Market update May: Strong months for globally diversified portfolios

In this update:

• Largely positive months 
• Foreign currencies gaining and precious metals rising 
• Bonds are back 
• How does Selma react?

Largely positive months

Despite political conflicts and continuous worries about inflation globally diversified portfolios (such as Selma’s) have performed strongly in recent months: Stock markets went up, international currencies have gained value against the Swiss Franc and precious metals have reached new highs. Bonds have become a stabilising factor in portfolios and generate yields again as interest rates remain on an elevated level.

US-Dollar, Euro and precious metals gaining

In the past month, the foreign currencies have gained value in comparison to the Swiss francs which has added additional performance to foreign investments. Additionally the Gold and Silver ETFs’ (which hold the metals physically in Switzerland) have gained in value as inflation worries and precious metal purchases of National Banks (especially from the Chinese one) have pushed prices up.

Bonds are back

In the past two years, bond prices have gone down because interest rates have gone up. When interest rates rise, older bonds that pay less interest aren't as attractive, so their prices drop. But looking forward this doesn't mean bonds aren't useful in a mixed investment portfolio with both stocks and bonds. For long-term investors, the higher interest rates mean higher interest income on bonds, which can help recover earlier losses and lead to better returns over time when earnings compound over time.

Adjustments to Selma's investment strategy 

With financial markets going up Selma is realising a small part of the profits in the equity markets, while still keeping an overall optimistic outlook. True to our investment approach, we believe that in this market environment, it continues to make sense to invest regularly in a well-diversified portfolio that fits your financial situation. Trying not to get distracted by ups and downs in the market is important when following a long-term investment strategy.

Of course, these changes only affect Selma’s investment accounts. Pillar 3a accounts stay true to the chosen strategy.