Dear Clients, Friends and Partners of Das Family Office,

Is the spook over yet?

After global financial markets were sent on a rollercoaster ride in April, which almost brought them back to their starting point, there was further stabilisation in May: Almost all asset classes recorded positive results. Only long-dated government bonds and shares from the healthcare sector suffered losses.

Year to date, European equities, led by the German DAX index, are showing high double-digit returns. The same applies to Asian and Latin American equities. Technology shares and shares in small companies are still nursing losses, even if these were sharply reduced in May. However, it should be noted that a significant proportion of these losses are attributable to the strength of the euro and the weakness of the US dollar.

The rapid recovery of the financial markets is very unexpected for many experienced market participants, as the damage to the global economy and the international community caused by Trump in the Rose Garden on 2 April is far from being fully visible, let alone contained. We are merely in a transitional period, as most of the announced tariffs have been suspended for three months.

Due to the rapid recovery, we are now back at the valuation levels of late March/early April, when we criticised high valuations of shares in major US technology companies. Risk premiums for the Nasdaq 100 and S&P 500 index have fallen back from about 5.5% p.a. on April 7 to around 4% p.a.

This reminds us to be cautious; hence we would not buy the S&P 500 Index, the Nasdaq 100 Index or similarly orientated technology funds or ETFs at current valuations.

We’ve informed clients who are heavily invested in these high-flying market segments to see the improved market sentiment as a second chance to re-balance portfolios:

•   Apart from U.S. large cap quality and large cap technology, which have once again run hot, valuations generally look moderate to favourable.
•   Bonds generally look attractive, especially when compared to current or breakeven inflation rates.
•   Equity strategies that focus on low valuations and income (‘value’, dividend strategies, smaller companies) are also relatively cheap.
•   The same applies to equities from developing countries, Europe and Asia. (See high-rise charts on pages 6 and 7).

We can therefore speak of a good environment for reinvesting money or adjusting portfolios away from U.S. (tech) stocks towards a more international strategy. In our opinion, a target size for US equities could be in the region of 50% of an equity portfolio.

In addition, find our monthly report attached.

Please take a look at an abundance of information and specific details on how you can build a portfolio that works!

Don't let market volatility impress you, stay the course!

Yours Truly,

Mario Becker

Founder and CEO of Das Family Office

Mario@dfo.sg