Passion Investments gain up to 12.5% in August
Mario, Head of Investments at Splint Invest, explains the performance of the assets in the last month.
How did Splint assets perform in August?
In August 2023, Splint assets performed well overall, driven by a higher demand in the luxury goods market. Categories such as cars, art, LEGO and precious metals showed significant growth. On the other hand we saw as well a slight slip in whisky bottle, wine and watch prices. The overall performance for the month is at 0.52%.
Outstandingly well was the performance of the Glenfarclas 1960 – 54YO Family Cask 1775 whisky bottle with +8.94% as our latest wine addition the Krug Portfolio (+12.15%) which we were able to source at a very competitive price.
How should we place this context of current macroeconomic trends? How have other asset classes performed?
The August pause in the 2023 stock market rally occurred as investors evaluated whether the latest economic data would compel the Federal Reserve to implement at least one more interest rate hike this year.
In August, the S&P 500 fell by 1.4%, reducing its year-to-date gains to 18.8%. This decline followed remarks from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Symposium, hinting at possible monetary policy tightening.
Furthermore, second-quarter earnings have been mixed, as companies grapple with rising costs and the potential for a U.S. economic downturn. In July, the consumer price index increased by 3.2% year-over-year, slightly below expectations.
Powell emphasized the persistence of "too high" inflation during his Jackson Hole speech, suggesting a readiness to raise rates further while proceeding cautiously.
Despite the Fed's recent 25 basis point rate hike in July, economists expect rates to remain steady at the upcoming September meeting. Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance, believes that if inflation remains controlled, the Fed may not raise rates again this year.
The bond market suggests a 44.4% chance of another 25 bps rate increase by November and a 59.5% chance of rate cuts by May 2024.
Mixed economic signals emerged in August, with CPI inflation below expectations but the PCE price index up. The U.S. labor market, while still strong, showed signs of a slowdown.
The New York Fed's recession probability index indicates a 66% chance of a recession within the next year, despite FOMC officials no longer explicitly calling for one.
The S&P 500's impressive 2023 rally has not been supported by underlying economic fundamentals. Companies reported their third consecutive quarter of negative year-over-year earnings growth in Q2. The S&P 500's forward P/E ratio has exceeded its 10-year average.
Analysts anticipate S&P 500 earnings to recover in the second half of 2023, but some have revised their estimates downward, particularly for Big Tech.
In August 2023, the gold price increased by 0.1% and is year to date at 4.7%.
How did the value of beloved Hermès Birkin and Kelly bags develop in August?
Splint Invest's portfolio, specifically the Hermès Birkin and Kelly bags, have consistently gained value over time, in line with enduring price trends. In the handbag category as a whole, there was a general increase of 0.5% in value. Notably, the Hermès Kelly HSS Ostrich bag stood out with a remarkable 1.5% increase in value. This illustrates that these high-end handbags have established themselves as a lucrative investment option within Splint Invest's asset portfolio.
What about the performance of the category cars?
In August, we initiated a new partnership by onboarding TheCarCrowd from the UK onto our platform as a car expert and issuer. During the same month, a remarkable Ferrari 348tb model was successfully introduced and quickly sold out, thanks to its attractive purchase price. As a result, the car's value already increased by 3.8% in August 2023.
In August, the value of the Renault Clio V6 once again experienced a rise of 1.2%, bringing its year-to-date increase to 5%. This demonstrates its potential as a valuable investment choice in the current market environment. The limited production and its nostalgic appeal to the generation that admired it in their youth are significant factors contributing to its appreciating value. Additionally, there are still Splints available on the primary market at a nominal value of 50 EUR.
What about the performance of diamonds?
Throughout August, the value of all the diamonds in Splint Invest's portfolio saw an uptick, with value gains ranging from 0.2% to 1.5%. Diamonds are well-known as a reliable asset, especially in times of crisis, thanks to their excellent storage benefits compared to gold. Investors often turn to diamonds as a secure investment during periods of economic instability, making them an exceptionally valuable option in tumultuous times.
Did art continue to grow in August?
The art segment continues to exhibit robust performance. In August, our latest artist proof print, "Soup Can," created by Banksy and limited to just 10 copies, saw an appreciation of 7.4%. The four paintings by Albert Willem showed gains ranging from 0.7% to 3.8%. Particularly noteworthy was the painting titled "We were all very thirsty" by Albert Willem, which achieved an impressive year-to-date performance of 22.1%. Additionally, the two paintings by Duncan Robert McCormick increased by 6% and 4%, respectively, in August.
How did you latest asset category LEGO perform?
In August 2023, the LEGO category continued to demonstrate remarkable performance. All four of our investment options saw their values rise, with increases ranging from 0.2% to 3.5%. The Modular Building collection stood out as the leading performer, with an impressive 3.5% gain. The category has achieved a year-to-date growth of 5.4%. Given the favourable market conditions that enable lower entry prices, we intend to introduce more investment opportunities within this exciting asset category.
What about watches?
In August, the watch category displayed a varied performance, with notable differences in the outcomes of various assets. Our most recent addition, the Audemars Piguet Royal Oak Reference 26331IP, showed a gain of 2.8%, whereas the GMT Master II suffered a loss of -8.3%.
The broader watch market has seen significant price reductions in the past year, as indicated by the Watch Chart Index, which has declined by 16% year-to-date. Nevertheless, the watches held within Splint Invest's portfolio experienced a more modest decline of 3.9%, emphasizing the importance of carefully selecting watches for investment purposes.
Exclusive models, highly regarded by watch enthusiasts, are expected to appreciate in value soon, given the increasing demand for them.
What have been the developments in whisky bottles?
During August, the value of our whisky bottles continued to decrease, influenced by a roughly 5% decline in the indexes used in our pricing model. This decline also had an impact on the prices of our bottles, resulting in an average loss of 0.8% for the month. Notably, the Glenfarclas 1960 – 54YO Family Cask 1775 stood out as the top performer, experiencing an impressive 8.9% increase. Conversely, both the Macallan Diamond Jubilee and the Macallan 1940 Gordon & McPhail lost more than 5% within just one month. In summary, our whisky bottles have shown an overall increase in value of 1.8% year-to-date.
And whisky casks?
Whisky casks have exhibited a consistent performance, with a modest overall increase of 0.7%. Notably, Staoisha and Tobermory casks showed strong performance, experiencing a 0.8% increase in value.
The whisky cask category is well-known for its stability, as it tends to remain largely immune to short-term market fluctuations, resulting in steady performance. Our whisky cask specialist, Braeburn Whisky, anticipates an average projected growth rate of 14.95% in 2022, representing a 1.7% rise from the previous year.
And how did the wine investments perform?
The Wine category experienced a slight decline of -0.7%. Year-to-date, the performance stands at -1.2%. The individual bottles exhibited a wide range of performance, with increases ranging from +12% to decreases of -5.7% this month.
The latest release, the Krug Rosé & Champagne Portfolio, showed a positive trend, thanks to the beneficial purchase price and increase by 12.2%.
On the other hand, most of the other champagne prices were dropping by more than 2%.
Overall, we anticipate the performance to improve, driven by the scarcity of Burgundy wine and Champagne.
How about rum?
As the Whisky index is used as well in the pricing model of the Rum, individual bottle price increases were negatively impacted. That is why we saw a drop in of 1.4%.
How about the latest asset category precious metals?
The Palladium we introduced in July experienced a price uptick of 2.4% last month. Furthermore, in August, we introduced 15 kilograms of Silver, and we also observed price gains of +0.6% in this asset. Given the current economic conditions, it appears to be an opportune moment to incorporate precious metals into the portfolio.
What is your final conclusion?
We saw a mixed picture in August 2023. While certain categories demonstrated remarkable strength, others experienced slight declines. Considering the prevailing macroeconomic uncertainties, we anticipate prices to rebound shortly, as investors seek to mitigate risk within their portfolios.