Strategic Income Fund – Update

We have got a sell signal on February 12th. Now 100 % of our assets are invested in the money market and therefore we are protected against price fluctuations. As our investments are in USD we get right now quite good interest rates. We were invested for almost the whole year 2017 and achieved after fees a net return of 4,66 %. Compared with our benchmark Barclays US Aggregate Bond Index (AGG), which increased by 1,3% last year before fees, our result is satisfying.

Our investment strategy with its disciplined decision-making-process has served investors for over 26 years, which delivered when being fully invested (ETF’s for income investments from treasury bonds, corporate bonds, high yield bonds up to high dividend ETF’s) a high level of security with only moderate setbacks until underlying market conditions deteriorated enough to warrant a move to cash.

In January of this year we cautioned that unwary investors who were buying stocks, lured by the surging strength of the stock market, should do so with “eyes wide open”. In February S&P500 Index lost 10 % during 10 days. Our strategy lost in the same period 1,9 %.

Our model is designed to avoid quick in and out investment decisions, so we can expect to stay invested in the low risk money market at least in the near-term. In a later stage, when the market environment is more favorable we will return to our fully diversified investments to participate from the next midterm up-cycle.

Over the period of its 26-year history, this strategy has been through numerous up and down cycles, interrupted by periods of trendless uncertainty. Nowadays, this is one of those times again. Because it’s impossible to foresee market conditions ahead of time, we rely on our model that takes the emotion and guesswork out of the process. Such a proven, time-tested process gives us the confidence that it will guide us to a satisfactory return in the future.