FUND REPORTING

FUND REPORTING, as of 31.01.2020

Financial markets thrive on optimism, but we remain vigilant

At the end of the month, things got uncomfortable again: After the stock markets continued to strive steadily at the beginning ofthe new year, the corona virus is putting increasing strain on the psyche of many investors

At the moment, it is only profit-taking that is not unusual after the strong rally and is even "healing". However, there is concern that the consequences for global economic growth and corporate earnings development are more serious than the comparison with the SARS epidemic of 2003 suggests. Share price gains in the first half of the month are history, with the decline in Asia and Europe more pronounced than in the United States. On the other hand, safe havens such as government bonds from the U.S. and the Eurozone have been experiencing a renaissance, so that the yield on 10-year U.S. Treasuries is back near its 1.5% low in October 2019. Corporate bonds also posted gains, albeit to a lesser extent. Another beneficiary was the gold price with a premium of almost 5%.

 

The fund gained between + 2.52% and +2.79% depending on the share class and on-ce again benefited above all from the dyna-mic development of the technology and he-althcare sectors. Of particular note areArista Networks, JD. Com, Mercado Libre,Shopify and Teladoc. Amgen, BASF andLVMH, on the other hand, contributed ne-gatively to performance. Cash inflows wereinvested in existing positions. In the bondportfolio, subordinated finance (Rabo,Deutsche Bank) and Teva issues again per-formed particularly well due to positivecompany reports, while K + S continues tostruggle with the weak economy. We madenew commitments in an attractive Deut-sche Bank CoCo and in an ETF on bondsfrom emerging markets in local currency.The exposure of 55% in equities and 39% inbonds have not changed. Despite the un-certainty factors mentioned and the resul-ting higher volatility, we want to maintainour current exposure in the coming weeks.Even though the spread of the corona virusdominates the headline, company reportsfor the past quarter and economic data aremore sustainable for the financial markets.Despite the ceasefire in the trade dispute,the global economy is still sluggish. But the-re is also good company news, most recent-ly from Apple, Amazon, Intel or Tesla. Ho-wever, so much positive has already beenpriced in that the potential for disappoint-ment is high. The next few weeks will becharacterized by nervousness, although wedo not expect any major setbacks, sincemost investors are already “risk-aware”

 

  Phaidros Funds Balanced Morningstar Peer Group*
  Return Volatility Return Volatility
10yrs ann. 7,2 7,0 2,5 5,7
5yrs ann. 7,1 7,8 1,5 6,1
3yrs ann. 8,5 6,1 2,3 5,5
1yr 18,5 5,9 8,2 4,4
YTD 2,6   0,5  

* Morningstar category EUR Flexible Allocation Global

The fund gained between + 0.62% and + 0.66% depending on the share class. Once again, US technology and financial stocks (Square, Adobe, Alphabet and Mastercard) stood out among the stocks, as did the French waste disposal company Veolia. By contrast, there were price losses at BASF, Total and the ETF on equities from emerging countries. In the bond segment, subordinated finance (Rabo, Deutsche Bank) and Teva and Bayer issues again performed particularly well due to positive company reports, while K + S and paper stocks continued to struggle with the weak economy. In the equity portfolio, we took profits at Salesforce, which caused the ratio to drop slightly. In the bond portfolio, we have started another round of our "quality offensive", and we have issued issuers whose current spread, in our view, does not adequately reflect the risk (America Moviles, Anglo American, CNP, Groupama, Hornbach, IHO, MPT, PVH, Repsol, Stora Enso , TDC, Vale). In return, we bought an ETF on emerging market bonds in local currency and an attractive CoCo from Deutsche Bank. As a result, the cash exposure rose to a good 11%. Even though the spread of the corona virus dominates the headline, company reports for the past quarter and economic data are more sustainable for the financial markets. Despite the ceasefire in the trade dispute, the global economy is still sluggish. But there is also good company news, most recently from Apple, Amazon, Intel or Tesla. However, so much positive has already been priced in that the potential for disappointment is high. The next few weeks will be characterized by nervousness, although we do not expect any major setbacks, since most investors are already “risk-aware”.

 

  Phaidros Funds Conservative Morningstar Peer Group*
  Return Volatility Return Volatility
5yrs ann. 3,9 5,1 1,2 3,3
3yrs ann. 4,9 4,0 1,6 2,7
1yr 10,7 3,7 5,3 2,1
YTD 0,7   0,5  

* Morningstar category EUR Cautious Allocation

The high-yield segment was unable to keep up with the rally of + 2% on average for investment-grade bonds. The fund gained between + 0.18% and + 0.28% depending on the share class. Subordinated finance (Rabo, Deutsche Bank) and issues by Teva and Bayer developed particularly well again due to positive company reports, while K + S and paper stocks continued to struggle with the weak economy. We slightly reduced the cash exposure by increasing existing positions and adding two attractive CoCos from Deutsche Bank and Santander, Credit Bank of Moscow and Autostrade. Consumer stocks continue to make up the largest share at 29%, followed by financial and telecoms stocks at 22% and 15%, respectively. Similar to the stock markets, high-yield bonds will also have to deal with increased volatility in the next few weeks. However, we do not plan to change our basic positioning.

 

  Phaidros Funds Fallen Angels Morningstar Peer Group*
  Return Volatility Return Volatility
5yrs ann. 3,8 2,6 2,9 4,2
3yrs ann. 3,9 2,1 2,4 3,3
1yr 7,9 2,0 6,2 2,7
YTD 0,2   0,0  

* Morningstar category Global High Yield Bond (EUR Hgd)

The fund gained between + 4.21% and + 4.36% depending on the share class and again benefited above all from the continued dynamic development of the technology and healthcare sectors. Arista Networks, PayPal, Shopify, Square and Teladoc deserve special mention. Amgen and BASF, on the other hand, contributed negatively to performance. We have largely invested cash inflows in existing positions; the cash exposure is currently a good 6%. The proportion of monopolists continues to be around 2/3. Our focus remains on the technology and health sectors, which together represent more than 50% of the portfolio. Despite the uncertainty factors mentioned and the resulting higher volatility, we want to maintain our current exposure in the coming weeks. Even though the spread of the corona virus dominates the headline, company reports for the past quarter and economic data are more sustainable for the financial markets. Despite the ceasefire in the trade dispute, the global economy is still sluggish. But there is also good company news, most recently from Apple, Amazon, Intel or Tesla. However, so much positive has already been priced in that the potential for disappointment is high. The next few weeks will be characterized by nervousness, although we do not expect any major setbacks, since most investors are already “risk-aware”.

 

  Phaidros Funds Schumpeter Aktien Morningstar Peer Group*
  Return Volatility Return Volatility
5yrs ann. - - 7,2 11,6
3yrs ann. - - 8,4 10,3
1yr 28,7 10,1 19,1 8,9
YTD 4,4   1,2  

* Morningstar category Global Large-Cap Blend Equity

Source: Morningstar, as of 31.12.2019 | Calculation based on month-end prices. The stated performance is the calculated net asset value in % in the fund currency after costs and without taking any subscription fees into account. The data are historical data and do not guarantee future developments.