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A. Stotz All Weather Strategies – May 2024

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The All Weather Strategy is available in Thailand through FINNOMENA. 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.

What happened in world markets in May 2024

Performance of the World stock markets

  • The US, and especially tech-heavy NASDAQ, performed great
  • Japan was up slightly
  • Hong Kong was up while China A was down
  • Europe was up too

Find the updated Performance of the World stock markets here.

World stocks rebounded in May

  • In 2023, World stocks were up 22.8%
  • In 2024YTD, they’ve gained 9.1%
  • Expectations of peak interest rates continued to support stocks

Global Bonds rose slightly in May

  • Expectations about rate cuts in 2H24 in the US and EU supported global Bonds

Commodities retreated in May 2024

  • While the index was down, the Commodities fund used in the strategy was up due to its lower weight in energy

WTI oil closed May 2024 at US$79/bbl

Energy dragged down Commodities

  • Drought concerns drove up Agriculture in May
  • Precious metals held up well on continued uncertainty
  • Improved economic outlook supported industrial metals

Gold gained in May 2024

  • Gold closed the month at US$2,327/oz
  • Central bank buying continued to support the Gold price

All currencies have weakened >10% against Gold in 2024YTD

  • Typically, a stronger US$ means a lower gold price in US$ and vice versa

Asset managers don’t expect a recession

  • 78% of global asset managers currently say that a recession within the next 12 months is unlikely
  • In November 2022, roughly 90% of portfolio managers anticipated a recession

US small cap debt coming due

  • Small caps have a bigger share of debt coming due in the next 5 years
  • At the same time, 41% of Russell 2000 companies are not profitable

Electricity inflation is the highest in 40 years

  • Energy prices surge as demand is growing from, for example, data centers and AI

US is no.1 in oil

Gold hits another ATH

  • Gold price recorded a new all-time high of US$2,450/oz t in May

China replaces UST with gold

  • In 1Q24, China sold a record amount of US Treasuries (UST) and US agency bonds to buy gold

China drives copper demand

  • Pretty much everything related to the “green transition” requires a lot of copper
  • Copper is also among the best-performing assets in the past six months

Performance review: All Weather Inflation Guard

All Weather Inflation Guard gained 1.2%

Since inception, the strategy was up 6.8% and 7.5% above a 40/60 portfolio

  • The strategy has also experienced less volatility

In May 2024, the strategy was up 1.2%, which was 1.1% below the 40/60 portfolio

  • Our 5% target allocation to Commodities did OK, but it was offset by the poor performance of World energy
  • TIPS and Gold both outperformed Global Bonds

Performance review: All Weather Strategy

All Weather Strategy gained 1.6%

Since inception, the strategy was up 44.9% and 20.0% above a 60/40 portfolio

In May 2024, the strategy was up 1.6%, which was 1.1% below the 60/40 portfolio

  • Our 25% target allocation to Developed Europe did OK
  • While our 25% target allocations to APAC ex JP, CN and Gold dragged on performance relative to the 60/40 portfolio

Performance review: All Weather Alpha Focus

All Weather Alpha Focus gained 1.3%

Since inception, the strategy has been flat and 6.1% above a 60/40 portfolio

And 0.9% below World Equity, but with a lot less volatility

In May 2024, the strategy was up 1.3%, which was 1.5% below the 60/40 portfolio

  • Our 17% tilt to Infrastructure outperformed but our 17% tilt to Healthcare underperformed World Equity
  • Our tilts to Gold and Bonds dragged on performance as well

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.

Posted in All Weather Strategy