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

The ERSTE EQUITY RESEARCH is an equity fund that invests worldwide in the form of a concentrated portfolio. The fund selection is based on the publicly accessible recommendation list of Erste Group Research. Primarily, companies with a "BUY" rating on the recommendation list are considered for investment.

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 Harald Egger

How did the fund perform in 2024?

ERSTE EQUITY RESEARCH closed the year 2024 (as of the end of November) with a positive performance of over 25%. Except for a correction at the beginning of July, the fund recorded a steady increase in value. As part of the portfolio construction, a concentrated portfolio of 45-50 shares is our target. The basis for the selection of said shares is the publicly available list of recommendations from Erste Group Research.

In this context, we primarily consider companies that have a BUY rating on the recommendation list. As a rule, the fund focuses on quality (above-average profitability), steady profit growth, and good momentum.

Please note: an investment in securities involves risks as well as opportunities.

 

What was the focus of the fund in 2024?

During the reporting year, our focus was on consumer staples, energy, raw materials, and healthcare. Individual companies in the IT sector continued to benefit from the future prospects of artificial intelligence (AI). Nvidia, for example, was once again among the top performers in 2024. (Please note: the companies mentioned here have been selected as examples and do not constitute an investment recommendation.)

Other companies in the IT sector, on the other hand, failed to keep pace with the market as a whole. The fund was less heavily weighted in the IT sector on average during the reporting period. Over the year, investor interest focused on the origin of energy for the energy-hungry AI sector. Accordingly, we also added energy suppliers to the portfolio, both utilities and gas companies that produced the raw material required.

We were overweight in healthcare for a long time, but we significantly reduced our weighting after Trump’s election. There were also major differences at the regional level: while US equities continued to shine, European equities performed significantly worse.

 

What are your expectations for the further economic development?

We are looking ahead with interest to 2025 and the as yet difficult-to-predict impact of the new Trump administration. Deregulation and tax cuts will have a positive influence on certain companies. Increasing oil production will tend to lower energy prices. This should reduce inflation, while tariffs and customs duties will have the opposite effect. In regional terms, we prefer the USA and Asia (including Japan) to Europe.

 

What priorities will you set based on these expectations?

We will be monitoring developments closely and respond to changes in a timely manner. In the USA, companies in the financial sector should be among the winners (deregulation), which is why we will be focusing on them.

Companies in the healthcare sector are more likely to be among the losers. We therefore intend to maintain a lower weighting here. We will be selective in the IT sector, as valuations are already ambitious in some cases.

The energy sector remains exciting, with our preference being for gas over oil. We would like to emphasise that our assessment may change over the course of the year.

The research and fund management teams regularly exchange information and reassess the situation accordingly, which can have a significant impact on the fund composition. Due to the strategy, this fund may also experience high levels of turnover, as was already the case in 2024. This actively managed fund differs from highly diversified products on the basis of its concentrated portfolio.

ERSTE EQUITY RESEARCH

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This document is an advertisement. Please refer to the prospectus of the UCITS or to the Information for Investors pursuant to Art 21 AIFMG of the alternative investment fund and the Key Information Document before making any final investment decisions. Unless indicated otherwise, source: Erste Asset Management GmbH. The language of communication of the sales offices is German and the languages of communication of the Management Company also include English. 

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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.

Our analyses and conclusions are general in nature and do not take into account the individual characteristics of our investors in terms of earnings, taxation, experience and knowledge, investment objective, financial position, capacity for loss, and risk tolerance. 

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.