MIRABAUD (CH) - LPP 45+ L cap. CHF

Performance update

Market activity was influenced by interest rate decisions from important central banks and the movement of interest rate curves. The biggest surprise was the decision of the new Swiss National Bank Board to cut the key interest rate by 0.5% while the market had expected only 0.25%. The European Central Bank and Federal Reserve (Fed) each lowered their key interest rate by 0.25%, but Fed Chairman Powell's hawkish comments on inflation caused some concern in the market. As a result, long-term interest rates rose significantly, more so in the US market 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, the currency gains from USD, GBP and EUR partially compensated for the negative price development. Equity markets also suffered a setback towards the end of the year with highly valued US stocks correcting more strongly than Europe and Switzerland, and Japan even delivering a positive performance. Real estate funds had another positive month and closed the year at an all-time high. Alternative investments were mostly negative except for catastrophe bonds providing stability for the portfolio in a difficult market environment.

Portfolio activity

In fixed income, we increased exposure and duration to euro-denominated bonds expecting a weak and disinflationary economy. The Swiss government bond position was reduced at the same time due to unattractive yield levels. Swiss real estate was slightly reduced to take profit from highly valued residential exposures.