A. Stotz All Weather Alpha Focus – February 2022
All Weather Alpha Focus was 1.3% below the 60/40 portfolio in February. In the near term, the war in Ukraine is going to rattle markets, and we think Energy, Commodities, and Gold will do well. Banks to benefit from rate hikes. We expect Fed and ECB to do what they can to prop up markets, and the Indian stock market to remain strong. Risks: New lockdowns, crash in the Indian market, collapse in energy prices.
A. Stotz All Weather Alpha Focus is Global, Opportunistic, Long-term, and Defensive:
- Global – Invests globally, not only Thailand
- Opportunistic – Tilts towards asset classes, sectors, regions, and themes in a quest to enhance returns and manage risks
- Long-term – Gains from long-term equity return
- Defensive – Aims to reduce extreme losses during equity market downturns
All Weather Alpha Focus is available in Thailand through FINNOMENA, and you can learn more here. Please note that this post is not investment advice and should not be seen as recommendations. Also, remember that backtested or past performance is not a reliable indicator of future performance.
Review
World stocks have retreated in 2022YTD
Performance of the World stock markets
- US was hit further in February, especially tech-heavy NASDAQ
- Though, Asia and Europe fell more
- And Moscow was down 31%
Review
O/W World IT, India, and the US
- Since December 2021, All Weather Alpha Focus has had an aggressive tilt towards World IT, India, and the US
War in Ukraine rattled financial markets
- Following Russia’s invasion of Ukraine, February 2022 saw a lot of volatility and ended down 2.5%
Healthcare was resilient
- World healthcare was down 0.6%, outperforming World equity by 1.9% in February
- Our allocation to World healthcare was a defensive play, which paid off
Info Tech continued to fall in February
- Expected rate-hikes by the Fed and higher uncertainty in the overall market led to highly valued Tech stocks falling by 6.6%
- World Info Tech underperformed World equity by 4.1% in February
- The World Info Tech fund ended the month as the second-worst performer among the funds the strategy invests in
Infrastructure held up well
- World infrastructure was up by 0.6% or 3.1% outperformance versus World equity
- Our allocation to World infrastructure helped Alpha Focus in February
India performed the worst
- India fell by 3.0%, underperforming World equity by 0.5% in February
- Indian stocks started January strongly but were hit hard by global events
- While foreign outflows continued, the market got support from strong domestic buying
Rate hikes and war pushed down stocks
- S&P 500 fell by 2.9% vs. World equity at -2.5%
- Fed’s expected rate hikes and the US-Russian tensions following the conflict in Ukraine led to weak equity performance
- US Tech stocks saw large falls due to high valuations
The money market remained flat
- The Thai money market was flat in January
- The main purpose of our money market allocation is downside protection
- Most other funds the strategy was invested in were down in the past month; hence, a bigger allocation to bonds would have been better
Gold is insurance
- Gold was the only fund that showed a significantly positive return, up by 6.7%
- Gold closed February at US$1,909/oz t
- The yellow metal served as insurance when investors fled to safe havens due to the war in Ukraine
Alpha Focus has had a lower return than 60/40
Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, expressed or implied is made regarding future performance.
- Four months is still a short period to evaluate any performance
- As equities fell worldwide, the strategy got hit harder than a 60/40 due to the higher equity allocation
Alpha Focus was 1.3% below the 60/40
Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, expressed or implied is made regarding future performance.
- Our three 20% tilts performed worse than World equity in February
All Weather Alpha Focus is an exclusive strategy available in Thailand through FINNOMENA, learn more here.
DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.