MIRABAUD (CH) - LPP 65+ L cap. CHF

Performance update

Markets were heavily influenced in December by interest rate decisions from major central banks. The biggest surprise was the new Swiss National Bank Board's decision to cut the key interest rate by 0.5%, while the market had expected only 0.25%. The European Central Bank and the Federal Reserve (Fed) each lowered their key interest rate by 0.25%, but Fed Chairman Powell's hawkish comments on inflation caused some concern. As a result, long-term interest rates rose significantly, more so in the US than in Europe and Switzerland. This led to a negative performance contribution from the bond allocation, with long bonds suffering the largest losses. In foreign currency bonds, gains from USD, GBP and EUR partially compensated for the losses due to the increase in yields. Equity markets also suffered a setback towards the end of the year, with highly valued US stocks correcting more strongly than those in Europe and Switzerland, while Japan delivered positive performance. Real estate funds had another positive month and closed the year at all-time highs. Alternative investments were mostly negative, except for catastrophe bonds, which provided stability for the portfolio in a difficult market environment.

Portfolio activity

We invested the subscriptions we received over the course of the month. In fixed income, we bought a Buxl future to increase the sensitivity to euro interest rates. We expect a weak and disinflationary economy, and therefore lower interest rates in the months to come. We rebalanced the market drift on Swiss equities towards the end of the month and increased the allocation to an ETF exposed to the Swiss Performance Index. We increased the allocation to US equities through the purchase of a future on the S&P 500 Index.