eToro’s Investment Office Performance Report (Aug.22)
eToro's Investment Office
eToro’s Smart Portfolios
Monthly Summary - August 2022
August was a rollercoaster month for stocks
In the first half of the month, share prices moved higher on the back of investor optimism and solid earnings, with the S&P 500 Index stringing together its longest streak of weekly gains in over a year. However, in the second half of August, markets gave back their gains as investor confidence waned.
The best-performing sector for the month was energy, which delivered high returns on the back of surging natural gas prices. Utilities, which are generating strong profits in the current energy environment, also did well compared with broad indices.
One of the main drivers of the stock market weakness in the second half of the month was Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on August 26th. Going into the economic conference, investors were hoping that the Fed might signal that it would take a softer stance towards interest rate hikes going forward. However, Powell took a tough stance on monetary policy, stating that the central bank will not stop increasing interest rates until inflation (which came in at 8.5% in the US in July) is under control. This disappointed investors, sparking a 1,000 point sell-off in the Dow Jones.
During August, US President Joe Biden signed the Inflation Reduction Act — a major climate change and healthcare bill — into law.
This Act is designed to curb inflation by lowering prescription drug and healthcare costs, and promoting clean energy. It represents the largest climate investment in American history. Meanwhile, Biden also signed the CHIPS and Science Act, also known as just the “CHIPS Act.”. This is a historic bill that will channel $53 billion towards domestic semiconductor manufacturing. The aim is to strengthen US chip research and manufacturing, supply chains, and national security, and ensure that America remains a leader in the industries of tomorrow, such as nanotechnology, quantum computing, and artificial intelligence. It’s worth noting that this wasn’t the only big semiconductor-related news during August. Early in the month, US House of Representatives speaker Nancy Pelosi visited Taiwan — which manufactures around 90% of the world’s chips today — to discuss the CHIPS Act.
In the bonds markets, the US 10-year Treasury yield ended the month near 3.2%, up from around 2.6% at the beginning of the month. Interestingly, the 2-year Treasury yield exceeded the 10-year yield by nearly 50 basis points during the month, a milestone last seen in August 2000. The curve inversion is a sign that the market believes the Fed’s interest rates increases will lead to a recession.
In commodities, it was another strong month for natural gas.
With winter not far off now, Germany has been boosting its gas inventories. However, its stockpiles are not enough to cover the full winter, meaning that the country is in danger of running out of gas if Russia decides to halt flows. The gas shortage situation across Europe is so worrying that the UK has been importing gas from far-off Australia. Oil prices dipped slightly in August, however, this didn’t stop oil giant Saudi Aramco from posting strong results. It generated the biggest quarterly adjusted profit of any listed company globally, driven by high crude prices and production.
Turning to crypto, it was another volatile month.
During the first half of August, when investors were in “risk-on” mode, Bitcoin rose to nearly $25,000. However, when investors went back into “risk-off” mode after Powell’s speech, the cryptoasset pulled back sharply, and ended the month near $20,000. Elsewhere in the crypto space, traders were a little cautious of Ethereum ahead of its upcoming software upgrade, which is set to take place in September.
Get to Know
the Companies Behind eToro's Smart Portfolios
Get to Know the Companies Behind eToro's Smart Portfolios
Closing price of 31 August 2022: $9.22
Performance: August: 12.44% | 2022: 20.05% | Past 12 months: -1.39% | Past 24 months: 82.21%
Adecoagro S.A. is an agricultural company with operations in Argentina, Brazil and Uruguay. The company is involved in a broad range of businesses, including farming crops and other agricultural products, cattle and dairy operations, sugar, ethanol and energy production and land transformation. The company reported a return to profit in its latest financial report, causing the share price to climb higher during the month.
Adecoagro is one of the largest farmland owners in South America, and its operations and representation in the region makes it an important member of the LatamEconomy Smart Portfolio. This portfolio offers exposure to an array of sectors from several Latin American countries, including mining, banking, technology, airlines, oil & gas, beverages and electricity.
Closing price of 31 August 2022: $11.86
Performance: August: 23.67% | 2022: 67.75% | Past 12 months: 64.27% | Past 24 months: 48.99%
Frontline Ltd owns a fleet of large crude carriers and tankers that transport crude oil and oil products between ports. The world’s fourth largest oil tanker shipping company, Frontline operates worldwide around 80 vessels that are managed by ship management companies. The company's second-quarter 2022 earnings indicated a solid performance as well as details regarding the agreement for a stock-for-stock merger between Frontline and Euronav NV to create a leading global independent oil tanker operator.
As a company that owns and operates one of the largest and most modern fleets in the industry, they are a relevant component of the GlobalLogistics Smart Portfolio. This portfolio is made up of stocks of companies that provide logistics services and transportation of goods by air, maritime, rail and road.
Closing price of 31 August 2022: €22.70
Performance: August: 10.14% | 2022: 10.14% | Past 12 months: 88.07% | Past 24 months: 288.97%
K+S AG is a supplier of mineral products for agricultural, industrial and final consumers. It produces fertilisers, food grade salt, industrial salt and salt for chemical use. The company reported its second–quarter 2022 earnings earlier this month, beating analyst expectations in revenue. This pushed the share price higher over the course of August.
The company's commitment to innovation in tackling problems in fields such as agriculture and food, means they are a relevant player in the FoodTech Smart Portfolio. This portfolio consists of companies that adapt and commit to sustainable business models in the food industry by applying innovation to impact modern society.
Closing price of 31 August 2022: $25.41
Performance: August: 25.61% | 2022: 15.87% |
Past 12 months: 18.63% | Past 24 months: 62.26%
Bloom Energy Corp manufactures power generation equipment. The company offers on-site power generation systems that utilize fuel cell technology to generate electricity. The company’s Q2 2022 earnings as well as the maintenance of their 2022 outlook affirmed investor confidence in the company and caused the stock price to bound higher.
As one of the most advanced electricity and hydrogen producing technologies on the market today, the company is a key component of the BatteryTech Smart Portfolio. This portfolio encapsulates the entire battery cycle. It includes mining and refining companies, chemical and battery producers, electric vehicle manufacturers, developers and users of energy storage technologies and more.
Closing price of 31 August 2022: $93.48
Performance: August: 8.02% | 2022: 17.88% |
Past 12 months: 31.42% | Past 24 months: 53.57%
Ormat Technologies Inc. develops and operates worldwide renewable energy projects, including geothermal, recovered energy, and energy management and storage solutions. The company secured a $100 million contract with Contact Energy for a new maximum continuous geothermal power plant in New Zealand.
While the company is primarily involved in the geothermal and recovered energy power business, it is expanding into solar energy storage and management services. Their diverse role makes them part of the RenewableEnergy Smart Portfolio. This portfolio consists of stocks of global leading renewable energy companies that use clean sources such as solar wind and hydrogen, and also allocates stocks of companies that deliver the most updated technologies behind the systems used for renewable energy production.
Any of these companies and business were new to you?
- Adecoagro S.A.
- Frontline Ltd.
- K+S AG
- Bloom Energy Corp
- Ormat Technologies Inc
In the Spotlight —
Trends of the Month
How the land “down under”
could help diversify your portfolio
'The Lucky Country’, by Donald Horne, is one of Australia’s most iconic books. However, despite being a cult classic, the book — which claims that Australians lack curiosity and that the country has only succeeded due to luck — is not really an accurate assessment of the land down under.
The 13th largest economy by GDP in the world today, Australia is a success case. But this success is not down to luck.
At the heart of Australia’s success lies its highly skilled labour force — which is one of the most educated, multicultural, and multilingual in the world. This labour force has boosted productivity substantially over time, and has helped the country build up significant wealth. According to the Credit Suisse Global Wealth Report, in 2020, Australia had the highest median level of wealth (USD $238,070 per adult) out of any developed country.
A strong legal framework and transparent regulations have been other key drivers of Australia’s success. A low-risk, stable country, it consistently ranks well in terms of political stability. This has helped it attract direct foreign investment. It has also been helped by free-trade agreements with many other countries in the region, and by high demand for its natural resources (iron ore, natural gas, coal, etc.) from China.
As a result of these features, Australia has generated consistent growth in recent decades. Before the COVID-19 pandemic hammered the global economy in 2020, the country had registered 29 years of consecutive GDP growth. And in March 2017, it took the record for the longest run of uninterrupted GDP growth in the developed world. Through drought, flood, the dot-com crash, and even the Global Financial Crisis (GFC) of 2008/2009, Australia has continued to grow. As for how it escaped the GFC, it was down to a combination of its banking industry being in good shape due to regulation, a fast response by the central bank to help the Australian population, and a strong performance by the country’s mining companies during the crisis. Again, it wasn’t down to luck.
Of course, like every other country, Australia saw its growth deteriorate during the pandemic. The second quarter of 2020 saw the biggest fall in GDP since records began back in 1959. However, the country has made a solid recovery from Covid.
Following a strong rebound in the final quarter of 2021, the economy is now bigger than it was before the pandemic.
For long-term investors, the Australian stock market has a lot to offer. A diversified market, Australia is home to world-class companies across sectors such as mining, banking, healthcare, and software. This means that the region can potentially help investors diversify their portfolios.
And now could be a good time to take a closer look at the land “down under.” With the macro environment (high inflation, rising interest rates, surging commodity prices, etc.) currently favouring banks and miners, the Aussie market could be set for a period of strength.
As inflation soars,
look to real estate
Right now, inflation is a hot topic as we’re all paying more for our goods and services. In the US, inflation hit 9.1% in June, its highest rate since 1981. Meanwhile, in the UK, inflation just hit 10.1%, and some experts are tipping it to climb much higher in the months ahead on the back of soaring gas prices.
Among the types of investments that can potentially provide protection in this kind of inflationary environment are real estate investment trusts (REITs) — publicly traded investment companies that own or finance real estate portfolios.
When inflation is high, real estate landlords can raise their rents to cover rising costs. Sometimes, long-term leases are even tied to inflation, meaning that rents increase automatically as inflation rises. Higher rental cash flows can lead to higher dividends for investors as REITs typically have to pay out the bulk of their income to investors as dividends.
Meanwhile, real estate values often increase when inflation is hot. This is because higher prices for labour, materials, and land make construction less economically viable, reducing real estate supply. Higher real estate values can help boost the share price of real estate investment trusts. So, ultimately, investors in REITs can potentially benefit from both capital gains and rising dividends when inflation is high.
It’s worth noting that in the 1970s, when inflation was very high, real estate investment trusts performed well. In fact, they were actually the second-best-performing asset after energy stocks. This suggests that REITs could play a valuable role in investor portfolios in the current environment.
Another thing going for REITs right now is the Inflation Reduction Act, which was recently signed into law by US President Joe Biden. This is set to provide a number of benefits for businesses that operate in the real estate space, including tax deductions for energy efficient commercial buildings, tax credits for large multifamily residential buildings, and clean energy incentives for construction beginning after 2024.
Those interested in investing in REITs may want to check out eToro’s RealEstateTrusts Smart Portfolio. This provides access to a range of top REITs including those that own and manage residential, office, warehouse, healthcare, and storage real estate.
Do you diversify your portfolio of investments with any of the strategies below?
- Real Estate
- Geographical stock diversification
Smart Portfolios Monthly Performance Update
Smart Portfolios monthly performance update
||5 years /
|Nasdaq-100 Index (Benchmark)
S&P Cryptocurrency Broad Digital Market Index (USD) (Benchmark)
|S&P 500 Index (Benchmark)
|MSCI World Index (Benchmark)
|Nasdaq-100 Index (Benchmark)
The figures presented in the below Tables refer to past performance and past performance is not a reliable indicator of future performance.The return of performance of the Smart Portfolios presented in the above Tables is based on Net Return (including deductions for fees and commissions).
Performances are calculated based on calendar months. Figures are calculated by compounding the monthly returns throughout the year. Click here for more information how performances are calculated
This communication is for information and educational purposes only and should not be taken as investment advice, a personal recommendation, or an offer of, or solicitation to, buy or sell any financial instruments. This material has been prepared without taking any particular recipient’s investment objectives or financial situation into account, and has not been prepared in accordance with the legal and regulatory requirements to promote independent research. Any references to the past or future performance of a financial instrument, index or a packaged investment product are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the contents of this publication.
The information included in this document shall be treated as a marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Smart Portfolios are products that may include CFDs.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Cryptoassets are unregulated in some EU countries and the UK. No consumer protection. Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply.
eToro AUS Capital Limited ACN 612 791 803 AFSL 491139. Social trading. eToro does not approve or endorse any of the trading accounts that customers may choose to copy. All instructions and actions related to copied trades will automatically be replicated in your account. When you select to copy a particular trading account, you will copy all of their future trades, and you may also select to follow their existing trades. Past performance of an eToro Community Member is not a reliable indicator of their future performance. Capital is at risk. Consider our Product Disclosure Statement (PDS). See full disclaimer.
This communication is for general information and educational purposes only and should not be taken as financial product advice, a personal recommendation, or an offer of, or solicitation to, buy or sell any financial product. It has been prepared without taking your objectives, financial situation or needs into account. Any references to past performance and future indications are not, and should not be taken as, a reliable indicator of future results. eToro makes no representation and assumes no liability as to the accuracy or completeness of the contents of this publication.
eToro (EUROPE) LIMITED: A company registered in the Republic of Cyprus. Registered number: ΗΕ 200585Corporate Address: KIBC 7th Floor,4 Profiti Ilias Street, Germasoyia, Limassol 4046Regulated by the Cyprus Securities & Exchange Commission (Cysec) under license number 109/10
eToro (UK) LIMITED: A company registered in England and Wales. Registered number: 07973792
Corporate Address: 42nd floor, One Canada Square, Canary Wharf London E14 5AB
Authorised and regulated by the financial conduct authority (FCA), under firm reference number 583263