Market Update August 2023: Positive Trend of Peaks Portfolios Continues

In this stock market update, you will find:

• Positive month for the Peaks portfolios 
• European Central Bank has raised the interest rate once again 
• Base interest rate hikes show effect 

Positive month for the Peaks portfolios 

While we are still waiting outside for the summery temperatures, they are at least already present throughout the summer in the Peaks portfolios: The positive trend of returns in the Peaks portfolios continued in July, thus causing the overall returns for the current year to shoot up as high as 14.3% in the Adventurous portfolio. In July, all portfolios achieved a positive return ranging from 1.3% to 2.8%.

One reason for this was, among other things, the good performance of the North America and Emerging Markets ETFs (see Table 3). Many sectors in the United States reported gains, including once again the technology sector, driven by the stocks of AI companies. And in the emerging markets, many companies, such as Meituan and NetEase, in which you invest with Peaks, recorded positive figures in July.

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 If you have deposited or withdrawn money this month, your personal return will differ from the figures shown above.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.

The volatility (risk) of the Peaks portfolios mostly eased in July compared to the previous month, while the stock prices increased in value. Volatility measures the fluctuations of a portfolio over a specific period. 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.

European Central Bank has once again raised the interest rate 

For the ninth time within a year, the European Central Bank (ECB) increased the key interest rate by 0.25 percentage points. As a result, the interest rate at which commercial banks can borrow money from the ECB now stands at 4.25%. Furthermore, the so-called deposit rate, which banks receive for "parking" money with the ECB, consequently rose from 3.50% to 3.75%.

You'll also find these interest rate increases reflected in the Peaks Interest Account. With the Peaks Interest Account, you invest in an ETF that securely holds your money at Deutsche Bank at an attractive variable interest rate. When the ECB raises the deposit rate, the interest rates on the Peaks Interest Account automatically adjust accordingly, and you receive more interest on your money. We've provided all the information about the Peaks Interest Account on our website – there, you can find more details about the security, benefits, and functionality of the Interest Account.

Base interest rate hikes show effect 

According to an estimate from Eurostat, the statistical office of the European Union, the annual inflation rate in the Eurozone is expected to be 5.3% in July 2023, a decrease from 5.5% in June. While this still falls short of the desired inflation rate of 2%, the interest rate increases are at least having some positive effect: By reducing the money supply in circulation through interest rate hikes, the ECB is causing each individual euro to gain in value. And because saving is now more rewarding, people are spending less. This leads to reduced demand, lower consumer prices, and a decrease in inflation.

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 July 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.