A. Stotz All Weather Alpha Focus – June 2022

Review: Inflation and recession concerns were in focus. All Weather Alpha Focus was 4.2% below 60/40 and 1.0% below World Equity in June due to our 20% tilts to Energy and Commodities. The war in Ukraine is likely to drive Energy stocks and Commodities higher. Risks: Global recession, 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. If you’re interested in our allocation strategy, you can also join the Become a Better Investor Community. 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 are down 9% since the last revision

• All Weather Alpha Focus has a core World Equity target allocation, which fell by 8.0% in June 2022
• The market expects aggressive rate hikes to stifle inflation, which is bad for risky assets like stocks

World Energy has fallen back

• We had a tilt to World Energy; down by 14.3%, and was the worst performer in June 2022
• Overall market sell-off put pressure on oil price, which fell in June, and the Energy sector with it

Healthcare has been defensive

• We had a target allocation to World Healthcare, which was down by 1.5% in June
• We consider Healthcare a defensive sector, and it has outperformed World Equity since our latest revision

Infrastructure has performed in line with the overall market since our June revision

• We also had an allocation to World Infrastructure, which was down by 7.7% in June

India has been fairly resilient since our last revision

• We had a tilt to India, which outperformed World Equity by 3.4% in June, but fell by 4.6%

Thai money market stayed flat

• Rather than Global Bonds, we had a small target allocation to the Thai money market, which was flat as expected
• The main purpose of our money market allocation is downside protection

Commodities underperformed in June

• We had a tilt to Commodities, which was the second-worst performer in June 2022, down by 9.0%

Only livestock wasn’t down

• Fed’s rate hike in June aims to slow inflation but could also lead to a recession
• Other central banks seem to do the same; bad for commodities
• WTI oil closed June 2022 at $106/bbl

Gold has kept up well since our last revision

• We had an allocation to Gold, which closed at US$1,807/oz or down by 2.0%

June 2022: Alpha Focus was 4.2% below the 60/40 portfolio

• Alpha Focus was also 1.0% below World Equity
• Our tilts to World Energy and Commodities were the main drivers of the May 2022 underperformance

Alpha Focus is below the 60/40

• Alpha Focus closed June 2022 1.4% below the 60/40

Alpha Focus has held up better than World Equity

• Alpha Focus closed June 2022 6.0% above World Equity

All Weather Alpha Focus is an exclusive strategy available in Thailand through FINNOMENA, learn more here. If you’re interested in our allocation strategy, you can also join the Become a Better Investor Community.

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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.