Market Update May 2023: Surprising Quarterly Figures Provide Momentary Relief

In this market update, you will find:

• A quiet month for the Peaks portfolios
• Strong quarterly figures bring joy to Wall Street
• American unemployment at the lowest level since 1969
• Central banks raise interest rates

A quiet month for the Peaks portfolios

Although April also brought much news that influenced the financial markets (more on that below), it was a quiet month for the Peaks portfolios. While all portfolios experienced minor negative returns in April, the year-to-date returns remain positive, ranging from 3.2% to 6.0% for all portfolios.

Table 1: Net returns of the Peaks portfolios

Peaks portfolio	Return April	Return 2023	Average yearly return since start of Peaks	Return since start of Peaks
Cautious	-0,2 %	+3,2 %	+1,0 %	+5,7 %
Balanced	-0,4 %	+4,1 %	+3,1 %	+18,3 %
Ambitious	-0,6 %	+5,1 %	+5,2 %	+32,0 %
Adventurous	-0,8 %	+6,0 %	+7,3 %	+46,3 %

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 If you have deposited or withdrawn money this month, your personal return will differ from the figures shown above.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

This was also reflected in the volatility (risk) of the Peaks portfolios, which reached a low of 4.7% for the Cautious portfolio in April. Volatility measures the fluctuations of a portfolio over a specific period, indicating how much values deviate from the mean. Higher volatility indicates greater fluctuations and higher investment risk.

Table 2: Risk of the four Peaks portfolios

Risk (volatility)	April	2023	Average annualized volatility since start of Peaks
Cautious	+4,7 %	+5,6 %	+5,8 %
Balanced	+5,5 %	+6,5 %	+7,9 %
Ambitious	+7,0 %	+8,1 %	+10,3 %
Adventurous	+8,9 %	+10,2 %	+12,9 %

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.

Strong quarterly figures bring joy to Wall Street

In recent weeks, more companies have released their quarterly reports. The question on everyone's mind was how the major companies fared with the central banks' high interest rates in the first quarter. Especially in the United States, as the Federal Reserve (Fed) is further along in its interest rate cycle compared to the European Central Bank (ECB).

The quarterly reports have shown that major names like Microsoft and Meta were able to pleasantly surprise, as weaker performances were expected. Last week, Apple, in particular, brought joy to Wall Street by gaining 4.7% despite experiencing its second consecutive decline in quarterly revenue. However, the decline was not as significant as feared. This news supported Wall Street during a previously challenging week for the stock market, where the focus was mostly on the issues faced by US regional banks, as reflected in the performance of the North America index fund (see Table 3).

Just a few weeks ago, worldwide turmoil erupted in the banking sector due to the bankruptcy of Silicon Valley Bank. Investor and customer confidence was lost, and other banks have recently faced difficulties. Some even collapsed entirely, such as First Republic Bank. As a result, the stock prices of banks worldwide came under pressure.

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

	ISIN	Return April	Return 2023	Return since start of Peaks
Equity funds
North America	LU0629460089	-2,1 %	+6,9 %	+81,9 %
Europe	IE00B52VJ196	+2,7 %	+12,3 %	+51,9 %
Asia Pacific	LU0629460832	-0,8 %	+4,0 %	+17,9 %
Emerging markets	IE00BYVJRP78	-1,6 %	-2,6 %	+10,9 %
Bond funds
European Government bonds	IE00B4WXJJ64	-0,1 %	+1,8 %	-10,2 %
European Corporate bonds	LU0484968812	+0,6 %	+2,6 %	-9,9 %

Good to know: These are net yields of the index funds in which you invest with Peaks in April 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.

US unemployment rate at the lowest level since 1969

On one hand, the banking sector has caused unrest in the US and financial markets in recent weeks. On the other hand, positive attention has been drawn to, among other things, the US Payroll Report, which for the seventh consecutive month exceeded expectations in terms of employment growth. Furthermore, it was announced that unemployment has fallen to its lowest level since 1969, while wages have increased by 0.5% monthly, bringing the annual wage growth back to 4.4%. This news was received with joy last week.

Central banks raise interest rates

Additionally, at the beginning of May, the ECB raised its benchmark interest rate from 3.00% to 3.25% to swiftly reduce the inflation rate of 7.0% in April in the coming months. This goal is also being pursued in the USA, where the current inflation rate stands at 5.0%. The Fed recently raised its benchmark interest rate to 5.25%.

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