Newsletter end of January 2021

For the month of January 2021, the Enhanced Permanent Portfolio account lost -1.8%.
January was a difficult month with all three asset classes declining. Treasuries declined -3.49%, Gold -2.86 and Equity (S&P500) -0.8%. This translated in a loss of 2.4% for the underlying strategy. Option premium income added a positive +0.6% to that loss so that the strategy ended with a loss of -1.8%.
It is quite rare that all three asset classes decline together, because most of the time they show negative correlations to each other and money which flows out of one asset will flow into the other. All three assets declining means that investors go to cash. In general, the save haven assets Gold and Treasuries are still consolidating after the huge jump during the March 2020 Corona crisis and investors are still shifting money into the riskier equity assets.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of December 2020 (full year report)

For the month of December 2020, the Enhanced Permanent Portfolio account added 2.09% and ended the year 2020 with an excellent performance of 19.74%
Even more important than this performance was the exceptionally low volatility or risk of the strategy during this very volatile year. Below you can see the Interactive Brokers Risk Analysis which shows a downside deviation (or risk) of only 0.48% which is about 10x lower than the downside risk of the two benchmarks (ACWI and DJ600).

The reason for this low downside risk was the fact that the strategy invests a bigger part in so called “safe haven” assets (Treasuries and Gold) and only about 1/3rd of the portfolio is invested in “riskier” equity.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of November 2020

For the month of November 2020, the Enhanced Permanent Portfolio account added 3.07%.
November was an incredible month for equity with performances of more than 10% for most developed markets. After the US elections, investors felt more secure and continued the rotation away from safe haven assets (Gold and Treasuries) into riskier equity. General market volatility came also slightly
down, which allowed us to slightly increase the equity exposure of the strategy.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of October 2020

For the month of October 2020, the Enhanced Permanent Portfolio account lost -1.39%.
October was a difficult month, with all major asset classes going down. The Stoxx600 dropped -5.2% and the S&P500 was down -2.5%. Unfortunately also our safe haven assets declined, with Gold declining -0.5% and Treasuries declining -3.4%.
This decline of all major asset classes means, that many investors just went to cash until the November 2. US presidential elections are over. Most of our decline however was due to again increasing volatility which had a negative effect on our option based long positions. This losses however will be recovered quickly, if volatility drops. Hopefully this should be the case, once the US presidential elections are over.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of September 2020

For the month of September 2020, the Enhanced Permanent Portfolio account returned net -0.16% which however was still much better than equity performance.
In September only Treasuries showed a +0.77% positive performance. Gold (-4.17%) and the S&P 500 (-3.74%) had negative performances. Altogether, the base Permanent Portfolio ETF based strategy had a -1.6% negative performance in September. This negative performance however was nearly offset by the good +1.44% option premium received due to still high volatility.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of August 2020

For the month of August 2020, the Enhanced Permanent Portfolio account returned net -0.54%.
Gains in Equity got overcompensated by weakness of the US Dollar, and increasing volatility in fixed income, equity, and gold derivatives. For the coming month, we are maintaining the allocation and implementation method.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of July 2020

For the month of July 2020, the Enhanced Permanent Portfolio account returned net 2.49%.

The strategy succeeded in compensating for the significant weakness of the US-dollar, which would have reduced the performance of dollar-denominated products in the month under review, by means of partial hedges. The S&P 500 volatilities are still high at “25”. This favors the profitability of the strategy, as we hold synthetic long positions (short put instead of long underlying). Due to the high decline in the time value of these put positions, the portfolio gains much more than would be expected with such a low portfolio volatility. For the coming month, we are maintaining the allocation and the implementation method.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of June 2020

For the month of June 2020, the Enhanced Permanent Portfolio account returned net -0.73%.

The reason for the slightly negative June performance was the massive near 5% rise in the value of the euro against the dollar. We mitigate the currency risk of the portfolio (instruments in dollars) to a certain extent, but not completely. We keep the portfolio allocation, as well as the implementation method unchanged for the coming month.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of May 2020

For the month of May 2020, the Enhanced Permanent Portfolio account returned net 2.57%.

The Enhanced Permanent Portfolio is still heavily hedged with Treasuries and Gold to achieve the volatility target of 5% due to the negative correlation characteristics of these so-called “Safe Haven” assets. The QuantTrader software continues to recommend an underweight of equities as they still have volatilities of almost 30%. This is still about 6x the maximum volatility or risk compared to our 5% low-risk target. For June, we are continuing the strategy more or less unchanged.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email

Newsletter end of April 2020

For the month of April 2020, the Enhanced Permanent Portfolio account returned net 6%.
Throughout April, we maintained our basic strategy, keeping the equity component very low. Earnings are a result of the reduction in volatility (after the peak during the crash). The optimum allocation calculated by QuantTrader remains cautious in May, investing primarily in Gold and Treasuries. The bull market of the last few weeks was mainly driven by a few tech giants. An end to the Corona pandemic is not in sight and the economic implications are uncertain.
We will therefore maintain our low equity exposure for May while our option based investments will profit from high premium decay due to the still historically high volatility levels.

Your Rational Invest Team
Walter Baumann / Frank Grossmann / Thomas Ritter
Tel +41 44 515 48 00 / Email