4. april 2016 - idh-capital.com

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IDH Capital, Cameron Dewey In der Hinterzelg 2, 8700 Küsnacht, Switzerland www.idh-capital.com Tel (+41 44)586 1577 [email protected] April 20 th 2016 Performance In March, the IDH Capital reference portfolio return 2.71% in Swiss Francs after taxes and before fees, bringing the total return year to date to -6.5% and to to 36.5% since inception. IDH Capital Reference Portfolio since inception in Swiss Francs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD Total 2012 -0.6 % 0.8% -1.6% -0.6% 3.7% 0.8% 2.0% 1.5% 1.5% 1.9% 9.6% 9.6% 2013 3.8% -0.2% 1.0% 1.6% 3.4% -5.4% 6.7% 0.6% 3.9% 3.4% 0.8% 1.8% 23.1% 34.1% 2014 -2.4% 1.3% 1.0% -1.0% 1.3% -1.5% -0.4% 2.0% -0.4% 0.3% 5.3% 1.2% 6.7% 43.9% 2015 -8.7% 10.3% -1.2% -1.0% 1.4% -3.1% 4.9% -7.4% -0.9% 9.3% 3.8% -4.1% 1.5% 46.0% 2016 -5.4% -3.8% 2.71% -6.5% 36.5% Performance in CHF, unaudited, after taxes and transaction costs and before fees The doldrums Mariners refer to the doldrums as the area around the equator where the warm air rises high into the atmosphere to return to the ocean’s surface further north, creating the trade winds. According to Wikipedia, the rising air causes “variable winds and more severe weather, in the form of squalls, thunderstorms, and hurricanes. The doldrums are also noted for calm periods when the winds disappear altogether, trapping sail-powered boats for periods of days or weeks.” A good friend, recounting his experience sailing through the doldrums, got us to thinking about the European equity market’s two-year move sideways: Eurostoxx 600, 2014-2016, complete with squalls, thunderstorms, and hurricanes… Source: Interactive Brokers With an entire generation deeply scarred by the events of 2008, it is easy to understand the angst of the investing public. Mistrust, much of it well deserved, in

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Page 1: 4. April 2016 - idh-capital.com

IDH Capital, Cameron Dewey In der Hinterzelg 2, 8700 Küsnacht, Switzerland www.idh-capital.com Tel (+41 44)586 1577 [email protected]

April 20th 2016 Performance In March, the IDH Capital reference portfolio return 2.71% in Swiss Francs after taxes and before fees, bringing the total return year to date to -6.5% and to to 36.5% since inception.

IDH Capital Reference Portfolio since inception in Swiss Francs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD Total

2012 -0.6 % 0.8% -1.6% -0.6% 3.7% 0.8% 2.0% 1.5% 1.5% 1.9% 9.6% 9.6% 2013 3.8% -0.2% 1.0% 1.6% 3.4% -5.4% 6.7% 0.6% 3.9% 3.4% 0.8% 1.8% 23.1% 34.1% 2014 -2.4% 1.3% 1.0% -1.0% 1.3% -1.5% -0.4% 2.0% -0.4% 0.3% 5.3% 1.2% 6.7% 43.9% 2015 -8.7% 10.3% -1.2% -1.0% 1.4% -3.1% 4.9% -7.4% -0.9% 9.3% 3.8% -4.1% 1.5% 46.0% 2016 -5.4% -3.8% 2.71% -6.5% 36.5%

Performance in CHF, unaudited, after taxes and transaction costs and before fees

The doldrums Mariners refer to the doldrums as the area around the equator where the warm air rises high into the atmosphere to return to the ocean’s surface further north, creating the trade winds. According to Wikipedia, the rising air causes “variable winds and more severe weather, in the form of squalls, thunderstorms, and hurricanes. The doldrums are also noted for calm periods when the winds disappear altogether, trapping sail-powered boats for periods of days or weeks.” A good friend, recounting his experience sailing through the doldrums, got us to thinking about the European equity market’s two-year move sideways: Eurostoxx 600, 2014-2016, complete with squalls, thunderstorms, and hurricanes…

Source: Interactive Brokers

With an entire generation deeply scarred by the events of 2008, it is easy to understand the angst of the investing public. Mistrust, much of it well deserved, in

Page 2: 4. April 2016 - idh-capital.com

IDH Capital, Cameron Dewey In der Hinterzelg 2, 8700 Küsnacht, Switzerland www.idh-capital.com Tel (+41 44)586 1577 [email protected]

our political and economic leaders is amplified by the 24-hour news cycle and the battle for reader mind share. Clearly, in the digital age, there is no room for the tedious, drawn out process of the economic cycle. Ho-hum does not sell papers or attract clicks, or generate an actionable trade. Without a doubt, it’s tough out there. Populists are capitalizing on discontent, monetary policy is unconventional and confusing to many, immigration is changing cultures, and, most importantly of all, the middle class rightly feels left behind in this recovery. While we too are concerned about many of these trends, our focus is on the stock market where gains and losses are driven by changes in expectations. Over time, company fundamentals drive returns, but near term trading is often more like sailing through the erratic weather patterns of the doldrums. Last month we wrote that the market is now in a prove-it-to-me attitude. Since then, all major indices have gained, with S&P and FTSE reaching year highs, and most companies that have reported Q1 have beaten expectations. The Bears out there will say those were beaten down expectations from three months ago, but we say it does not matter. It is irrelevant because these results prove the doom and gloom crowd wrong. There is no return of the financial crisis or systemic threat do to negative rates, but rather this is a time where good business models and well companies will outperform those that are not. In short, it is a stock pickers market, where growth and returns are hard to come by, but where conviction and discipline are rewarded. Many mariners are said to have lost their sanity in the doldrums. Don’t let it happen to you! Happy Sailing, Cameron Disclaimer: All performance calculations are not independently audited and are reported before fees but after taxes and commissions. Client portfolio returns will vary from that of the reference portfolio depending on when the account was initiated, asset flows, and fees. All views expressed in this report are solely those of IDH Capital and are not a recommendation to buy or sell any of the securities mentioned. This letter is intended as an informational update for clients of IDH Capital and is not a solicitation of business.