1. Economic Situation:
There are 3 steps in our investment process. The first step is to evaluate the
current economic situation.
The global economy has undergone significant changes since 2020, mainly
due to the impact of the Covid-19 pandemic. However, with the reopening of
economies and support from fiscal policies, we have seen improvements in
economic activity. Private investment, interest rates, GDP, and net trade have
shown growth, indicating a positive economic outlook and numerous
investment opportunities post-pandemic. Consumer behaviors like e-grocery
shopping, virtual healthcare visits, and home nesting are expected to
continue, while leisure air travel may gradually return to pre-pandemic
patterns.
Based on our analysis and identified post-pandemic trends, our portfolio
focused on investment opportunities in the travel service, biotechnology, retail,
and materials and commodities sectors. These sectors show potential for
growth and align with the anticipated changes in consumer behavior and
market demand.
2. Diversification by Location:
In addition to diversifying asset classes, we also diversify our portfolio by
location to manage country-specific risks such as foreign taxation, currency
fluctuations, and political/economic developments. Our portfolio primarily
consists of assets from the United States and China.
3. Diversification by Sector:
To mitigate risks, our portfolio is diversified within stocks and ETFs across
sectors that align with post-pandemic consumer demands. We have invested
in sectors such as travel services, biotechnology, retail, semiconductors and
materials/commodities.
4. Portfolio Rebalancing:
Rebalancing our investment portfolio is a crucial step to achieve desired
returns, manage risks, and maintain target asset allocation. We use
threshold-based criteria, where we rebalance if the asset allocation deviates
by 5-10%. We sell high-performing investments and buy lower-performing
ones to maintain the desired balance.
5. Investment Risks: Investing in our fund carries certain risks. These include:
Interest rate risk: The Federal Reserve has raised rates, but we believe the
hiking cycle is nearing its end.
Commodities risk: Uncertainties in China regulatory policies and supply chain
disruptions due to geopolitical conflicts, such as Russia-Ukraine conflicts.
Semiconductor risk: potential supply chain issues extend until late 2023 or
early 2024 due to impact of Covid-19 on the industry. However, we expect
these risks to mitigate in the future.
Risk of derivative instruments: Derivatives carry their own set of risks related
to market volatility.