#25 weekly recap
A strategic portfolio reallocation to explore existing & emerging opportunities, and a strong Friday's closure sparking continuous buyout rumours for major positions.
Summary
Total 8 trades:
1 were closing trades from the prior weeks
7 were new buys to start a new or add to an existing position
Another passive week. Annual interest on Belgian bonds and regular weekly dividends were offset by the closure of a half German Bunds position at a slight loss. So we ended the week flat. Despite June’s weak performance, Endowment’s trading profit target is still 4 weeks ahead of the plan.
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Key Highlights
The major event was a strategic portfolio reallocation. We reduced our long-dated bond exposure from almost 50% to slightly above 30%, increasing the allocation in equities to 60%.
The reasoning is two-fold. First, with rising inflation and increasing expectations for higher rates, long-dated bonds lose their near-term potential. After a successful trading of Belgian & German bonds and TLT 0.00%↑ for the US Treasuries in 2025 H1, reaping a 32% annual bond portfolio gain last year, we got stuck in a low single-digit zone, dragging down the overall Endowment’s portfolio performance.
Second, our core equity positions (biotechs included) are very depressed now, providing a screaming BUY signal. Raising some extra liquidity by major portfolio reallocation, we aim for more flexibility to explore existing & emerging opportunities.
The bond portfolio still holds Belgian and German bonds (cut in half), and we look to short the US Treasuries via TMV 0.00%↑ if rates continue to compress short-term. We don’t see yield compression as a sustainable development in the future, (1) providing trading opportunities, (2) offsetting long European bond exposure.
Our buy zone is $34-35, aiming for $37-38.
