Strategy Defense: More gold for capital preservation
The Quint: Essence Strategy Defensive has come one step closer to offsetting first-quarter losses in May with a 1.64% share price increase . At the end of May, the fund stands at a performance of -0.78% so far this year.
There were slight changes in portfolio composition during the past four weeks :
With the purchase of additional XETRA Gold shares , we increased the Fund's gold position by approximately 30%. Gold is still not sought after by investors. We therefore use the currently low prices to increase the gold exposure of the Strategy Defensive. There are also increasing signs of rising inflation in the US and the eurozone.
We remain convinced that neither the US Fed nor the ECB can raise interest rates in line with inflation. This then leads to falling real interest rates , which basically have a positive effect on the gold price . Depending on market conditions, we will continue to increase the portfolio's gold allocation over the coming months.
On the equity side of the Quint: Essence Strategy Defensive, we reduced our exposure to the Swiss pharmaceutical company Novartis AG by about 10%. We are still convinced of the company and have currently weighted it at about 4.8%. The reduction of the position is only for higher diversification of defensive equity segment.
The third change to the portfolio's portfolio position last month was the purchase of a Singaporean government bond . The state of Singapore is a first-class debtor and thus fulfills the strict quality criteria of the strategy defense. With a maturity in October 2019, the bond has a short maturity with minimal interest rate risk.
The interest rate on the paper is 1.625% , which is significantly higher than the yield that can be achieved with German bonds of comparable maturity. This exposure is accompanied by a foreign currency exposure to the Singapore dollar leading to a higher degree of diversification on the currency side of the fund.
The current market environment continues to be detrimental to the conservative and security-focused nature of the Quint: Essence Strategy Defensive. Nevertheless, the defensive strategy continues and the risk is not increased. Capital preservation remains a top priority for this fund.