Macroeconomic market insight of the first quarter of 2021
The first quarter of 2021 marked exactly one year since the outbreak of the pandemic and the imposition of restrictive measures, which lead to an unprecedented market and global economy decline. Three important events mostly dominated the first quarter of 2021 for investments. Firstly, the rise in US treasuries yields by 88%. Secondly, the pressure on stocks in the technology sector in US and China. Thirdly, the turn of investors to Value shares, as 2021 will be a year where economies will open permanently.
These events have had a significant impact on investors who have chosen to invest in stocks, as the major technology companies in the United States and China have on several occasions recorded losses similar to those they had exactly a year ago. All the leading technology companies have been in negative returns since the beginning of the year.
The first quarter of 2021 confirms our estimate for periods of increased volatility, which will follow the periods during which markets will move upwards. For one more quarter, the second in just 12 months, XSpot Wealth’s investment portfolios met exceptionally well to the same demanding market conditions.
XSpot Wealth Portfolio Performance
Above is the performance of all XSpot Wealth’s portfolios. Investment portfolios such as XSpot Growth and XSpot ESG, which have exposure (via ETF’s) to technology stocks and China as well as selected bond ETFs, performed better, with less risk. For the second time in a year, these high risk XSpot Wealth’s portfolios fell less than their benchmarks.
As an example, if a conservative investor had a combination of some of the above portfolios, with 90% of his capital in conservative portfolios and only 10% in moderate risk portfolios, then he would have achieved higher returns than in any other investment and possibly with the same or even less risk.
What changes occurred in the investment portfolios in the first quarter
The guide for the XSpot Wealth portfolio management team is to maintain a portfolio in achieving its goal. This is a daily process to ensure that a portfolio is moving towards the right direction and can perceive the changes that most safely lead to that targeting.
That is why we made a critical change in the XSpot Growth portfolio by liquidating Growth stocks, with significant gains and buying Value stocks, which are expected to outperform due to the opening up of the economy but at the same time are less affected by the rising interest rates and in the long run are favored by them.
Value stocks offered higher returns to investors but also a much lower risk exposure as they continued to move higher, while Growth stocks followed a completely opposite course. The coming months will be even better for Value stocks.
The next change was made to the XSpot High Income portfolio. This portfolio is unique, as it significantly enhances the potential investor needs for a monthly income. As the portfolio has already outperformed, with 6.5% gains since the beginning of the year, dividend yield had declined. As a result, two key changes were performed at the portfolio aiming to increase the annual dividend yield, which was enlarged by 40%.
Second quarter estimates
Our estimation is that the second quarter will be much better for the markets and it will create opportunities for significant gains. But we would like to mention this: Estimates for the course of the markets are of XSpot Wealth’s interest, as your fund manager. You should be interested in your funds to have the highest efficiency within the risk framework that you have defined. Rest assured that all opportunities, as well as all potential risks, have already been analyzed and have shaped the current composition of each portfolio.
Please remember that past performance is not a reliable indicator of future performance
This document does not constitute and shall not be construed as a prospectus, advertisement, public offering, or placement of, nor a recommendation to buy, sell, hold or solicit, any investment, security, other financial instrument or other product or service. This document is for general information only and is not intended as investment advice or any other specific recommendation as to any particular course of action or inaction.