Stockholm (HedgeNordic) – Following a robust recovery in the first half of 2023, the second half of the year has posed challenges for both stocks and longer-term bonds amid the “higher for longer” sentiment. In the early part of 2022, Danish fund boutique Othania launched Othania Stabil Investering, a fund designed to equally distribute investments across five different asset classes to protect capital in volatile markets such as those experienced in the second half of 2023. After a flat first half of the year, Othania Stabil Investering is enjoying its fourth consecutive month of positive returns, advancing 1.8 percent from the mid-point of the year to the end of October.
After a promising first half of the year across various asset classes, the second half has presented more challenges. The recent surge in bond yields that began this summer has put downward pressure on stock prices. Although the S&P 500, for instance, is still up about nine percent for the year, it has declined by over eight percent since its peak in late July. The 10-year Treasury yield has risen by about a full percentage point during the same period.
“The combination of increased geopolitical turmoil, uncertainty about ‘higher for longer’ in the bond market, and fears of recession have caused major shocks in financial markets.”
“The combination of increased geopolitical turmoil, uncertainty about ‘higher for longer’ in the bond market, and fears of recession have caused major shocks in financial markets,” says Othania’s CIO, Vincent Dilling-Larsen. “Under such scenarios, especially with rising interest rates, we do not expect positive return contributions from equities and bonds,” he continues. In this context, Othania Stabil Investering relies on other asset classes to drive returns.
Launched in April of the previous year, Othania Stabil Investering maintains an equally-weighted portfolio across five asset classes, including equities, global investment grade bonds, precious metals, CTA strategies, and long volatility strategies. The multi-asset fund seeks to represent a low-risk investment option capable of performing well in all financial scenarios. While investments in both equities and longer-term bonds experienced losses in the latter part of this year, the fund’s exposure to precious metals, trend-following strategies, and long-volatility strategies all contributed to returns.
“The point of our ‘All Weather’ investment approach in Othania Stabil Investering is precisely to remain well-prepared for any economic, financial, or geopolitical environment that unfolds.”
“The point of our ‘All Weather’ investment approach in Othania Stabil Investering is precisely to remain well-prepared for any economic, financial, or geopolitical environment that unfolds,” explains Larsen. The objective of Othania’s ‘All Weather’ approach is not to predict financial markets but rather to “protect against major market downturns while taking advantage of increasing fluctuations in financial markets.” Othania Stabil Investering is designed to safeguard investors during highly volatile market conditions and offer investors an expected positive return of 6.5-7 percent per year after fees over the next decade.