“When the government debases money to defraud all creditors, this process is given the polite name of inflation” (George Bernard Shaw). The topics of value investing and commodities are currently the subject of intense discussion among institutional investors against the backdrop of the current inflationary push. Markus Hill spoke for FONDSBOUTIQUEN.DE with Alex Rauchenstein, SIA Funds AG, about the possible positioning in this environment, the rating concept of Sharing Alpha as well as planned event activities in 2022. These considerations were rounded off by an interesting literature reference regarding future trends in geopolitics (Ray Dalio).
Hill: How do you see value investing and commodities developing in 2022?
Rauchenstein: In our eyes, there are very good investment opportunities for value and commodity investors in 2022 as well as in the next few years with corresponding return opportunities. For us as value-oriented investors, it is very fascinating to observe how the relative valuations for so-called growth stocks have once again almost reached a new high towards the end of the year. But as we all know, the pitcher goes to the well until it breaks. Since the beginning of the year, the pendulum has now swung in favor of value stocks, the upcoming turnaround in interest rates and the very high growth expectations already priced in for many growth companies are probably the two main reasons for this. Briefly a few points on our behalf, admittedly a bit “promotional”, exceptionally – valued our Long Term Investment Fund Classic is currently very attractive with a P/E ratio 22 of 11x, an expected dividend yield of 3.2%, and a price/book value of 1.7x. The values for our commodity fund look similar. Commodity stocks in particular currently offer very attractive investment opportunities to protect themselves from the decline in the value of money and thus maintain their real purchasing power. Due to a lack of replacement investments in this area, the next few years will be characterized by decreasing availability of many raw materials. Accordingly, well-positioned companies in this area will benefit in the coming years.
Hill: You received an award from Sharing Alpha last year. What is the concept behind this rating approach?
Rauchenstein: Yes, our Long Term Investment Fund Natural Resources was the winner in its category (commodity equity funds) in 2021. We’ve been on this platform since last year and we find the concept very interesting because, with SharingAlpha, a fund is rated by fund selectors in terms of its ability to outperform in the future, not simply based on historical performance numbers over the last three or five years. In addition, the fund selectors are in turn also measured against their ratings and are thus able to build a track record as good fund selectors. Both our company and our two funds received very high marks on SharingAlpha.
Hill: What issues and activities do you have coming up in 2022?
Rauchenstein: This year, a few formats are planned. Here, in brief, are the most important key points in terms of events. On Feb. 11, we will host an investor zoom call. We will participate in Finanz’22 on 4/27 and 4/28 and Value Day on 6/10 in Zurich. We are also planning a lunch presentation at Mannheim in June and Frankfurt this September.
Hill: Besides portfolio management, you are open to many topics. Are you reading anything in particular at the moment?
Rauchenstein: Yes, “The Changing World Order” about the rise and fall of nations by Ray Dalio. It’s also of particular interest to me because the area of commodities and geopolitics has often been a topic of discussion at our Investor Zoom Calls and local events. Strategic metals, oil, USA versus China, etc. – Urs Marti, for example, as a commodity fund manager, often has very interesting views here. Especially since he is also a passionate reader and likes to think outside the box, we can often pass the balls to each other here in the discussion. It is often underestimated that many investors have a very great interest in such discussions.
Hill: Thank you very much for the interview.
SIA Funds AG (Strategic Investment Advisors Group) / Event note «institutional investors – 11.2.2022»: www.s-i-a.ch
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- Value versus Growth, Commodities, India, Youth and Inner Peace (Interview – Alex Rauchenstein, SIA Funds AG)
- Commodities, Value Investing, Family Offices and Hugo Stinnes (Interview – Urs Marti, SIA Funds)
Photo: www.istock.com/Juergen Sack