10 January 2018

Dear Investor,

We are pleased to present the results of our ‘Multi Asset Index’ and our ‘Dividend Yield Equity Index’ for the year 2017. They are part of most of our client’s investment strategies:

LAPIS Core Portfolio TR Index - USD Performance 2017
Performance Q4-2017
Underlying Indexes
MSCI All Country Index 24.50% 5.82%
UBS Bloomberg CMCI Composite TR Index 8.14% 6.84%
FTSE EPRA/NAREIT Global Index 11.33% 3.83%
USD Government 3 - 5 Years Term Index Index 0.97% ./. 0.59%
Lapis Top 25 Dividend Yield TR Index - USD 22.78% 4.09%
Lapis MidCap 50 Dividend Yield TR Index - USD 19.32% 6.87%
MSCI All Country World Index 24.50% 5.82%

Market comments about Q4-2017

Q4-2017 was once again a very good quarter for the equity market. The Lapis Top 25 Dividend Yield TR Index has underperformed the MSCI All Country World Index by 1.72 % for the year 2017. This is expected during an exceptional strong Equity market due to the very conservative structure of our indexes.

We are pleased to highlight that the Lapis Top 25 Dividend Yield Fund which follows the Lapis Top 25 Dividend Yield TR Index has outperformed his main peers by a wide margin:

(Peers comparison from the 18.11.2016 to 29.12.2017)

This chart shows the strength of the selection and rebalancing process of our Lapis Indexes / Fund.

Market Outlook

We have started the year 2017 with ‘multiple fear factors’ which have been forecasted by the media and the financial analysts around the world: President Trump’s new policy, rise of ‘populists’ parties in Europe, UK Economy slowdown after Brexit, ‘Hard Landing’ of the Chinese economy. Not much of these ‘scary forecasts’ have been verified and the equity market has had very positive year.

Also this year we can read about many difficult moments that might occur: North Korea nuclear threat, rise of inflation, Bitcoin Crash, USD Mid Term Elections, stretched market valuations etc. The market is a very efficient in absorbing this information.

Since the history of the stock market has started over 100 years ago only two factors have triggered severe bear markets (more than 25 % stock market falls):

  • Total euphoria by the market participants (dot com crash etc)

  • Flattening of the yield curve

Sir John Templeton had this very famous phrase: “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die of euphoria”

‘Euphoria’ can be defined by the market of seeing a ‘grand future’ and most importantly market participants ‘stop worrying’.

We believe that the market should have a positive outcome for next few years even though we might have some more volatility periods to accept.

We believe that our portfolios continue to be very well diversified, invested into high quality companies and most importantly not expensively valued. In case of a major market correction which can never be excluded, we believe that we solidly invested and can wait until the market recovers.

We wish you a good start to the year!

Andreas Wueger

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