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

  • ERSTE STOCK QUALITY outperformed the overall market in the first half of 2025.
  • The fund pursues a consistent quality strategy that focuses on companies with robust business models, stable earnings prospects, and solid balance sheet structures.
  • The earnings estimates – particularly for US companies – have remained robust, and the investment momentum in the technology sector is unabated.
  • If the macroeconomic picture were to deteriorate – for example, due to new protectionist measures, geopolitical tensions, or an unclear interest rate outlook – we would expect quality companies to be able to withstand these headwinds relatively well.

Fund manager Wilhelm Spitaler
(c) Stephan Huger

Fund & Performance

ERSTE STOCK QUALITY is an equity fund which invests in selected companies worldwide. The fund’s investment process is based on a quantitative pre-selection as well as an analysis of hereby identified companies according to fundamental and technical aspects. The stock selection is conducted with focus on quality companies which are rated at least with an average rating of “A-“ and tend to offer a high market capitalization.

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 (15.9.2020). 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 Wilhelm Spitaler

How did the fund perform in the first half of 2025?

ERSTE STOCK QUALITY outperformed the overall market in the first half of 2025. This positive performance was primarily due to the consistent allocation to equities with above-average quality indicators – in particular companies with rising earnings expectations, stable balance sheets, and a sustainable return on capital. The market environment during the reporting period was one of pronounced volatility, triggered by erratic political signals and market-moving announcements by US President Donald Trump. Events such as the so-called “Liberation Day” led to massive losses in the short term. However, as the period progressed, the markets showed increasing resilience to political disruptions, which facilitated a partial recovery. At the same time, we saw considerable fluctuations in the interest rate environment, while the US dollar depreciated significantly – both factors that would typically act as headwinds for quality and technology shares. This collection of parameters notwithstanding, the fund managed to achieve a relatively good performance.

 

What were the fund’s main areas of focus in the first half of 2025?

ERSTE STOCK QUALITY pursues a consistent quality strategy that focuses on companies with robust business models, stable earnings prospects, and solid balance sheet structures. The portfolio is constructed in a focused and balanced manner, with selective investments in 25 shares that offer above-average return potential from a fundamental perspective over the medium to long term.

In line with its previous allocation policy, the investment focus in the reporting period was primarily on US shares from the technology sector. In addition, we made substantial allocations to the industrial and financial sectors. This positioning proved particularly advantageous in the second quarter, as the fund was able to benefit disproportionately from the cyclical market recovery.

 

What are the expectations of your fund management team with regard to global economic development and trends, among other things, for the second half?

We expect volatility and uncertainty to remain key market drivers for the rest of the year. The medium-term impact of the newly aligned US tariff policy is currently difficult to quantify, particularly against the backdrop of potentially far-reaching measures such as the so-called “Big Beautiful Bill”, which will make planning even more difficult for companies and investors. At the same time, the fundamental environment remains supportive: earnings estimates – especially for US companies – remain robust, and the investment momentum in the technology sector is unbroken.

Innovations in areas such as artificial intelligence, semiconductors, and automation are providing structural tailwinds. Overall, this results in a neutral to slightly positive market outlook. However, we expect this to be repeatedly overshadowed by short-term fluctuations and political disruptions. Selective stock-picking therefore remains essential.

 

What are your priorities in the fund, based on your expectations?

We will remain committed to our quality strategy in the second half of the year. In a market environment increasingly characterised by political and economic uncertainty and heightened volatility, we continue to believe that high-quality companies with solid balance sheets and resilient business models offer the best foundation for stable performance.

Should the macroeconomic picture deteriorate – for example, due to new protectionist measures, geopolitical tensions or an unclear interest rate outlook – we would expect quality companies to be able to withstand these headwinds relatively well. At the same time, we are well positioned for a constructive scenario: our strategically high weighting in the IT sector offers substantial upside potential should market sentiment continue to improve.

 

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

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