has lowered its equity exposure by around 2 %-points and re-allocated this into Alternatives which cover real estate (REITs) and listed private equity. During November the model also shifted around 2 %-points of exposure from global momentum stocks and into European small caps.
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.
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.
The current portfolio weights are still painting a picture of a cautious model attempting to get some returns but overall trying to mitigate any large drawdowns. The model has reduced equity exposure a bit during the sell-off in global equities in August so the recent comeback has hurt a bit. As a result the portfolio is currently outperforming on days with more risk-off and as such strong risk-on sessions will most likely create underperformance relative to the benchmark.
For those not familiar with the Stronghold portfolio is a tactical asset allocation strategy offered by Saxo Bank through its managed portfolio platform SaxoSelect. The minimum investment amount is EUR 30,000 and the annual performance fee is 0.75%. The portfolio is based on a mathematical framework which aims to limit large drawdowns by dynamically responding to changes financial markets while aiming to provide stable returns.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...