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

  • Review: strong price fluctuations on the equity markets triggered by US tariff policy; US dollar under pressure; positive performance of government and corporate bonds; allocation in the first half of the year: slightly lower weighting of equities; bonds: focus on European government and investment-grade corporate bonds; reduction in the money market allocation.
  • Market expectations: political uncertainty and associated higher volatility on the capital markets will remain in place; positive measures such as investment programmes in Europe; possible interest rate cuts in the USA and the Eurozone.
  • Positioning: increase in the equity allocation – relatively higher weighting for Europe, focus on defensive sectors; bond segment: focus on Eurozone corporate bonds.

Fund manager Gerhard Beulig
(c) Samuel Kreuz

Fund & Performance

YOU INVEST GREEN balanced offers investors a dynamic mix of different asset classes. Within the YOU INVEST product family for private customers, it is the fund with a balanced risk appetite and suitable for long-term capital accumulation. A balanced ratio of opportunities and risks favours this solution. The portfolio is continuously monitored by our experts and regularly optimized in line with current market opportunities. The fund management is managed within a comprehensible and structured investment process. Investment decisions align with the ERSTE AM responsible approach, considering sustainable and ethical selection criteria. The fund invests up to 30% in equities or equity funds and up to 100% in bonds or bond funds.

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. 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 Beulig

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

The fund achieved an almost balanced result despite turbulence on the equity markets and the weak US dollar.

 

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

The focus was on European bonds, both government and corporate, mainly investment grade. Equities were allocated somewhat more cautiously. The emphasis was on the sustainable investment policy until the fund was converted to Article 8 integration towards the end of the first half. We partially hedged currency risks and reduced money market holdings due to the increasingly unattractive interest rate environment.

 

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

Political uncertainty is likely to remain in place and continue to cause volatility. We expect trade conflicts to recede into the background after a while and positive measures (deregulation, tax cuts, investment programmes in Europe) to offset the negative effects of higher tariffs. A further interest rate cut in the Eurozone in the second half of the year or several interest rate cuts in the USA in autumn could provide tailwinds.

 

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

We have recently stepped up the fund's equity allocation by a slight degree. We expect the trade dispute to calm down, at least temporarily. On the bond markets, we continue to favour the Eurozone, with a focus on both investment-grade and high-yield corporate bonds. We expect to maintain partial currency hedging. Within the equity segment, we have given Europe a relatively higher weighting, and we (have) preferred defensive sectors such as healthcare as well. Emerging markets will only play a minor role in the equity portion for the foreseeable future.

 

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

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