A. Stotz All Weather Alpha Focus – March 2022

All Weather Alpha Focus was 1.5% above the 60/40 portfolio in March. In the near term, the war in Ukraine is going to rattle markets, and we think Energy and Commodities will do well. We keep Gold as insurance. We expect central banks to do what they can to prop up markets and the Indian stock market to remain strong. 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. 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 was up slightly in March

Performance of the World stock markets

• US rebounded in March
• Most Asian markets recovered, too, though China continued to fall
• Key European markets stayed flat

US pulled up World equity

• World equity was up by 2.0%
• US, with its heavy weight in the index, was mainly what pulled up World equity in March 2022

High volatility due to the war in Ukraine

• World energy was up 12.6%
• The war in Ukraine led to massive price moves in oil and natural gas
• At the end of March, oil was just slightly up, while natural gas saw large monthly gains

World Financials underperformed

• We think post-covid recovery should lead to more economic activity, supporting Financials
• Also, rate hikes should benefit banks
• Though, in March, we saw downgraded growth expectations leading to 1.4%  underperformance versus World Equity

Healthcare performed strongly

• While many cyclical sectors were hit by downgraded growth expectations, sectors that are traditionally considered defensive, like healthcare, saw great returns
• World healthcare was up by 7.6%, outperforming World equity by 5.6% in March

Infrastructure is typically also defensive

• World infrastructure was up by 4.8% or 2.8% outperformance versus World equity

India was slightly above World equity

• India gained 2.3%, outperforming World equity by 0.3% in March
• As global sentiment improved, the Indian market did as well
• RBI reassured the inflation in the country is transitory, which eased the market’s concern

Worst quarter ever for US Treasuries

• The Thai money market was flat
• The main purpose of our money market allocation is downside protection
• Since the inception of the “Bloomberg U.S. Treasury Total Return Index” in 1973, 1Q22 was the worst on record, down by 5.6%
• Other asset classes did well in March; hence, it was good with to have a small allocation

Energy continued to drive commodities

• Recovery demand, inflation, and the war in Ukraine led us to add Commodities
• Commodity groups  where Russia and Ukraine are big exporters were the strongest performers

Gold performs under uncertainty

• Gold closed March at US$1,936/oz or up by 0.7%
• As the market didn’t seem to worry about ww3 anymore, the gold price retreated after the first week of March

Alpha Focus is almost on par with the 60/40

• Five months in, Alpha Focus closed 0.7% below the 60/40
• As equities fell worldwide, the strategy got hit hard initially
• Reduced the gap to 60/40 in March, as our tilts performed well

Alpha Focus was 1.5% above the 60/40 portfolio

• All three of our bigger tilts beat World equity
• We increased Gold in our latest revision to have some insurance; below World equity, but slightly up

All Weather Alpha Focus is an exclusive strategy available in Thailand through FINNOMENA, learn more here. 

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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.