Developments in the markets and the economy
The third quarter had two sides. The first is the good, with the markets not provoking any turmoil during the summer resulting in six consecutive rising months and the second, the least good, where September confirmed its historicity as the worst month for opening positions.
The main concerns of investors were:
1. The insisting problems in the global supply chain which are causing chain reactions in the economy as prices rise sharply.
2. The fact that inflation still remains at high levels, makes investors be more defensive as their investment positions are based on a possible scenario of rising interest rates by central banks.
3. The sharp rise in energy prices which will lead to an even greater rise in inflation, and this is expected to cast shadows on economic growth.
4. China and the Government's insistence on intervening in all economic activity. The case of Evergrande, which has been described as China's Lehman Brothers and almost shook international markets.
5. Markets move to the next phase, the phase of mature growth and this is captured in investment flows.
Returns of XSpot Wealth Portfolios
A quarter of low returns for the markets and the XSpot Wealth investment portfolios, which, however, have been performing particularly good since the beginning of the year. What happened was that the higher risk portfolios gave the opportunity to open new positions at better levels, in order to be ready for the fourth quarter.
The XSpot High Income portfolio recorded the biggest losses, as it had already recorded returns of over 20% since the beginning of the year. The result of the fall was the improvement of the dividend yield of the portfolio, which is now at 9.82%.
The latest turn of events in the markets and in our investment portfolios, offer the opportunity to investors with conservative portfolios, to consider a possible increase in their risk tolerance by investing in portfolios of higher estimated annual return.
As the investment portfolios XSpot Growth, XSpot Growth ESG and XSpot High Income have moved lower, an investor has covered a higher probability of a possible fall, based on the historical behavior of the portfolios. Thus, an investor takes relatively less risk and expects a significantly higher return from now on.
Expectations for the coming months
In the third quarter, there was no change in the composition of the investment portfolios. With the markets entering the mature growth phase, capital movements to the sectors of banking, tourism, hotels, energy, and Value stocks are already visible, and it is possible that there will be an attempt for better closure in China.
All of the above are key investment elements of the XSpot Growth and XSpot Growth ESG portfolios and we expect that the fourth quarter will offer a more positive outcome as in the latest events there is the American debt settlement and the announcement of Merck for a promising drug, which could reduce significantly the coronavirus' effects and the associated risks to the global economy.
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.