The super election year of 2024 lies behind us. In addition to another interest rate hike by the major central banks in the USA and Europe, it brought a potentially landmark election victory for Donald Trump in the US presidential election. What is in store for 2025?

In the Funds check series, the fund managers of selected funds look back on the developments of the past year and give their assessment of what to expect from the stock exchanges in 2025. (Please note: forecasts are no reliable indicator of future performance.)

Fund & Performance

CORE Balanced is a mixed fund of funds and invests between 20% and 30% in equities and up to 80% in bonds. In addition, up to 10% of the portfolio is invested in alternative asset classes. The fund is suitable for long-term capital appreciation.

Note: Please note that an investment in securities entails risks in addition to the opportunities described. Past performance is not a reliable indicator of future performance.

The performance is calculated in accordance with the OeKB method. The management fee as well as any performance-related remuneration is already included. The issue premium which might be applicable on purchase and as well as any individual transaction specific costs or ongoing costs that reduce earnings (e.g. account- and deposit fees) have not been taken into account in this presentation.

Commentary by fund manager Markus Jandrisevits

What was the focus of the fund in 2024?

At the outset of the year, the fund was slightly overweight in equities, but we reduced said overweight in August, as a result of which equities are indeed slightly underweight at this point. On the bond side, the focus was on EUR government and corporate bonds. We added Asian high-yield bonds, emerging markets corporate bonds, hard- and local-currency emergency markets government bonds, and USD Treasury bonds to the mix. In addition, the fund is also invested in commodities (gold). The fund gained 8% in 2024.

 

What does the fund management team expect for 2025 in terms of global economy and trends?

For 2025, we expect a slightly weaker but still positive growth momentum for the US economy, i.e. a so-called soft landing. The other major economic blocs will see only slight economic growth. We expect inflation to continue to ease, although by its very nature the progress will be less significant than in the previous year. There is also the risk of stubborn inflation, particularly if the USA were to pursue a very expansionary fiscal policy. (Note: Prognoses are not a reliable indicator of future performance.)

We expect the central banks to continue lowering their interest rates, with the exception of Japan. However, from today’s perspective, the yields on long(er)-term bonds will not fall to the same extent, i.e. we expect yield curves to steepen. This environment will continue to support the equity markets, but a year as good as 2024 is unlikely to come through again. Government budget deficits are a risk factor; if they continue to widen sharply, this development could result in higher yields.

 

What are your priorities in the fund, based on your expectations?

In a continued supportive environment, we will continue to invest in equities and corporate bonds in both the investment grade and high-yield segments, as well as in hard and local currency emerging markets government bonds. We also intend to maintain a gold allocation within the fund’s investment limits.

CORE Balanced

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N.B.: The performance scenarios listed in the key information document are based on a calculation method that is specified in an EU regulation. The future market development cannot be accurately predicted. The depicted performance scenarios merely present potential earnings, but are based on the earnings in the recent past. The actual earnings may be lower than indicated.

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Please note: Past performance is not a reliable indicator of the future performance of a fund. Investments in securities entail risks in addition to the opportunities presented here. The value of units and their earnings can rise and fall. Changes in exchange rates can also have a positive or negative effect on the value of an investment. For this reason, you may receive less than your originally invested amount when you redeem your units. Persons who are interested in purchasing units in investment funds are advised to read the current fund prospectus(es) and the Information for Investors pursuant to Art 21 AIFMG, especially the risk notices they contain, before making an investment decision. If the fund currency is different than the investor’s home currency, changes in the relevant exchange rate can positively or negatively influence the value of the investment and the amount of the costs associated with the fund in the home currency.

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Subject to misprints and errors.