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: Samuel Kreuz
“In Europe, inflation should continue to fall, enabling the ECB to cut interest rates further.”
Gerhard Ramberger, Fund manager ERSTE RESPONSIBLE STOCK GLOBAL
Fund & Performance
ERSTE RESPONSIBLE STOCK GLOBAL is a sustainable equity fund that primarily invests worldwide in shares of selected companies in the developed markets. The fund's investment process is based on fundamental business analysis. When selecting stocks, high-quality, high-growth companies are used. Investing in shares of companies that are pioneers in terms of ecological, social and governance aspects is at the forefront of the investment decision. A holistic ESG approach also takes ethical aspects into account (Note: Please note that investments in sustainable investment funds involve risks as well as opportunities.).
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 Gerhard Ramberger
How did the fund perform in 2024?
ERSTE RESPONSIBLE STOCK GLOBAL recorded a very solid performance in 2024 because the economy in the most important equity market, the USA (accounting for more than 70% of the fund’s assets), performed surprisingly well. (Please note: an investment in securities involves risks as well as opportunities.)
Accordingly, company results in the individual quarters were also positive. The US equity market indices S&P 500 and Nasdaq 100 kept hitting new all-time highs and recorded the best performance among the major equity markets. The start of the phase of interest rate cuts by the central banks in the USA and Europe also improved sentiment on the markets. Among the companies in our portfolio, Nvidia experienced the biggest gains. (Please note: the company listed has been selected as an example and does not constitute an investment recommendation.)
What was the focus of the fund in 2024?
The fund’s main focus was on technology shares, which currently account for around 37% of assets under management, a large proportion of which benefit from the AI boom. The second-largest sector, with around 14%, is the financial sector. US equities have gained significantly in recent weeks in the wake of Trump’s US election victory. The renewable energy sector includes several companies and makes up about 3% of the fund’s assets. Unfortunately, however, most of them, with the exception of First Solar and Hannon Armstrong Sustainable, have disappointed in terms of performance. (Please note: the companies listed has been selected as an example and does not constitute an investment recommendation)
What does the fund management team expect for 2025 in terms of global economy and trends?
We also expect GDP growth in the USA to outperform the referential figure in Europe in 2025, although President Trump’s election programme could boost US inflation again, in which case further Fed rate cuts would likely be called into question. In Europe, inflation should continue to fall, enabling the ECB to cut interest rates further. (Please note: forecasts are no reliable indicator of future performance.)
What are your priorities in the fund, based on your expectations?
We expect that Trump’s tariff policy might harm export-heavy countries, so in the short to medium term we are comfortable with our high US exposure. The relative valuation of European equities is favourable, but potential investment triggers (ceasefire in Ukraine, new German government) would have to materialise before our stance becomes more positive for the region.
The market has been broadening since mid-2024, particularly in the USA (i.e. the proportion of equities participating in the rally is increasing), and we expect this trend to continue into next year. This could lead us to reduce our tech exposure somewhat if we were to discover more attractive alternatives. (Please note: forecasts are no reliable indicator of future performance.)
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