The persistent presence of violence and military unrest in the news is alarming, particularly since the Ukrainian conflict captured global attention in February 2022. Now, with the October 7th assault on Israel, the world’s gaze shifts to the Middle East. The financial markets, sensitive to geopolitical and economic tremors, respond accordingly. A key concern in these tensions is oil prices, which surged by 10%, and despite a recent drop, fears of regional escalation loom over the financial sector. This anxiety cast a shadow over October's financial mood in Europe and the USA. Growth uncertainties, compounded by the U.S. government's escalated borrowing, have precipitated a bond market decline, driving yields to a peak unseen since 2007.
Amidst this backdrop, major indices have universally logged a downturn over the month: MSCI China contracted by 4.4%, MSCI Europe by 3.6%, and MSCI USA by 2.4%. The Japanese MSCI, too, reflected this trend, receding by 3.1% (all indices in local currencies).
Despite tumultuous markets, our proactive, fundamentals-driven investment strategy has outperformed its peers (fig. 1), particularly eclipsing passive balanced multi-asset ETFs over the past year and notably so in the year-to-date.
| Figure 1: Percentile rank* for fund peer group** in % |
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|---|---|---|
| YTD | 1-yr | |
| BlackPoint Evolution Fund D | 7 | 15 |
| Source: Morningstar, 10/31/2023 | Due to longest history and largest volume, we are showing data for share class D * For example, a percentile ranking of 20 means that 80% of the funds in the peer group underperformed and 20% performed equal to or better than the BlackPoint Evolution Fund D. ** EAA Fund EUR Moderate Allocation - Global |
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October witnessed a downturn in our stock portfolio. Performers like Kinsale and Upstart, which had shown strong annual gains, experienced corrections alongside Chinese firms Baidu and Daqo. However, stalwarts like Microsoft and Novo Nordisk, and growth names such as Dutch Bros, managed to distinguish themselves positively. Our bond holdings, while also down, fared slightly better. Positive contributions from short-term government securities were offset by underperformance in long-term and corporate bonds. Strategic profit-taking led to partial divestitures in Kinsale, Salesforce, Microsoft, and DHL, along with a complete exit from BMW, consequently lowering our equity exposure. On the bond front, risk mitigation entailed the disposal of two long-dated U.S. government bonds. Additionally, we capitalized on Jaguar Land Rover's buyback offer at an advantageous rate for our position.
Mindful of the ongoing geopolitical tensions and macroeconomic uncertainties, we maintain a cautious stance in our portfolio management.
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