After a short breather in September and October, the stock markets continued their upswing until the end of the year. The MSCI World Index gained around 14% in Q4 (in USD). The long-awaited breakthrough in the vaccination against Covid-19 and the clear election outcome in the USA provided the necessary boost. The new aid packages and economic stimulus programs of the USA and the EU also ensured that the scenario of a sustainable economic recovery convinced more and more investors. All of this was accompanied by declining risk indicators - the tension is clearly falling.
Unlike in the previous two quarters, the price gains were no longer attributable to just a few, mostly technology-related stocks. Sectors such as financials and industrials also gained ground. Within the sectors, more procyclical and riskier stocks were predominantly sought after. Geographically, other regions were also able to keep up with the strong US market.
Although our risk-based strategies ended the quarter in positive territory, they clearly underperformed their respective benchmarks. Strong positive market performance and declining or low risk indicators were - with the exception of the Corona crash in early spring - the defining features of the stock market year 2020. The year-end result of our strategies is therefore unfortunately also very sobering. In general, it was not a year for investments that focus on risk minimization. Such short- to medium-term "market regimes" have also existed in the past - in the long term, however, disciplined risk-based implementation has paid off.