Passion Investments gain up to 13.65% in July

Mario, Head of Investments at Splint Invest, explains the performance of the assets in the last month.

How did Splint assets perform in July? 

In July 2023, Splint assets performed well overall, driven by a higher demand in the luxury goods market. Categories such as diamonds, cars, art, handbags, LEGO and whisky bottles showed significant growth. The overall year-to-date performance increased to 3.01%.

Outstandingly well was the performance of the Macallan Diamond Jubilee whisky bottle with +13.65% as our latest art addition Summer Ferns from Duncan Robert McCormick with +6.12%.

How should we place this context of current macroeconomic trends? How have other asset classes performed?

In the third quarter of 2023, the stock market showed continued economic momentum, supporting the idea of a soft landing while raising concerns about further Federal Reserve rate hikes. Inflation remained a key concern, with core PCE inflation in June registering at 0.2% MoM and 4.1% YoY, the lowest reading since September 2021. Despite these concerns, Q2 GDP surpassed expectations at 2.4% (SAAR), fuelled by robust consumer spending. Consumer confidence reached its highest level since mid-2021, driven by increased optimism about the labor market. Initial and continuing jobless claims were lower than expected, and headline durable goods orders for June exceeded forecasts. 

The Federal Reserve raised interest rates by 25bps, reaching a target rate of 5.25-5.50%, a move widely anticipated by the market. The question now is whether the Fed has reached its peak rate or if more rate hikes are to come by the end of the year. Fed Chair Powell indicated that while the 2% inflation target has not been fully achieved, they might consider holding rates steady at the next meeting in September if the data supports it. The market currently places less than a 50% probability of another 25bp rate hike this year.

The first half of 2Q '23 earnings reports showed mixed results. S&P 500 companies reported a blended earnings decline of -7.3%, the largest since Q2 2020. While the number of companies reporting positive EPS surprises was above recent averages, the magnitude of those earnings surprises fell below recent averages.

Consumer Discretionary stocks saw the largest earnings upside, with an average beat of approximately 12.4%, followed by Communications and Industrials. On the growth front, 68% of companies reported revenue growth, with the Materials sector being the hardest hit, while Consumer Discretionary had the highest upside. Earnings growth varied across sectors, with Energy and Materials experiencing declines, and Communications and Consumer Discretionary seeing significant growth.

 The forward 12-month PE for the S&P 500 stood at 19.4, above the five and ten-year averages. Following earnings announcements, Materials and Energy sectors saw gains, while other sectors experienced declines, with Real Estate being the most affected.

 In July 2023, the gold price increased by 1.6% and is year to date at 4.6%.

 How did the value of beloved Hermès Birkin and Kelly bags develop in July?

 Splint Invest's portfolio, particularly the Hermès Birkin and Kelly bags, have consistently appreciated in value, aligning with long-term price trends. Among handbags as a category, there was an overall increase of 1.4% in value, with our most recent addition, the Hermès Birkin Box-Leather bag, being the standout performer, with an impressive 3.6% rise in value. This demonstrates that these luxury handbags have emerged as a profitable investment choice within Splint Invest's asset holdings.

What about the performance of the category cars?

The car market is currently facing challenges amid economic recession conditions. Standard luxury cars, like the Porsche 911, have experienced a stagnant price trend over the last six months. In response to this situation, there has been a shift in focus towards selecting cars that have the potential to become lucrative investments.

To meet this demand, a decision was made to introduce a highly limited young-timer model, the Renault Clio V6, as the first offering. The Renault Clio V6 garnered significant admiration from young individuals when it was originally released in the early 2000s. Now, as these individuals have matured in age and financial status, there is an expected increase in demand for such unique and rare cars.

In July, the value of the Renault Clio V6 witnessed a rise of 1.1% (3.8% year-to-date), indicating its potential as a valuable investment option in the current market conditions. The limited production and its nostalgic appeal to the generation that admired it in their youth are key contributing factors to its appreciating value.

 What about the performance of diamonds?

 During July, all of Splint Invest's diamonds experienced a rise in value, with increases ranging from 0.5% to 1.8%. Diamonds are renowned as a safe haven asset, particularly during times of crisis, owing to their superior storage advantages in comparison to gold. Investors frequently opt for diamonds as a secure investment during periods of economic uncertainty, making them a highly valuable choice in turbulent times.

Did art continue to grow in July?

 The art category continues to demonstrate strong performance. In July, our new painting "Summer Ferns" by Duncan Robert McCormick appreciated by 6.1%. The four paintings by Albert Willem experienced increases ranging from 2.8% to 6.0%. Notably, the painting titled "We were all very thirsty" by Albert Willem achieved an impressive year-to-date performance of 21.3%. Additionally, our latest print addition, Keith Haring's "Pop Shop I, Plate I," saw a modest increase of 0.8% in value during July.

How did you latest asset category LEGO perform?

 In July 2023, the LEGO category continued to perform exceptionally well. All three of our investment opportunities experienced an increase in value, ranging from 0.2% to 6.2%. The Star Wars Bundle emerged as the top gainer, with an impressive 6.2% increase, and it has already achieved a year-to-date growth of 8.3%. Given the favourable market conditions, which allow for lower entry prices, we plan to introduce additional investment opportunities within this exciting asset category.

 What about watches?

 In July, the watch category presented a mixed picture, with notable variations in performance among different assets. Our latest addition, the Audemars Piguet Royal Oak Reference 26331IP, recorded a gain of 3.8%, while the Rolex Explorer II encountered a loss of -6%.

The overall watch market has witnessed significant price drops over the past year, as evidenced by the Watch Chart Index, which declined by 13% year-to-date. However, the watches held by Splint Invest experienced a more moderate decline of 2.2%, underscoring the importance of selecting the right watch for investment purposes.

 Exclusive models, cherished by watch enthusiasts, are expected to regain value soon as demand for them is on the rise.

What have been the developments in whisky bottles?

In July, the value of whisky bottles continued to rise, but the indexes used in our pricing model decreased by approximately 1.3%, which also had an impact on the prices of our bottles. On average, we observed a gain of 0.9% for the month. The top performer was the Macallan Diamond Jubilee, which experienced an impressive increase of 13.7%. Only one bottle, the Spring Bank 40YO – Millenium Edition, saw a negative decline in price, with a decrease of -1%. Overall, our whisky bottles have increased in value by 2.6% year-to-date.

And whisky casks?

Whisky casks have maintained a steady performance, showing a slight overall increase of 0.7%. Among them, Staoisha and Tobermory casks performed particularly well, with a 0.8% gain in value.

The whisky casks category is renowned for its stability, as it remains relatively unaffected by short-term market fluctuations, leading to consistent performance. Our whisky cask expert, Braeburn Whisky, forecasts an average projected growth of 14.95% in 2022, representing a 1.7% increase 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 +0.6%. The individual bottles exhibited a wide range of performance, with increases ranging from +2.1% to decreases of -3.7% this month.

The latest release, the Petrus 2009 magnum bottle, showed a positive trend, increasing by 2.1%, thanks to an advantageous purchase price.

On the other hand, the 2008 Salon Mesnil – Limited Oenotheque Case faced a decline of -3.7%.

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. Nevertheless, both of our bottles increase in price by 0.2%.

How about the latest asset category precious metals?

So far we released one asset within this category end of July, 1 kg of Palladium. As the prices for precious metals can be volatile, we see already price developments for our asset. Since the purchase was made on July 27^th, the price of the asset increased by 0.5%.

What is your final conclusion?

The global demand for luxury products continues to increase. We are optimistic about the value development of our assets. As in the past, we will continue to adjust our product offerings based on the current market situation within each category.