Market Update November 2023: Markets still in the red

In this Market Update, you will find:

• Peaks portfolios in the red for October
• Central Banks Kept Interest Rates Steady
• Surprisingly Sharp Decline in Inflation
• Performance of ETFs in the Peaks Portfolios

Peaks Portfolios in the red for October'

The geopolitical instability in Ukraine and particularly in Israel/Gaza has been reflected in the financial markets in recent weeks. Consequently, there was a downward trend in the Peaks portfolios in October. However, this did not change the fact that the year-to-date return for 2023 is still positive, with up to 7.3% in the Adventurous portfolio.

As mentioned before, the current events not only unsettle the world but also the financial markets – and this may continue to be reflected in your Peaks app in the coming weeks and months. It is important to always remember that after every crisis in the past, the stock markets have recovered, and you can acquire investments at a lower price during times of crisis.

Table 1: Net returns of the Peaks portfolios

Good to know: These are the net returns of the Peaks portfolios for the previous month, the year-to-date, and since the start of Peaks, after deducting Peaks’ fees, fund costs, and transaction costs. The value of your investment may fluctuate. Past performance is not indicative of future results.

The table above shows returns for a portfolio of €10,000. The returns do not take into account any deposits or withdrawals made during the month. If you have deposited or withdrawn money this month, your personal return will differ from the figures shown above. Additionally, your personal return will vary if you have invested less or more than €10,000 due to the monthly fixed costs charged by Peaks.

With the declining prices in the portfolios, the volatility (risk) of the Peaks portfolios has increased a bit in the past month. The volatility measures the fluctuations of a portfolio over time. The higher the volatility, the greater the fluctuations and the riskier the investment.

 Table 2: Risk of the four Peaks portfolios

Good to know: Here you can see the risk of the four Peaks portfolios over different time periods (last month, year-to-date, and average since the start of Peaks). Risk represents the annualized fluctuation in return and is also referred to as "volatility.". Risk is measured by calculating the standard deviation of the daily net returns of the Peaks portfolios and converting that number to an annual basis.

Central Banks Kept Interest Rates Steady 

Towards the end of last month, the European Central Bank (ECB) decided to maintain interest rates at a high level for the time being. This resulted, among other things, in the fact that with the Peaks Interest Account, you can still receive up to 3.63% interest. 

Furthermore, the US Federal Reserve (Fed) has also initially reached the peak of interest rates: after eleven consecutive increases, the Fed has kept interest rates steady for the second time in a row. 

Surprisingly Sharp Decline in Inflation 

In Germany, inflation in October dropped to its lowest level since the beginning of the Ukraine war. The Federal Statistical Office announced in an estimate that goods and services cost on average 3.8 percent more than a year ago. In October, falling energy prices had a dampening effect on inflation, while food prices, on the other hand, continued to rise.

Performance of ETFs in the Peaks Portfolios 

In October, only the bond ETFs were able to deliver positive returns, as bonds benefit from higher and stable interest rates. 

This can be explained as follows: Investors who own a bond with an annual interest rate of 1 percent, for example, will sell it when a similar bond with a higher interest payment of, for example, 1.5 percent comes onto the market. The price of the 'old' bond falls. Conversely, if one owns an 'old' bond with an interest rate of 1.5 percent, and there are only securities with low annual interest payments on the market, or if interest rates fall, the value of the 'old' bonds rises as they become more attractive.

Table 3: Net yields of the index funds included in the Peaks portfolios

Good to know: These are net yields of the index funds in which you invest with Peaks in October 2023, for the entire year 2023, and since the start of Peaks, after deducting Peaks costs, fund costs, and transaction costs. The value of your investment may fluctuate. Past performance is not indicative of future results.

Investing always involves risks. Know that you could lose (a part of) your invested money.