In the first quarter of 2017, the global equity index MSCI World reached new highs. The profit season in the industrial countries came as a surprise. On the other hand, the economic conditions in most world regions improved considerably, and early indicators point to a continuation of the economic growth.
The US economy made a solid start to the year. The National Association of Purchasing Managers Index for the manufacturing sector climbed to its highest level in two years. Private consumption increased as well. However, industrial production and retail sales stagnated. Nevertheless, the Fed raised the federal funds rate for the second time in three months, confirming the improved economic outlook and the increasing inflation.
In the Eurozone, various enterprise surveys, such as the National Association of Purchasing Managers Index for the Eurozone and the German Ifo index, reached their highest levels in six years. Industrial production and retail sales unexpectedly lost some of their dynamics. In view of the economic performance in the first months of the year, the European Central Bank (ECB) did not change its monetary policy. Despite positive economic data, the presidential elections in France could however represent a short-term risk.
The Swiss economy remained robust in the first quarter. The National Association of Purchasing Managers Index surged to its highest value in five years, and foreign demand increased significantly compared to the prior quarter. The manufacturing sector and private consumption also performed well. The situation in the retail sector remained tense. Due to the largely positive data, the SNB retained its monetary policy.
Measured against the Swiss Bond Index, the domestic bond markets recorded an increase of 0.17 percent. EUR bonds closed with a loss of 1.78 percent. USD bonds finished the quarter with a loss of 1.01 percent (all values in CHF).
In this environment, the SMI concluded the quarter with an increase of 5.34 percent, the US Dow Jones was up 2.78 percent and the European DJ Eurostoxx50 index gained 6.07 percent (all values in CHF).
Portfolio return (first quarter)
The good start to the year endowed the Vita Joint Foundation with a sound performance of 2.14 percent for the first three months. All subcategories of the portfolio contributed to this development, each delivering a positive performance for the quarter under review. Equities proved to be the most successful among them: With an absolute performance of 6.11 percent, this subcategory's portfolio contribution amounted to 1.56 percentage points.
Together with infrastructure, insurance linked securities and senior loans – each of which also provided a positive contribution – alternative investments made a contribution of 0.19 percent to the overall portfolio.