Analyzing the data exactly one year after the outbreak of the pandemic, we found that the excessive rise of commodities in combination with the lasting policy of the provision of US benefits to American citizens, has begun to bring about a significant increase in inflation which will remain the coming space. An increase that we expect to intensify as vaccinations proceed and the opening of all activities culminating in the 3rd and 4th quarter of 2021.
In combination with the first steps of the restart of the economy, we expect the cyclical sectors to record particularly high returns in the coming period.
For this reason, we consider that there is no reason to further hold long-term government bonds which we held more for protection reasons in periods of high volatility (Covid-19), proceeding to liquidate our position in long-term US bonds (TLT), supporting two new moves. On the one hand, we supported our already successful option for Value shares, increasing their weight in the portfolio from 20% to 24%. In addition, we made a new addition, which is the American banking sector (10%). Banks gather the following significant features for the period we are going through:
a) It is a Value sector that has strong dividends
b) Records gains and interest rate hikes are expected to lead to an even greater profitability boost
c) Banks have activated huge own shares repurchase packages
d) The banking sector is significantly strengthened in times of high inflation
We expect that with the above changes, the XSpot Growth plan will move closer to our MSCI World benchmark in the near future.
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.