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.)
(c) Photo: Daniel Hinterramskogler
„We expect the fiscal policy to remain expansive.”
Philip Schifferegger, Fund manager ERSTE REAL ASSETS
Fund & Performance
ERSTE REAL ASSETS mainly invests in equities, commodities and precious metals, real estate, infrastructure and inflation-linked bonds with focus on real values. Investments take place directly or indirectly through investment funds or derivatives.
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.
Performance since start of the fund (6.5.2021). 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 Philip Schifferegger
What sort of conclusion do you draw from 2024 on the capital markets?
Towards the end of 2023, the market opinion became more entrenched that inflation would fall sustainably and that the central banks would no longer raise key-lending rates in the foreseeable future but would instead lower them. This was followed by a turnaround in the markets. In particular, high-risk asset classes, such as equities and corporate bonds, recorded a sustained upward trend that continued into 2024. Robust economic momentum and strong corporate earnings in the USA also provided support.
Gold benefited in particular from expectations of lower key-lending rates and geopolitical uncertainties. The commodity markets also posted gains overall over the reporting period, although the range of price fluctuations between the individual commodity segments was quite high (energy down, industrial and precious metals up).
What were your priorities in the fund?
In 2024, ERSTE REAL ASSETS was invested as follows: about 50% in equities, about 30% in gold, and about 10% in commodities. The real estate segment, which consists of real estate and infrastructure equity funds and open-ended real estate funds, was weighted at about 10%. ERSTE REAL ASSETS generated a performance of +19% in 2024.
What do you expect for 2025?
The likelihood of the USA facing weaker economic growth in the next twelve months remains in place. This is indicated above all by the current weakening of the labour market (N.B. the unemployment rate has increased from a low of 3.4% to 4.1% most recently).
Should an economic downturn occur, the equity markets in particular are likely to suffer initially. Conservative investments, such as money market bonds, government bonds, and gold, should benefit. (Please note: forecasts are no reliable indicator of future performance.)
At the same time, the central bank will cut key-lending rates further to support the economy. We also expect the fiscal policy to remain expansive. Therefore, the equity markets should also recover again after a possible bottoming-out phase. In this environment, we expect increased volatility for 2025, but we are confident that the positive factors will outweigh the negative ones for the asset classes of ERSTE REAL ASSETS. (Please note: an investment in securities involves risks as well as opportunities.)
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