Vistafolio Review: March 2023 — Unexpected Bank Bumps

Monthly, we update our wholesale investors on what’s happening in the market. Running what’s probably the only late-night trading desk from New Zealand, we’re well-positioned to feel the pulse of the market’s direction.

Despite swift rises in January and February, taking our composite growth to around 7%, March has seen drawdown.

As I’ve said before, we are still paying off the ghost of Covid. The lockdowns. And the loose money.

When interest rates are forced to hike so quickly, there’s fallout.

This time, that hit some marginal banks in the US. Silvergate Bank, Silicon Valley Bank, and Signature Bank all had exposure to cryptocurrency. These particular banks, with concentrated depositors, experienced a liquidity crunch.

Troubles at Credit Suisse were also concerning — but this is not a large entity in the greater scheme, having a market cap of only around $3.5 billion. (Westpac alone has a cap of approximately A$77 billion).

We don’t see wider threat to mainstream retail banks. And we remind investors these troubled banks were depositor-insured (to certain limits), acquired, or recapitalised.

But all this has been enough to spook the markets.

Meanwhile, the end of March made up for much of this.

While local (New Zealand) inflation remains elevated — recent pension/benefit increases won’t help — global inflation appears to be softening.

Some US/Europe analysts say the peak has already passed.

Certainly, the US and Europe are showing some softening. In Spain, the fourth-largest EU economy, inflation almost halved in March, falling to 3.3%. This was more than expected.

Vistafolio performance*

For the month of March 2023, we were down 3.71% across the composite portfolio (total aggregate return across all portfolios following the strategy).

This brings our return for the year to date (January + February + March 2023) to 3.38%.

Our average annualised return since inception is 14.77% p.a.

Please see our performance chart for more details.