Contents Page
3
Quick Take on Iberian Markets
Page
4
The Net Zero Carbon Society
Page
8 Page
12
Stoicism and Investments
NIC-UD Fund: Monthly Performance
2
Quick Take on Iberian Markets Portugal held snap legislative elections on January 30th, with the results contradicting all projections from the weeks prior, which placed the socialist party, PS, only slightly ahead of its closest opposition, PSD. However, what ended up happening was a landslide win for PS with the party managing to obtain an absolute majority in the parliament, something which hadn’t happened since 2005, a result of other left-wing parties’ electorate shifting their votes to PS, with Bloco de Esquerda losing 14 out of their 19 members of parliament. In spite of this expressive win for the left wing party, it is also worth mentioning the rises of both Chega, that went from 1 member of parliament up to 12 and Iniciativa Liberal, that went from 1 to 8, taking votes from the main opposition PSD, which had one of its worst results in the 20th century. It is also worth noting that this absolute majority will have at its dispose the entirety of the funds sent by the EU to recover from the pandemic, which they can decide, unchallenged, how and where to use it. Portugal’s Finance Ministry reported a 7.7% decrease in public debt in 2021, dropping from 135.2% of GDP down to 127.5%, in what João Leão, the head of the ministry, called “the largest reduction ever” and “fundamental to the country’s international credibility”. Even though these numbers were still below the target set by the government, which was 126.9%, the numbers showed that the trajectory of public debt reduction picked back up in 2021, after stifling during the pandemic. Portuguese GDP grew 4.9% in 2021, more than expected, and the highest growth since 1990. After a historic GDP decrease of 8.4% in 2020, the Portuguese economy has been able to bounce back in 2021, and by more than the 4.6% estimated in October 2021, by Prime Minister, António Costa. According to INE, this growth is explained by “an expressive positive contribution” of domestic demand, bouncing back from the negative impact of 2020. Furthermore, in the last quarter of the year, there was an acceleration in the volume of exports of goods and services which ensured a positive impact of net exports on GDP, which grew also 1.6% in quarter-on-quarter terms.
Francisco Baptista Spain proposes new Social Security system for the self-employed. The project, which is still under discussion, would mean that freelancers have to pay according to what they earn, instead of a flat monthly rate. Currently, Spain’s self-employed can choose their flat contribution base, regardless of actual income, while the proposed reform would create a 13 contribution bracket system, based on the freelancer’s income, ranging from 600€ to 4050€ monthly. The proposal, which would see an estimated 2 out of 3 self-employed pay less in social security contribution, was well received by two of Spain’s biggest self-employed unions, UPTA and UATAE, but got strong criticism from the freelancer association ATA. If it moves forward, it is expected to come into full effect in 2023. Spanish inflation levels slow down during January 2022, but not as much as expected. Consumer prices were 6.1% higher in the first month of 2022 when compared to January of 2021, decreasing from a historic high of 6.6% in the month before, however, this drop was not as much as forecast by a group of economists in a Bloomberg survey, with the predicted value being around 5.5%. The fact that inflation is slowing less than expected is mainly due to soaring energy prices that have been surging since mid-June, driven by natural gas prices. The ECB has been meeting this week, to consider the different possible courses of action. Both the IBEX 35 and the PSI 20 showed light decreases in January, of 1.6% and 1.3%, respectively. Taking into consideration the uncertainties still around the different Covid-19 variants and the added factor of the elections in Portugal, both indexes started and ended the month of January at around the same values. Besides this, it is important to mention that, in a press conference held on January 18th, Isabel Ucha, the CEO of Euronext Lisbon, admitted that “two or three” listed companies may disappear in March when new rules come into force, including a requirement of at least €100M market capitalisation and the elimination of the minimum number of 18 companies in the index. 3
NIC Undergrad Review
The Net Zero Carbon Society How taxes, electrical disruptions, and companies’ trade-offs lead to a better planet Introduction
João Castilho
Overview of U.S. Greenhouse Gas Emissions in 2019
Nowadays there is the need of constant implementations towards a better environment. Treaty of Paris, COP26, and the upcoming International Conference on Environmental Pollution, Treatment and Protection (ICEPTP'22) are some marks on the fight in favour of a better globe. To limit global warming to 1.5°C, to reduce the carbon emissions by half by 2030, and lastly the reduction to “net-zero” by 2050, there have been implementations that can lead to the goals idolized. Carbon Credits are one of the major activities that can unroll the solutions.
Greenhouse effects, and damages of C02 The Greenhouse effect is a process that heats the planet by unhindered radiant energy from the sun heating the planets ‘surface. As supposed, some of its radiation should reflect in the Earth´s atmosphere, thus bouncing back to space. However, with the large excess amount of greenhouse gases, most of the inserted radiation is getting trapped, thus heating the planet to unwanted levels, damaging the ecosystem of the Blue Planet. But why is CO2 bad for the environment? To be specific, Carbon Dioxide is needed at some levels (allows for the creation of Oxygen, and greenhouses are needed, otherwise temperature would fall 30°C), but there is current excess amount of it. This type of gas is the most responsible for the process priorly written, accounting for around 80%, so a reduction of it can lead to a better achievement of the goals implemented.
Carbon Taxes and Carbon Pricing CO2 pricing is a method taken by several nations in order to reduce global warming. The cost is applied to greenhouse gas emissions to better encourage polluters to reduce the combustion of gggggggg
coal, oil and gas, the major drivers for the unwanted rise of Earth´s temperature. Carbon Dioxide is a negative externality, thus Carbon Pricing, which has proved to be efficient, seeks to address the economic problem behind the emission of this gas. In what concerns the taxes implemented in the release of the gas, it is always in consideration to a delivery of 1 ton of gas into the atmosphere. However, the pricing scheme is not consistent among all countries. Only 21.7% of Global GHG emissions are covered by this type of tax in 2021. The Chinese National Carbon Trading Scheme was the major success for the increase of the percentage throughout the years. This ETS is based on the creation of a market where emitters can buy and sell emission credits. With this, it allows for the decrease of the gas polluters by the application of a tax, but instead of contribution for the Government’s income, it is delivered as a subsidy for companies that present negative Net Carbon emissions. With this scheme, China is also contributing for the development also of the economy, with increase of trade-offs among companies in the public or gggggggg
4 NIC Undergrad Review
private market. Besides China, most European Countries and Canada also implemented the Carbon Pricing. However, some of the major players do not present these types of solutions, as for example India, Russia, The Gulf States, and many US States. As an overall for 2020, these types of taxes generated globally a $53bn in revenues. According to the Intergovernmental Panel on Climate Change, a price level between $135-5.500 in 2030 (expectations are of $360), and $24513.000 in 2050 are the needed to reach the desire of the 1.5°C. With the latest models of the social cost of carbon, it is calculated a damage of more the $3.000/ton of CO2 because of economy feedbacks and falling GDP growth rates.
How does the Taxes affect the Social and Economical Welfare? A Carbon tax leads to the increase of the price of burning fossil fuels, which, as a consequence, leads to the increase of the overall commodity price. For example, a tax of $40 per ton would roughly add a 36 cents price for a gallon of gasoline, or 2 cents increase on the average price of a Kilowatt-hour of electricity. Higher energy prices lead to raising costs for companies and households, ending up with lower profits, wages, and consumption as an overall. As low-income households tend to consume a more energy-intensive basket of goods (usually related to fossil fuel energy and natural gas) than the wealthier gap of the society, a carbon tax would be regressive. It would cost a higher share of the income of those in lower classes in comparison to the other substrates of the society. However, just like China did, there is an option that does not contribute negatively to the society, that promotes the economical well-being, the helps
in the development of green environmental companies and venture capitals, while promoting employment and a green world.
Carbon Credits It is undeniable that there is the existence of companies that will lead to bankruptcy if they decide to fully ban the Carbon Dioxide emissions. Even with proper developments occurring nowadays of renewable energies and electrical systems, for example, fossil fuels still take a tremendous percentage of the needs of the society. Most cars driven, trains, airplanes are not “green”, however banning these types of vehicles would lead to a crash of the economy in several countries. Carbon Credits are one of the many solutions for these types of dependencies. A Carbon Credit is a tradable permit or certificate that provides the holder of the credit right to emit one ton of carbon dioxide or an equivalent of another greenhouse gas. It is essentially an offset for producers of such gas. The main goal in the of the environmental presence of CO2, mainly from industrial activities PP&E (Property, Plant and Equipment). There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their Carbon Footprint on a voluntary basis. The Carbon offsetters intend on a transaction with investment funds or a carbon development company that has aggregated the credits from individual projects. These types of transactions can also use an exchange platform to trade, almost like a stock exchange for carbon credits. The inherent quality of the credits is based on the validation process and sophistication of the fund or development company that acted as the sponsor of the Carbon project. As a reflection, different prices are settled. The European Union´s Carbon Credits trade from $7.78 to $25.19 per tonne. It is expected to be a developing market, particularly as several Governments have committed to having “green recoveries” post Covid-19 recession. For the valuation of the projects that are listed in the Credit Rights Exchange platform, several conducts and organizational patterns are needed to be undertaken. As the first step, there is the valuation of the company´s Carbon Footprint, using firstly the amount of energy that a given factory or gggggggg
5 NIC Undergrad Review
entity needs and the given CO2 emissions that will be released. Afterwards, it is calculated the number of trees and forestation needed to consume the Carbon Dioxide and, at least, consume the gas in the same proportions with the emissions of Oxygen. With this, companies are eligible to announce, alongside the merger that has occurred, that the project is not harming as much the environment as it tended to be.
These types of contracts were ratified in the Kyoto Protocol (a treaty established in 1997 in Japan with the goal of decreasing gas emissions by 5.2% in comparison to 1990, which, in 2010, was already reduced to 29%), and The Paris Agreement has set provisions for facilitating the Credit Rights. For these types of agreements, Credit Rights are separated into two categories. The Voluntary Emissions Reduction (VER) – Carbon credits provided by emission reduction projects that have attained voluntary third-party approval but have not been certified by official UNbacked offsetting schemes - and Certified Emissions Reduction (CER) – Emission units (or credits) created through a regulatory framework with the purpose of offsetting a project´s emissions. The main difference between the two types of agreements is that there is an external certifying entity that regulates the CER opposed to the free will of VER. Although these types of actions are favoured by the United Nations and most European Countries, to be eligible to be inserted in these transactions, as of the Credit Right Exchange Platform, the projects need to be independently validated throughout their cycle. Data of these initiatives are held securely to avoid tempering and, as provision for the upcoming future, proposes to use blockchain technology to
create an scandals.
unalterable
record,
thus
avoiding
EU Emission Trading System (EU ETS) Alongside China, the European Union has also started taking measures on the Carbon Credit market. It is the largest trading platform in the world for these types of projects, which had a beginning in 2005. The successful strategy undertaken has reached high levels due to their segmentation of phases. The first stage had a duration of three years (2005-2007), which all allowances were delivered for free, thus expanding the market, with penalties on businesses for non-compliance ($40/ton). However only CO2 was the gas covered, but the phase has allowed the establishment of a price on Carbon and the free trade on European Countries. From 2008 to 2012, the inclusion of the aviation sector into the market was the greatest hit. Airplanes are a large percentage, apart from fossil fuels deterioration, of emissions of CO2. The third Phase (2013-2020) had the main importance in their inclusion of other greenhouse gases. Besides, the allowances were allocated now through auctions, and not of a free delivery. For the upcoming years on the fourth Phase (2021-2030), allowances are to double until 2023, with a regular feeding rate of 12%. Due to the ecological benefits these types of initiatives bring, higher risk sectors (those that cause the largest damages to the planet) will have their payments reduce to zero to promote the entrance of these companies, but also the same target for 2026 for less exposed firms. To prevent the miss allocation of allowances, rules have been set to better align with actual production levels. Allocations to individual installations may be adjusted annually to reflect relevant increases and decreases in production. The threshold for adjustments was set at 15% and will be assessed on the basis of a rolling average of two years. To prevent manipulation and abuse of the allocation adjustment system, the Commission may adopt implementing acts to define further arrangements for the adjustments. Besides, the list of installations covered by the Directive and eligible for free allocation will be updated every 5 years, and the 54 benchmark gggggggg 6
NIC Undergrad Review
values determining the level of free allocation to each installation will be updated twice in phase 4 to avoid windfall profits and reflect technological progress since 2008. Several low-carbon funding mechanisms will be set up to help energy-intensive industrial sectors and the power sector meet the innovation and investment challenges of the transition to a lowcarbon economy. The Innovation Fund will support the demonstration of innovative technologies and breakthrough innovation in industry. The Modernisation Fund will support investments in modernising the power sector and wider energy systems, boosting energy efficiency, and facilitating a just transition in carbon-dependent regions. With this, it is expected an increase and expansion of the market in the last stage, with 6 more billion allowances being allocated between the 10-year period.
Summary With the awareness of the emissions of greenhouse effects and their possible damages to the environment, Governments, companies, services and entities have started to take more precautionary actions. In several countries there has already been the implementation of taxes on emissions of Carbon Dioxide and other gases. The expectations are of a constant and gradual increase of the Carbon prices, expecting a constant decrease of the emissions until 2050, where the Net-Zero Carbon Emissions are expected to reach. However, this type of taxation tend to cut down economic growth. In contrast, the Carbon Credit Exchange Platform has allowed for these types of firms to maintain production. By an affiliation to a “green” company, the impact to the environment can be reduced, and sometimes even null. Those types of projects are being backed up by several important entities. China and the European Union are some examples. With a controlled vigilance, constant measures being undertaken, and the correct allocation of allowances and funds, the Carbon Credit has seen an exponential growth since the Kyoto Protocol, and all capabilities of continuing to do so.
7 NIC Undergrad Review
Stoicism and Investments How can a 3rd century BC philosophy be applied to capital markets? João Freire
Introduction The great depression of 1929 was caused by excess liquidity, proliferation of debt in large scales and stock speculation. The 70’s crisis was guided by a significant increase in energy prices that afterwards led to a huge inflationary pressure. Three decades later, the global financial crisis of 2008 was characterized by an asset bubble in the real estate market, with easy access to credit and risky subprime mortgages. If all these events were caused by the previous points, we can indeed observe that right now we have: an overvalued stock market, a growing bubble in the real estate market, huge amounts of public debt, retail investors running to brokers in unprecedented waves, and easy access to credit. Do we have all the ingredients for a new crisis? When facing different macroeconomic environments investors tend to either adapt or reject current trends according to different investment philosophies. As a Stoic, I strongly believe that more than a way of being in every sphere, Stoicism can be seen as a great support for almost every investor, guiding them in how to behave and perform in the capital markets. Stoicism is a school of thought that appeared in Greek antiquity, becoming one of the loftiest and most sublime philosophies. The name Stoicism comes from Stoa Poikile, the decorated public colonnade where Zeno and his disciples used to meet to discuss. Even though this line of thought was very thorough during the time of Seneca and Marcus Aurelius, the link between the philosophy and investments has not been studied extensively. However, based on several pieces of evidence such as speeches, books, and podcasts we can confirm that names such as Bill Gates, Warren Buffet and Bill Belichick (five-time winner of Super Bowl as a coach) are all adopters of the Stoic Philosophy. So why is Stoicism not utilized by more people?
Stoic Model The trifecta of virtues serves as the foundation of
happiness to the Stoicism followers. This trifecta is known as eudaimonia, which stands for wellbeing at the highest level. More simply, eudaimonia means to be on good terms internally, to find peace and happiness within the best version of ourselves. Who could disagree with this idea?
First, to better understand the Stoic framework, we must consider that a proper Stoic lives with Arête, which means to live with excellence on a moment-to-moment basis. For example, after deciding who you wish to become in the future, considering your capacities and limitations, you should start bridging the “today you” with the “future you” using a Stoic Framework. According to this framework, you will get closer to your objective if you live every single moment with Arête. By actively living with the Arête framework, you will create routines that grow exponentially with time. Each day you will become more like the “future you”. A good example can be observed in a person who wants to become a professional runner. In substance, it is hard to become a runner after some casual jogging sessions on the weekends; however, Stoicism tells us that if I perform as a runner on a moment-to-moment basis, I will be more likely to achieve that goal. In simple terms, if I follow certain routines such as eating and training properly, and if I try to have the same commitment as an Olympic runner during every moment of the day, I will not immediately become one, but I will constantly move closer towards my goal. 8
NIC Undergrad Review
Second, according to Stoicism the world must be divided into two big fields: the field of actions we control and the ones we cannot. In the markets, while on the one hand one can control the way to apply his/her wealth, can decide the way to behave during a 20% drop in the market, and can choose which class of assets to invest in, on the other, he/she is aware that market shifting factors, such as interest rates, Brexits, or pandemics are uncontrollable. Given this, the Stoic Philosophy mainly focuses on the controllable things. One of its key aspects is to be aware and able to identify what is, and what is not, within our control. On the one hand, the controllable things include actions, and judgements. For example, if the ECB decides to increase interest rates, a judgement would be the way I interpret it; Then the actions would be my reaction according to the event and the judgment: borrowing less money due to an increase of borrowing costs, would be an action post-judgement. On the other hand, the uncontrollable things include all external events that might have a positive or negative impact in our outcomes; the Stoicism defends that these external events must be seen as challenges that must be handled in order to become stronger. For example, you can’t control getting sick, but according to Stoicism, you can embrace the sickness as a challenge put in front of you for you to become stronger. Lastly, this philosophy defends that a Stoic should take responsibility, and must be cognizant of both the uncontrollable events, his/her judgements, and his/her actions. Summing up, the three triangle corners are interconnected: If we focus on what we can control, we are able to take responsibility for our judgements, and the choice to take action in order to reach what is best for ourselves. Stoicism goes according to a rationale that every event occurs according to a cause and effect (logos) and therefore this philosophy has a lot to say about the way we approach the circumstances.
Application 1 - Cycles can be extremely relevant, however, predictions are not: The first application of the Stoic Model to the investment world, concerns the predictions made by investors regarding stock price fluctuations.
According to Stoicism, one should not take huge inputs from those, as usually they only originate from noise and do not provide a realistic perspective about what is actually going on in the market. A study conducted at the University of Miami from 1994 to 2012, analyzed how 3.000 stock analysts reported on 1.700 companies. The objective was to assess whether characteristics of the companies’ CEOs, such as their gender or political orientation, would bias the analysts’ reports. The results found that a male analyst would evaluate a firm headed by a male CEO more favorably. Since the number of male analysts exceeded the number of female analysts, male-led companies were consistently predicted to generate much higher returns in the future. However, this prediction, was solely an outcome of bias. Contrary to some predictions, cycles are regarded by Stoicism as relevant since they present traceable track records. In my opinion, diversification is a great way to defend ourselves from cycles; it doesn’t just minimize our odds of being wrong, but it also maximizes our probabilities of being right during the cycles. It would cost a higher share of the income of those in lower classes in comparison to the other substrates of the society.
Application 2 – Know what you don’t know and what you will never know Most times, investors believe they are aware of certain things which they are not, and therefore end up being prejudiced. Investors that risk 50% of their wealth in a specific company, only with the guarantee that their close friends are also investing half
9 NIC Undergrad Review
in it, must be aware that they may be exposed to a coin flip situation. In the capital markets, investors tend to use data available in the short-term, which is often incomplete and not very significant. With this data they make conclusions for the long-term, ignoring historical trends that could be contradicting their conclusions. A defensive investor tends to ignore short-term trends. In fact, simplified assumptions are usually leveraged in drawing conclusions. Many times, investors resort to past momentum to explain the future – the idea that what performed well in the past will keep performing well. However, these investors are ignoring important key variables, such as: 1. Changes in Legislation, invalidating all the previous data and studies. 2. The increasing trade volume together with an ease of access to financial markets, will potentially generate lower returns than in the past. Therefore, past returns cannot be used as a linear predictor of future returns. 3. Specific events with severe impacts on the financial markets that won’t likely repeat in the future, and therefore cannot be used in making future predictions. I will not deep dive into technical analysis but every investor that uses it as a tool must be aware that resistance and support zones really depend on the economic environment, so they might not repeat. project.
Application 3 – Understand, identify and manage risk recognizing that without it there are no returns Risk is not supposed to be fully minimized or else target returns can never be achieved. When investing to beat indexes, according to the Stoicism, the goal is not to avoid risk at all costs. The Stoic Investor is aware that winning is not always possible in financial markets, and therefore avoiding risk due to fear of losing should not have a major weight in investment decisions. However, the institutional environment surrounding investors is propitious to avoiding high risks. This arises mainly due to investors’ fear of underperforming, of ruining their career, or losing money. I truly believe this is a failure of the system
itself as, in their personal investments, investors tend to be less risk averse. During the pandemic escaping risk was even more intensified, where evidence shown that many people shifted their investments to almost risk-free assets, without taking in consideration that those returns would lose to inflation. At the most basic level, the more investing risk you take, the higher the potential reward. Risky stocks, for instance, will be more volatile (we will explore it later); however, by exposing yourself to all this risk, you anticipate the payoff will be proportional to that risk.
Application 4 – Risk is more complex than what we think, and It is a ‘risk’ to only account for volatility Although the Stoic Investor is not afraid of taking risks, this investor is cautious in measuring it. While many investors measure risk by accounting only for volatility, according to Stoicism, it is necessary to consider many other dimensions. Looking at the stock market example, one can easily see high volatility with frequent oscillations throughout the day. Although this is an important component of risk, mainly because people react to it, it surely does not provide the full scenario. 10
NIC Undergrad Review
In fact, if it was the only risk measure to consider, one would have to conclude that no volatility would imply no risk. A clear example is represented by “Papel Comercial do GES”, or obligations of that type, in which no oscillations in value (no volatility) were observed, suggesting no risk. However, related to those was the so-called credit risk to which investors need to pay attention to. Adding up to the credit risk, the concentration risk also needs to be accounted for. Many times, people see good results and draw conclusions without knowing their roots. When such results come from high concentration in a popular asset, sector, industry or region, investors must be aware that the good results can revert very quickly. This year we noticed large falls in sectors that grew immensely in 2021, due to being hot topics, which is the case of Bitcoin and Green Energies. Their growth was mainly due to Concentration. In fact, concentration always leads to scalable movements, both in good and bad terms, representing also a risk. The third risk to look for is the counterparty risk, which arises with the probability that the other party fails to meet its obligations. In a derivative contract, many times only the value of the underlying asset is considered. However, the counterparty’s risk is a serious danger in this type of financial contract, and therefore must be accounted for.
importance of the process, in comparison with the resources available. It states that success requires embracing the virtue of psychological strength, especially patience and fortitude. Standing apart from the crowd, refusing to follow fads and diligently pursuing possible inefficiencies can serve as a big advantage for some investors.
Application 5 – Do more with less Charlie Munger has proven over a lifetime of value investing success that it is possible to beat an efficient market (we will assume that) over the long run, especially once using the psychological and analytical attributes with rigor. His returns consistently beat the ones of the big banks, that had unlimited resources and were composed of vast teams of analysts and strategic investors. What we can conclude is that we always have room for improvement, and a Stoic must always believe that with the correct application of wisdom and courage we can always reach more. Market inefficiencies arise without clear patterns and can vary widely in scope, from all-consuming market panics to industry-spanning irrationality to company-specific mispricing. The stoicism philosophy also defends the 11 NIC Undergrad Review
NIC-UD Fund: Monthly Performance Outlook for 2022: Less of the same
Rodrigo Mota
Global Markets Stocks are off to an ugly start for this year. The drop comes ahead of the Federal Reserve’s interest rate hikes that are expected this year. Tech stocks have been especially hard hit by rising bond yields as investors rotate out of risky growth stocks into safer assets. The benchmark S&P 500 lost nearly 6% in January – its worst month since March 2020. Experts are warning that the worst may be yet to come, predicting that stocks may continue to fall among disappointing corporate earnings and the Fed’s tightening monetary policy. Elevated Inflation is expected to persist for longer than envisioned, with ongoing supply chain disruptions and high energy prices. Moreover, the emergence of new COVID-19 variants could prolong the pandemic and induce renewed economic disruptions.
In the Eurozone confidence among the consumers dropped to the lowest level since April as the increase in COVID-19 infections due to the Omicron variant weighed on the economy. Furthermore, Consumer price in the Eurozone rose by a record 5.1 per cent in January piling more pressure on the European Central Bank to respond with tighter monetary policy. The ECB has rejected investor bets that it will raise interest rates this year, saying it will not do so before it stops asset purchases, which it plans to continue at least until October. However, the persistence of inflation above the ECB’s 2% target has already caused widening divisions on its governing council. The “Hawkish” heads of the German, Belgian and Austrian central banks complained that the ECB was committing to continue bond purchases for too long.
Current Positions Regarding asset allocation, no new positions were added to our portfolio during the month of January. Although January was an extremely bad month, our portfolio was able to lose less than the other indexes despite having a less diversified investing profile. The top performer of portfolio was British American Tobacco (BATS), with a 13.54% share price increase. In addition, Enterprise Products Partners (EPD) was amongst the top performers of the month with a 6.44% share price increase. Positions Weight on Total Equity
6,01% 16,31%
5,49% 7,23%
3,22% 3,53% 12,04%
4,54% 3,36% 4,29%
7,40%
6,54% 3,82%
5,41% 4,87% 2,93%
3,00%
Holding Company US Entertainment US Food & Beverages ETF Internet US Gaming ETF Renewables US Electric Batteries ETF Gold Miner Consumer Products EU Pharma Retailer Chinese Govt Bonds Aerospace & Defense UK Tobacco UK Oil & Gas US Accounting Sof tware Biotechnolog y ETF Cash
Nº
Industry
Type
1
Streaming/Entertainment
US Equity
Current Price Open Price $142,97
2
Gaming/eSports
ETF
$38,52
$25,21
3
Holding Company
US Equity
$313,02
$286,23
4
Accounting Software
US Equity
$91,87
$103,60
5
Social Media/Internet
US Equity
$313,26
$175,75
6
Renewables
US Equity
$78,12
$75,49
7
Utilities
US Equity
$9,6
$9,67
8
EV Battery
ETF
€15,55
€9,98
9
Consumer Products
EU Equity
€ 54,99
€ 47,80
10
Gold Miner
CND Equity
$38,17
$44,74
11
Pharma Retailer
US Equity
$49,50
$47,14
12
Sovereign China Bonds
Bond ETF
$5,67
$5,34
13
Aero & Defense
UK Equity
£5,67
£4,93
14
Tobacco
UK Equity
£32,25
£27,98
15
Food & Beverages
ETF
$81,42
$72,91
16
Biotechnology
ETF
$41,63
$58,87
$141,70
12 NIC Undergrad Review
NIC-UD Share Price (Inception Cumulative Returns) 8% 7% 6% 5% 4% 3% 2% 1% 0% 04/01/22
09/01/22
14/01/22
19/01/22
24/01/22
29/01/22
Monthly Performance
Benchmark Analysis 15% 10% 5% 0% -5% -10% -15%
E T S F# to 1 ck E #1 TF S # to 2 c S k# to 2 c S k# to 3 ck E #4 TF S # to 3 c S k# to 5 c S k# to 6 ck E #7 TF S # to 4 c S k# to 8 S ck to # 9 c S k# to 1 0 ck E #11 TF # 5
As it was referred January represented the worst month since March 2020 as data suggests that inflation is here to stay just like supply chain disruptions. The S&P 500 fell 5.86% , being amongst the worst performers of our benchmark selection, mainly due to supply chain disruptions and inflation fears that have put the tech stocks on a major selling pressure. The MSCI World Index was another victim of the uncertainty with 9.98% decrease. European equity markets followed the downtrend. The Eurostoxx 50 index fell 3.63% in January. In Portugal the PSI-20 fell 1.30%. Regarding big tech companies, the FANG+ performed poorly with a fall of 9.83% due to, as it was previously stated, investors fearing interest rates hikes and moving into safer assets. Finally, our fund dropped a little over 3% but started the year on a favourable note since it was able to outperform most of our benchmarks, despite having a negative share price increase.
Portfolio return vs Benchmarks 0% -0,54%
-2% -4%
-1,30%
-3,47%
-6%
-3,63%
-5,86%
-8%
-7,85%
-10%
-9,83%
-9,98%
-12%
Portf oli o S& P 500 (Share Price)
MS CI World Index
-7,46%
FTSE 100 Eurostoxx 50
Nikkei
Shanghai FANG+ Com posite
PS I 20
Corporate News Facebook lost daily users for the first time in its 18-year history, the platform’s parent company Meta, which chief executive Mark Zuckerberg attributed to stiff competition from fast-growing rivals like Tiktok among the younger generations. The latest evidence that Meta was losing protagonism to apps such as Tiktok came a day after its rival, Google, posted an unexpected surge in advertising revenue. Meta shares plummeted more than 25% when the markets opened on Thursday. As part of Blackline’s focus on growth through the cloud, it recently announced a tie-up with Google cloud. Blackline will leverage the Google Cloud Platform to add cloud-native capabilities such as machine learning and artificial intelligence to enhance its financial automation platform with new real-time, intelligent functionality. Blackline also announced an integration with Workiva, a leading cloud provider of connected reporting and compliance solutions. The platform integration will help joint customers streamline financial close and reporting processes by enabling users to connect and transfer data between the two platforms. 13
NIC Undergrad Review