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FFM Fund Newsletter - Aug 2022

August 2021


Dear Investors, Dear Friends,


Back on the rollercoaster we go, after the strong run-up in July, markets slid again in August, with most of the losses coming after Federal Reserve President Jay Powell’s combative speech at the annual central bankers retreat in Jackson Hole, Wyoming (S&P 500 -4.24%, Nasdaq 100 -5.22%, Euro Stoxx 50 -5.15%, CAC 40 -5.02%). We should also note that September has also begun on an inauspicious note after Russia confirmed no more natural gas would be delivered to Europe until Western sanctions were lifted (at least things are crystal clear now, no more innuendo). Similarly, interest rates also swung wildly, with the US 10 Year rate going from a low of 2.75% to a high of 3.25% and the German 10 Year rate going from 0.88% to 1.50% in the blink of an eye.


It seems we have been, and are still, stuck in this infinite loop of either fearing recession or at least a slowdown (lower interest rates and equities in the green) or fearing unceasing inflation (higher interest rates and equities in the red). At the end of August, everyone hung on to every word spoken by Jay Powell, the Federal Reserve President, at the annual central bankers powwow in Wyoming. Mr. Powell came out swinging against inflation and interest rates duly went up and equity markets duly went down.


It must be said that these central bankers meetings have taken the guise of ancient Greece’s oracles, from whom every sentence is analyzed and perused for every possible meaning. It is interesting to note that, at the exact same meeting in 2021, Mr. Powell was adamant that inflation was contained to only a few pockets of the economy and that it should not be an issue for the global economy. This is not meant to be a knock on Mr. Powell, it is simply a reminder that nobody knows anything and that predicting the future is notably hard, if not impossible. It is also why we chose an approach of not having to think too much about the future by investing in companies of the highest quality that can do well in pretty much any circumstances. While it is true that 2022 has not been a good year for our strategies, that doesn’t preclude from the fact that this remains, in our opinion, the right approach of a longer timeframe.


As we wrote last month, “you should not expect a straight line up, but rather more volatility and stress” and August certainly did not disappoint on that front. Having said that, many inflation indicators are pointing to things cooling down and this should help at the margin, as central banks will be looking at the same numbers everybody is looking at to decide at which pace to increase interest rates further. So, yes, you guessed it, we will probably have more ups and downs before the correction is well and truly over and why should it not be so? If you think about it, the correction (at least in the riskiest parts of the market) started in the middle of last year and ended (possibly) in June of this year. A 1-year correction can easily have a 6-month consolidation period.


Let’s have a look at how our funds performed in August.


The FFM European Selection Fund was down for the relevant period (28.07.2022 to 01.09.2022) by -8.69% vs -5.35% for the Euro Stoxx 50, -5.80% for the Stoxx Europe 600 and -4.81% for the CAC 40. Year-to-date (31.12.2021 to 01.09.2022), the fund is down -25.22% vs -19.58% for the Euro Stoxx 50, -16.43% for the Stoxx Europe 600 and -15.64% for the CAC 40.


As for the FFM American Growth Fund, it was down for the relevant period (27.07.2022 to 31.08.2022) by -2.98% vs -1.71% for the S&P 500, -2.61% for the Nasdaq 100 and -2.13% for the Dow Jones Industrials. Year-to-date (30.12.2021 to 31.08.2022), the fund is down -23.71% vs -17.24% for the S&P 500, -25.30% for the Nasdaq 100 and -13.43% for the Dow Jones Industrials.


The FFM Global Quality Portfolio certificate is down -7.05% against -2.99% for the MSCI World over the month. Since the beginning of the year, the certificate has lost -19.99% against -8.06% for the index.

Sincerely,


For more information, please email contact@fisconsult-sinews.com



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