Quarterly Reporting

Good Morning Ladies and Gentlemen

„Hedonistic societies do not endure.“
by George Orwell

Extract from the quarterly reporting for our private customers

Today, I want to share some extracts from our quarterly report to Incrementum’s private clients.

Comparison of returns

What return would you have generated if you had invested in standard asset classes from 1900 onwards, i.e. in the S&P 500, in 10-year US government bonds and in gold? Interesting question, no? Well, there is no magic, Ladies and Gentlemen, just stats. Let us dig in:

S&P 500

The S&P 500 Total Return Index has generated an average annual return of 9.8% since 1900. This comprises price gains (5.5%) and dividends (4.3%).

US government bonds

With an average total return of 4.6%, 10-year US government bonds remain well below the S&P 500 mark. The best period for US government bonds was from 1980 to 2010. Falling yields in a disinflationary environment ensured high bond yields, averaging 8.9% annually during that time.

Gold

The price of gold only marginally changed until the end of the Bretton Woods system in 1971. As a result, gold is on the books, with an annual increase of only 3.8%. After the end of Bretton Woods (dissolution of the USD gold price peg), the performance was significantly stronger; since then, it has been 5.4% per year. Gold’s average total return has, therefore, also remained well below that of the S&P 500.

Dividends

For a few of our investments, I have compiled the number of years for which the respective companies have not lowered their dividends. For Nestlé, this has been the case for 38 years, for Novartis for 27 years and for Roche for 32 years. Rubis has also not lowered its dividends for over 20 years and, on the contrary, has increased its payout yearly for the past 13 years. Enel has been paying regular dividends for over 25 years and has increased them continuously since 2013. BMW has paid regular dividends for over 25 years but has adjusted them to fit its business performance. BASF has been paying regular dividends for over 25 years and, despite all the crises, has never reduced them since 2008 but has increased them a total of 12 times since then.

Hand on heart

I like companies that provide employment for their employees even during challenging economic, political and social periods (9/11, Asian crisis, financial crisis, bank collapse, Covid crisis, Russian invasion of Crimea and a few years later of other areas of Ukraine, energy crisis, elections of increasingly ideological political representatives, etc.), remain profitable and thus fulfil an essential economic task. If such companies are then able to generate positive cash flows with their intrinsic business and are also willing to share these positive cash flows with their investors, we tend to use them as part of our investment strategy for private clients in their portfolios.

Ladies and Gentlemen

As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day and the weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li