17 July 2017

Dear Investor,

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

LAPIS Core Portfolio TR Index - USD 3.69% 1.48%
Underlying Indexes
MSCI All Country Index 11.71% 4.76%
UBS Bloomberg CMCI Composite TR Index -4.12% -3.25%
FTSE EPRA/NAREIT Global Index 5.28% 3.07%
USD Government 3 - 5 Years Term Index 2.17% 1.61%
Lapis Top 25 Dividend Yield TR Index - USD 9.79% 7.00%
Lapis MidCap 50 Dividend Yield TR Index - USD 7.00% 4.00%
MSCI All Country World Index 11.71% 4.76%

Market comments about Q2-2017

Q2-2017 was once again a very good quarter for the equity market. Commodity prices were under pressure due to the weak oil prices. The Lapis Top 25 Dividend Yield TR Index has outperformed the MSCI All Country World index by 74 basis points during the last quarter.

During strong bull markets, as we have experienced in the first half of 2017, the main equity markets usually outperform the value companies. During difficult market conditions, this situation will be reversed.

Market outlook

We would like to clarify the on-going discussion about the ‘high P/E’ ratios that we are experiencing now. The estimated 12 month forward looking P/E ratio of the S&P 500 is about 17.6 times which is slightly higher than the 15.4 time average from the year 2000 until now. We have already experienced a P/E ratio above 17 times in February 2015, and the market has risen since then by about 20 %. This negative news concerning an ‘overpriced’ market has already been absorbed in the market place; otherwise, we should have experienced sharp market corrections. We are in a normal market expansion in terms of company valuations and progress of the earning results.

It is much more important that the equity valuations stay attractive in comparison to the bond market valuation which is its main ‘competitor’.

Andreas Wueger

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