During the first two months of the last quarter, global equity markets continued their peak storm that had lasted since the end of March. The MSCI World Index gained around 12% (in USD) in July and August, reaching a new all-time high. Once again, performance was driven by cyclical technology stocks, which are broadly represented in the US equity market in particular. In September, the picture changed for the first time in a long time. Rising infection figures in Europe rekindled fears of a second wave of corona and market risk indicators rose again. The previous winners of the year, i.e. technology-oriented companies such as Apple or Tesla, were in the red. By contrast, more defensive sectors held up relatively well.
Our risk-based strategies behaved accordingly in Q3. Our underweight in the US market, especially in technology giants, and the generally more defensive stock selection led to an underperformance in July and August. The situation was exactly the opposite in September. However, the outperformance towards the end of the quarter was not enough to close the gap.
The USD continued its downward trend of the second quarter, losing another 3% against the CHF. Although underweight, the USD remains the largest currency position in our Equity World Funds. The losses of the USD were partially offset by the appreciation of the GBP and AUD. In the final analysis, the currency-hedged fund classes performed slightly better than those without hedging.