Investment strategy

High-dividend stocks are a source of recurring income, but their importance is often underestimated. In the long term, dividends often make the biggest contribution to share performance, as reinvested dividends benefit from the compound interest effect. This is why stocks with above-average dividend yields are preferred in DJE - Dividende & Substanz. However, the decisive factor here is not the amount, but above all a stable, ideally increasing dividend payment. A low payout ratio also helps. Analyses have shown that high-dividend stocks can be more robust in difficult market phases than low-dividend stocks, as dividends can act as a buffer to mitigate temporary price losses. This is because good value and balance sheet quality as well as a high dividend yields, together with an earnings situation hedged as far as possible, increase the chance of sustained investment success. The stock selection aims for an above-average dividend yield relative to the market. However, the fund may also include stocks that do not currently pay a dividend.

Monthly Commentary

The international stock markets fell for the most part in October. The month was dominated by the attack on Israel by the Palestinian terrorist organisation Hamas. From a market perspective, the main concern was whether this could lead to a major escalation and there was a clear reaction in several assets. Gold was in demand as a safe haven. Another negative factor for equities was the mixed reporting season so far. Bonds have also become a notable competitor for equities due to the further rise in yields. The US Federal Reserve left key interest rates at the range of 5.25 to 5.50%, despite the robust labour market and US economic growth of 4.9% compared to the second quarter. The US inflation rate was 3.7% in September, as in the previous month. This means that there is no need to raise interest rates for the time being, unless the US economy continues to grow at this rate. Against this backdrop, the DJE - Dividende & Substanz fell by -2.11%. Only four sectors on the global equity market performed well: Media, Utilities, Insurance and Personal Care, Drug and Food Stores. The weakest sectors included automobiles, energy, banks, financial services and construction and materials. The fund benefited in particular from its exposure to the technology, utilities and telecommunications sectors. By contrast, the basic materials (weak demand from China), oil and gas (falling oil price) and financial services sectors weighed on the fund's performance. At individual stock level, the strongest results came from the Hong Kong laminate manufacturer Kingboard Laminates, the Danish pharmaceutical giant Novo Nordisk and the US software group Microsoft. In contrast, the US energy company Chevron, the German medical technology manufacturer Fresenius and the US speciality chemicals company Albemarle, among others, performed disappointingly. Over the course of the month, the fund management positioned the portfolio more defensively and significantly reduced the equity allocation. It increased its exposure to the insurance, chemicals and financial institutions sectors in particular. On the other hand, it reduced the healthcare, technology, energy, industrials and financial services sectors, among others. At country level, the proportion of US stocks in particular fell. The proportion of German and French equities was also reduced. In contrast, the proportion of stocks from Asia was increased. As a result of the adjustments, the fund's investment ratio fell from 80.23% to 72.31%. The fund's liquidity rose from 19.77% to 27.69%. At the end of the month, stocks denominated in Hong Kong dollars were currency-hedged against the US dollar.

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