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 STOCK GLOBAL invests in selected companies worldwide. The fund's investment process is based on fundamental business analysis. The selection of stocks takes place with a focus on high-quality growth companies without restrictions on size, industry affiliation and location. A concentrated portfolio is striven for as part of the portfolio construction process. Furthermore, the individual stocks are weighted independently of the market capitalization of the respective companies. 

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 Andreas Rieger

How did ERSTE STOCK GLOBAL perform in 2024?

The bull market on the global equity markets continued in a dynamic manner in 2024. The US economy remaining resilient, expectations of a cycle of interest rate cuts by the Federal Reserve, solid corporate earnings performance, and the topic of artificial intelligence was shaping market developments.

ERSTE STOCK GLOBAL recorded gains of approximately 22.7% in 2024. The market breadth, i.e. the proportion of equities that outperformed the market as a whole, improved in the second half of the year. The clear outperformance of US mega-caps and the Magnificent Seven (Nvidia, Apple, Microsoft, Alphabet, Amazon, Meta, Tesla) slowed in the second half of the year. (Please note: the companies mentioned here have been selected as examples and do not constitute an investment recommendation.)

The election of Donald Trump as the 47th President of the United States in November and his political programme triggered significant gains in financial shares (banks, financial service providers) and cyclically sensitive equities, among others. From a regional performance perspective, the US market once again dominated, driven to a large degree by its technology focus and expansionary fiscal policy. Market breadth, i.e. the proportion of shares outperforming the overall market, was once again narrow, not the least due to these developments. Only about a third of the shares in the global index outperformed the index. Technology and communications companies performed particularly well, posting significant gains. In particular, semiconductors and media/entertainment were by far the best sectors in 2024. Regionally speaking, performance differences were relatively small. The equity markets in China and Hong Kong started a massive rally in April after a long period of underperformance, and in 2024 thus almost closed the performance gap to the MSCI World index.

 

What was the focus of the fund in 2024?

In the fund, we continued to invest in high-quality growth shares. In terms of sectors, we favoured technology (especially semiconductors), financials (especially payment service providers and insurance companies), and industrials (logistics, air conditioning, and mechanical engineering). Over the course of the calendar year, we positioned the fund somewhat more cyclically, including reductions in defensive consumer staples and health care. We increased our exposure to financials and consumer discretionary. In the financial sector, we opened positions in attractively valued quality shares (including Fiserv and Progressive). Regionally speaking, we began to increase our exposure in China/Hong Kong at the start of the third quarter. Here, we can see interesting investment opportunities, particularly in consumer equities with a focus on the Chinese domestic market. We sold off positions in India and South Korea. (Please note: the companies mentioned here have been selected as examples and do not constitute an investment recommendation.)

 

What are your expectations for 2025, and how will you be positioning the fund accordingly?

Our longer-term strategy in the fund can be roughly characterised by three focal points, which overlap to some extent. As in previous years, well-managed companies with strong longer-term growth potential form the core of the fund. In addition, we see investment opportunities in topics such as regionalisation, automation, and investments. The election of Donald Trump as US president and the Republican majority in Congress are likely to reinforce these thematic trends. The third strategic element we see is the technological trend of artificial intelligence, in which we are already investing as a growth fund. We expect that opportunities will increasingly arise outside the technology sector as well.

We envisage a fairly constructive environment for equities in the coming year: moderate growth with stable or slightly falling inflation, accommodative central bank policy, and deregulation in the USA. That being said, we do anticipate larger price fluctuations from time to time, depending on the specific shape of Trump’s economic policy (including import tariffs). A renewed rise in inflation and geopolitical developments are also risk factors that need to be monitored. In regional terms, we are maintaining a slight preference for the US market for the time being, as there are a number of arguments in favour of the USA, despite the high valuation: Trump’s largely business-friendly policies, higher earnings growth, and the USA’s technological and AI superiority. However, we expect international equity markets (Europe, China) to catch up in the coming months. We can see attractive investment opportunities in selected Asian markets (Indonesia, China). (Please note: an investment in securities involves risks as well as opportunities. Forecasts are no reliable indicator of future performance.)

ERSTE STOCK GLOBAL

Disclaimer of the management company Erste Asset Management GmbH and its sales agent Erste Bank Group

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. 

The prospectus for UCITS funds (including any amendments) is prepared and published in accordance with the provisions of the InvFG 2011 as amended. Information for Investors pursuant to Art 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in conjunction with the InvFG 2011. 

The currently valid versions of the prospectus, the Information for Investors pursuant to Art 21 AIFMG, and the key information document can be found on the website www.erste-am.com under “Mandatory publications” and can be obtained free of charge by interested investors at the offices of the Management Company and at the offices of the depositary bank. The exact date of the most recent publication of the prospectus, the languages in which the key information document is available, and any other locations where the documents can be obtained are indicated on the website www.erste-am.com. A summary of the investor rights is available in German and English on the website www.erste-am.com/investor-rights and can also be obtained from the Management Company.

The Management Company can decide to suspend the provisions it has taken for the sale of unit certificates in other countries in accordance with the regulatory requirements.

Note: You are about to purchase a product that may be difficult to understand. We recommend that you read the indicated fund documents before making an investment decision. In addition to the locations listed above, you can obtain these documents free of charge at the offices of the referring Sparkassen bank and the offices of Erste Bank der oesterreichischen Sparkassen AG. You can also access these documents electronically at www.erste-am.com. 

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.

We are not permitted to directly or indirectly offer, sell, transfer, or deliver this financial product to natural or legal persons whose place of residence or domicile is located in a country where this is legally prohibited. In this case, we may not provide any product information, either.

Please consult the corresponding information in the fund prospectus and the Information for Investors pursuant to Art 21 AIFMG for restrictions on the sale of the fund to American or Russian citizens. 

It is expressly noted that this communication does not provide any investment recommendations, but only expresses our current market assessment. Thus, this communication is not a substitute for investment advice, does not take into account the legal regulations aimed at promoting the independence of financial analyses, and is not subject to a prohibition on trading following the distribution of financial analyses.

This document does not represent a sales activity of the Management Company and therefore may not be construed as an offer for the purchase or sale of financial or investment instruments.

Erste Asset Management GmbH is affiliated with the referring Sparkassen banks and Erste Bank.

Please also read the “Information about us and our securities services” published by your bank.

Subject to misprints and errors.