Discussions regarding customs tariffs and geopolitical tensions were the main focus in the first six months of the year on the financial markets. Where are the markets headed in the second half of 2025?

In our Funds check series, fund managers from selected funds look back on the past year's performance and give their assessment of what we can expect for the rest of the year. (Please note that forecasts are no reliable indicator of future performance and that investing in securities involves risks as well as opportunities.)

Summary

  • Market environment: strong price fluctuations on the equity markets, triggered by the US tariff policy; US dollar under pressure; positive performance of government and corporate bonds; gold rose by approx. 20% (as of 2 July 2025, in USD).
  • Current allocation: slightly lower weighting in equities; with regard to bonds, a focus on corporate bonds from European issuers (investment grade, high-yield) and Asian high-yield bonds, emerging markets corporate bonds, emerging market government bonds, and US Treasury bonds blended in.
  • Outlook: we still expect elevated volatility on the capital markets for 2025 but are confident that the positive factors will outweigh the negative ones for the fund's asset classes.

Fund manager Philip Schifferegger
(c) Daniel Hinterramskogler

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 Philip Schifferegger

How do you assess the first half of 2025 on the financial markets?

This year, the US tariff policy has been the dominant topic on the capital markets. The introduction of prohibitively high tariffs triggered sharp price fluctuations, and global equities lost around 15% from their highs to their lows (in local currency). With the temporary withdrawal of the tariffs, the markets recovered, and equities managed to largely offset their losses. The US dollar also came under pressure, depreciating against the euro. The recent turmoil on the equity and currency markets also had a positive impact on credit-safe bonds. Government bonds and investment-grade corporate bonds posted gains. High-yield corporate bonds also followed this trend.

 

How did that affect your positioning in the fund?

Over the past five months, CORE Balanced has commanded a slightly lower weighting on the equity front, with the foreign currency contingent remaining strategically unhedged. With regard to corporate bonds, we preferred European high-yield issuers and blended in Asian high-yield corporate bonds tactically. The split between emerging markets government bonds denominated in hard currencies and those denominated in local currencies was balanced. In the year to date, the fund has recorded a performance after costs of +0.2% (as of 2 July 2025).

 

What do you expect for the second half of the year?

We expect economic momentum in the USA to slow down in the coming months, but do not anticipate a deep recession. The trade and tariff policies are likely to continue to dominate market sentiment, with inflation in the United States remaining a key focus for investors as a result. In this environment, we currently regard the US Federal Reserve's scope for significantly lowering key-lending rates as limited and assess company earnings to be largely solid.

Conclusion: we still expect higher volatility on the capital markets for 2025 but are confident that the positive factors will outweigh the negative ones for the fund's asset classes.

 

Please note: investing in securities involves risks as well as opportunities.

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