What got off to a brilliant start at the end of Q1 was continued impressively in Q2: the market recovery from the corona crash continued unabated. Since its low in March, the MSCI World Index has risen by around 35% (in USD). In June, numerous key indices were only a few percentage points below their historic highs.
The central banks' monetary policy safety net, the generous economic stimulus packages of governments and investors' hopes of a V-shaped recovery of the economy gave share prices the necessary boost. The price fireworks were accompanied by declining but still above-average volatility. Cyclical sectors and the more cyclically sensitive stocks within the respective sectors were clearly ahead of defensive stocks. The technology and communications services sector (once again) was the strongest performer. Large and mega caps in particular outperformed small and mid caps, as has been the case for several years.
In this environment, our risk-based strategies could not keep up with the capital-weighted benchmarks. Both the declining volatility level and our underweight in cyclical stocks and mega caps slowed down the race to catch up.
Although the extent of the underperformance could lead to some uncertainty among our investors, we are neither surprised nor concerned about the current situation. The market dynamics of the last quarter were very unfavorable for risk-based strategies - a fact that we have had to experience several times in the past. In the long term, however, we remain convinced of the added value of our concept.
The CHF reacted to the easing situation and on average depreciated somewhat. The share classes without currency hedging therefore performed slightly better than the classes with CHF hedging.