Moventum AM’s Private Wealth portfolio promised positive returns with low volatility when it launched in May 2012. At the time, there was hardly anyone who could have imagined how challenging this goal turned out to be. In the summer of 2012, the euro crisis intensified already as yields on Italian and Spanish bonds skyrocketed. The European Central Bank pulled out all the stops and promised to do whatever it took to preserve the euro. In the years that followed, it continued to buy up large amounts of euro bonds to contain the crisis and to return interest rates to rock-bottom levels. “Safe government bonds then yielded hardly any returns”, Gerlinger recalled. At the end of 2013, the yield on German government bonds stood at only 1.8 per cent in nominal terms. It turned negative for the first time in the summer of 2016.

The past decade was also marked by geopolitical crises. Protests shook Ukraine in 2014, and the government in Kiev resigned. Russian troops occupied the Crimean Peninsula, the regions in eastern Ukraine declared their independence. Subsequent economic sanctions and a drop in oil prices caused the Russian rouble to crash. In the two years that followed, weak economic data from China rattled stock markets across the world after the Asian country’s boom had long fuelled global growth. Brexit, UK’s decision to leave the EU in 2016, also caused unrest.

“Record-low interest rates regularly drove the stock markets back up”, Gerlinger added, “but in 2018 the German share index slumped by some 18 per cent due to the global economic slowdown.” One of the few bright spots that year was Wirecard’s stock, which, however, was about to face a crisis all its own.

Gloomy growth prospects were compounded by the trade dispute between the US and China, causing the global industry to fall into recession in 2019. The subsequent corona pandemic dashed any hopes of recovery. “Instead of an upturn, the world experienced the sharpest decline in economic output since World War II and a drastic increase in national debt”, Gerlinger explained. With the pandemic somewhat over, supply chain problems began to hamper the economic recovery, driving up inflation. Now, both developments are exacerbated by the Russian attack on Ukraine.

“Looking back on a decade of crises”, Gerlinger added, “it proved to be the most difficult environment imaginable for our new product, which had promised investors security ten years ago.” Nevertheless, the assessment is clear: “Moventum’s PWM has weathered the storms well”, Gerlinger said. Since its launch, growth stands at some 32 per cent, with a loss recorded in only a single calendar year to date – in 2018. More importantly, however, fluctuations in value have remained low, amounting to just 3.74 per cent annually since launch up to the end of March 2022.

This is the result of the investment approach. “Risk is at the heart of the PWM process”, Gerlinger explained. PWM is actively managed through diversification and the combination of funds with the lowest possible correlations to each other and to the overall portfolio. “It causes the individual components to achieve balance”, Gerlinger said. Portfolio managers may freely select funds in a product-neutral and provider-neutral manner. In addition, the investments are regularly and promptly reviewed for suitability. “This allows our investors to sleep soundly”, Gerlinger concluded.

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