In the Fund Check series, fund managers of selected funds look back on developments over the past year and give their assessment of what we can expect in 2026. (Note: Prognoses are not a reliable indicator of future performance. Please note that investing in securities involves risks as well as opportunities.)

Summary

  • Over the course of 2025, there was a striking divergence in market performance: quality shares were underperforming the broader market.
  • In the medium term, however, a return to fundamental valuation metrics and sustainable earnings power could lead to a relative reallocation in favour of quality shares.
  • During the reporting period, the investment focus was primarily on US equities from the technology sector. In addition, we made substantial allocations to the industrial and financial sectors.
  • Earnings estimates – especially for US companies – remain robust as the investment momentum in the technology sector continues unabated. Innovations in areas such as AI, semiconductors, and automation are providing structural tailwinds.

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 2025?

Over the course of 2025, there was a striking divergence in market performance: quality shares were underperforming the broader market. This divergence was primarily due to the exceptional price momentum of technology companies, particularly those without significant revenues (“no-revenue tech”) and with low fundamental quality. Driven by the ongoing hype surrounding artificial intelligence (AI) and the associated disruptive narratives, smaller and growth-oriented tech shares in particular recorded exponential gains in some cases. This development was supported by massive capital inflows and high risk appetite among institutional and retail investors. The market distortion in favour of low-quality shares poses a temporary challenge for quality-oriented investment strategies. In the medium term, however, a return to fundamental valuation criteria and sustainable earnings power could lead to a relative reallocation in favour of quality shares. Despite these circumstances, the fund generated a positive performance.

Please note: Past performance is no reliable indicator of the future value development of the fund.

 

What were the fund’s main areas of focus in 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 on an equal-weight basis, with selective investments in 25 shares that offer above-average return potential from a fundamental perspective in the medium to long term. In line with its previous allocation policy, the investment focus in the reporting period was primarily on US equities from the technology sector. In addition, we made substantial allocations to industrial and financial equities. This sector positioning proved to be disadvantageous in some cases this year, as the fund was naturally unable to participate in the “junk rally”.

 

What are the expectations of your fund management team with regard to global economic development and trends, among other things, for 2026?

We expect volatility and uncertainty to remain key market drivers next year. The medium-term impact of the newly aligned US tariff policy is currently difficult to quantify. At the same time, the fundamental environment remains supportive: earnings estimates – especially for US companies – remain robust, and investment momentum in the technology sector is unbroken. Innovations in areas such as AI, 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 equity selection therefore remains essential.

 

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

We will remain committed to our quality strategy in the coming year. In a market environment increasingly characterised by political and economic uncertainty and heightened volatility, we continue to regard high-quality companies with solid balance sheets and resilient business models as a good basis for stable long-term performance. Should the macroeconomic picture deteriorate – for example, due to new protectionist measures, geopolitical tensions, or an unclear interest rate outlook – we expect quality companies to be able to withstand these pressures relatively well. At the same time, we are well positioned for a constructive scenario: our strategic overweighting in the IT sector offers substantial opportunities for participation, should the market sentiment continue to brighten.

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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. Past performance is not a reliable indicator of the future performance of a fund.

Please note: 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 § 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.

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