Determinant portfolio: situation as of 01.12.2022

The technical rebound of the market, which began in October, continued during this last month, with a gain of 3% for the Swiss Performance Index. determining portfolio, less volatile, was content with a progression of 2%, which is nevertheless very good over this short period of time.

The profitability of the PF since the beginning of this year now stands at -2.4% compared to -13.6% for the MSCI Switzerland index. Volatility remains at a very appreciable level, with 12.2% compared to nearly 23.7% for the aforementioned index.

The new asset I have been telling you about for september is still in the exploratory period. I will have to postpone its introduction into the PF once again. In the meantime, it continues to appear in the portfolio as "Asset in test", just before reserves and liquidities. In the meantime, I am taking the opportunity to introduce an additional strategy...

(Re)introduction of some Big Caps in Buy & Hold

Nico asked me recently on the forum if I sometimes positioned myself on large companies. I answered him that this was mainly the case in the past, before I reoriented my strategy in 2017, following the excessive valuations of quite a few of these stocks. That being said, his question led me to look again at certain companies that had made the good days of my portfolio between 2010 and 2017.

One thing led to another, and I started to perform a multitude of backtests with large cap stocks. The goal behind this approach was to be able to build a small portfolio that was as efficient and as little volatile as possible, with a limited panel of Big Caps, held over a very long period.

I eventually found an ideal configuration, consisting of just a few stocks. Individually, they are quite volatile, but together, they outperform the market twice as much, with only slightly more volatility. Since 1991, this mini-portfolio has had only three negative years. Best of all, it pays regular dividends, growing very quickly.

All of these titles display a momentum favorable compared to the market. These are also very large companies quality, and this has been the case for decades. On the other hand, their valuation, like that of other large companies currently, is above the historical average. For this reason, the weighting attributed to these new positions, in the whole of the determining portfolio, remains tenuous.