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

  • During the calendar year, we increased our exposure to the financial and healthcare sectors and expanded our weighting in the European market, among other things.
  • As in previous years, well-managed companies with strong long-term growth potential form the core of the fund.
  • In our view, companies that use AI to increase efficiency or improve product quality offer attractive investment opportunities alongside pure technology companies.

Fund manager Andreas Rieger
(c) Samuel Kreuz

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

What sort of conclusion do you draw from the first half of 2025 on the capital markets?

Global equity markets performed well in the first half of the year despite high macroeconomic and geopolitical uncertainty. The announcement of massive US import tariffs at the beginning of April led to sharp losses on the stock markets. However, the weak phase did not last long and was followed by an impressive recovery. The resilience of the US economy and US consumers was reflected in better-than-expected company earnings and business outlooks. That being said, the uncertainties put significant pressure on the US dollar and consequently reduced returns on US equities for euro-based investors.

European equities and emerging markets have performed best in the year to date. From a regional perspective, industrial and financial shares led the winners' list, while consumer shares suffered from the trade conflict and underperformed the market. The topic of investment in AI technologies remained in focus for investors due to continued solid demand.

 

How did ERSTE STOCK GLOBAL perform in that environment?

ERSTE STOCK GLOBAL has recorded a loss of approximately 8% in the year to date (as of 2 July 2025).

We continued to invest in high-quality growth shares in the fund. In terms of sectors, we favoured technology (especially semiconductors and software) and financials (especially payment service providers and insurance companies). Throughout the year, we increased our exposure to the financial and healthcare sectors, among others. Two new additions included the Indian bank HDFC and the US medical technology group Abbott Labs. From a regional perspective, we expanded our weighting in the European market. The purchase of SAP is worth mentioning here. In the emerging markets, we increased our exposure to India and reduced our Chinese exposure.

Please note: the companies listed here have been selected as examples and do not constitute any form of investment recommendation.

 

What do you expect for the second half?

Our long-term strategy for the fund can be broadly characterised by three focal points that partially overlap. As in previous years, well-managed companies with strong long-term growth potential form the core of the fund. We also see investment opportunities in areas such as regionalisation, automation, and capital expenditure. The third strategic element is the technological trend towards artificial intelligence, in which we are already investing as a growth fund. The data suggests demand for AI technologies has remained high in recent quarters. In our view, companies that use AI to increase efficiency or improve product quality offer interesting investment opportunities alongside pure technology companies.

For the second half of the year, we generally expect the upward trend on the equity markets to continue. However, following the dynamic recovery of recent months, a temporary consolidation/correction should come as no surprise. We expect the trade conflict to ease gradually, company earnings to grow at a healthy rate, and investors to focus increasingly on the positive aspects of US economic policy (deregulation, tax cuts). A renewed rise in inflation and geopolitical developments are to be seen as risk factors. The expected catch-up movement of international equity markets (Europe, China) took place in the first half of the year and could continue. At the same time, we continue to view the US market as attractive (quality of companies, liquidity, structural growth companies, shareholder-friendly policy, regulation).

 

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

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