Expert interview "Considerably more flexible than others"
Mr. Stürner, you have set the bar very high with the strong performance last year. What is the interim result this year?
Stürner: Of course there is always room for improvement, but on the whole I am very satisfied with the development since the beginning of the year, namely a plus of almost 4 percent. But more important is the view over a longer period. Here we can show an increase of 31.5 percent over a three-year perspective and thus depend on the peer group.
What are the reasons? What do you do better than the competition?
Stürner: I do not know exactly how the competition works, but I can tell you what we do and where I guess where the big difference is. First of all, from my point of view, it's about active management, and I mean it's really active. While others may marginally change the allocation ratios, we have the freedom to control the equity allocation very flexibly and vary between 0 and 100 percent. And we use this freedom depending on the signal situation.
Is that the only reason?
Stürner: Our concept is based on long-term and short-term indicators. And the mainspring of our performance is that we are not so slavishly positioned in terms of deadlines, ie one third in the long term, one third in the medium term and one third in the short term. Instead, we have additionally installed a risk management process, which signals to us which of the three deadlines is currently decisive. For example, in the fall of 2018, the short-term indicators dominated everything, which has led us to completely exit stocks. So I see the big difference: that within the deadlines, we are much more flexible than others.
Let's go to the allocation. How are you currently positioned?
Stürner: We are currently 95 percent invested in equities since the end of January. As you know, we came through the year so well in 2018 because we reduced the equity ratio to zero towards the end of the year. The start to the new year was difficult at first, but then the signals have signaled us to re-enter.
In which regions are you primarily invested?
Stürner: Up to 7 percent all titles come from the USA.
What about bonds? What is the current quota?
Stürner: For the time being, bonds are not an asset class in which we invest because they offer an asymmetric opportunity-risk potential. This is especially true for European bonds. They are divorcing until further notice. Perhaps briefly to classify: We pretend that, of course, we always evaluate the opportunity-risk potential in addition to the individual analysis of the fundamentals. If it is asymmetric, it means that the risk potential is greater than the opportunity potential. And then we do not invest.
What about currency bonds?
Stürner: The signal situation for the US dollar is positive. That means we could actually invest in US bonds. But the US has - at least - a rising interest rate trend. This puts us at zero chance and, in addition, poses a risk if the interest rate side continues to develop negatively. Thus, currency bonds are currently out of the question.
Which hedging instruments are used in the fund?
Stürner: We use options for single stocks that are deep in the money, because there are still as good as no bonuses on them. I can currently hedge equity positions at 0.1 percent cost.
In your opinion, which topics will play a role in the coming weeks and months?
Stürner: Per se, as we know, we are forecast-free. We work signal-based. But what you can say is that economic data in the US, both macro and microeconomic, remains nominally and relatively better than the rest of the world. For us, that means that the US will remain a heavyweight in our fund for the foreseeable future.
What about the rest of the world?
Stürner: Europe has clear problems on the growth side, which has led to the DAX already having its peak in January 2018 and not, as in the US, until October. This difference is fundamentally justifiable and there is no trend reversal yet. We observe when we get the first signals to rebuild positions in Europe, but we do not have any. By contrast, the signal situation in the emerging markets is visibly improving. We have already built some positions, such as Alibaba and Baidu, both of which are assigned to the Chinese market.
Generally you put a focus on tech values. Do not you see the problem of a lump risk?
Stürner: No, a lumping risk always arises only if you assume that in the near future casually formulated the plug is drawn and the Amazons, Microsoft and Apple of this world suddenly earn no more money. But for me the scenario is not tangible and unimaginable. In addition: Our risk management system works on a daily basis and would show us appropriate signals. Our signal has been that we can secure the titles, which have good long-term prospects, and this has undoubtedly secured the technology sector, in the meantime.
Where does the preference for tech values come from?
Stürner: The basis for these companies to continue to grow is significantly better than in other industries. The processes of change are running at a gigantic speed. We are in the middle of the revolution. We just can not get it. That means investing in technology stocks does not mean a lot of risk to me, but rather for me it's more of a risk not to be invested there.
The strong performance of the fund should have a positive impact on volume. How hard is the PEH Empire up to date?
Stürner: Currently, the fund has a volume of almost 70 million euros. Since June of last year, we see significant inflows of funds.
Is there a fund volume where you would brake and take no more money so as not to jeopardize the investment philosophy?
Stürner: No, I do not see that right now. Just look at our ten largest positions or perhaps the 25 positions we are currently invested in. These are very large, if not the largest, titles by market capitalization. As a result, we are able to implement our investment policy with a significantly larger volume, completely unchanged.