Opportunities: Seizing opportunities with liquidity

At what price levels should you consider increasing your share position? We look at various factors, including the expected earnings growth of companies and the expected share valuations (price/earnings ratio) for the next twelve months. Based on this, we have defined trading ranges for indices for individual regions and markets that reflect our current expectations. If a market moves at the lower end of this range for an extended period, we consider increasing the equity position, as a lot of negative news would already be priced in.

However, scenarios must have the flexibility to be adjusted dynamically.  For example, if the economic outlook deteriorates, we would revise earnings expectations downwards.

At sector level, we favor healthcare (overweight) and financials (slightly overweight). The healthcare sector is less cyclical, which is an advantage in the current phase of slowing growth. Financials are more sensitive to economic developments. Nevertheless, we are moderately positive on them, especially in the US, thanks to the Trump administration's planned deregulation of the financial sector. In general, less regulation increases the profitability of banks and other financial players.

Thematically, we continue to see opportunities in the field of artificial intelligence (AI), as companies continue to invest in AI. However, the trend is not limited to commercial applications. AI has also become an important factor in modern defense. Technologies such as AI, which were originally developed to optimize business processes, are increasingly being used for military purposes.

For you as an investor, this presents an opportunity to support technological innovations that are important for both the civilian world and national security.

In the article “Impulse: The future of defense lies in technology” you can learn more about the role of technology in modern defense.

European governments will boost their economies with extensive fiscal programs. One example is the massive infrastructure investment announced by the German government a few months ago. Defense spending will also be increased in some European countries. In addition, Europe has an advantage over the USA: low expected inflation, which enables the ECB to cut interest rates further. We therefore expect economic growth in the eurozone to pick up again in 2026.

Nevertheless, we are not overweight in Europe, as government investments in defense partly benefit non-European companies, such as American defense equipment manufacturers. As a result, some government investment is flowing out of Europe rather than boosting the Eurozone economy. Overall, we do not currently see sufficient reasons to favor European equities over US equities. We have a neutral regional weighting for Europe, the US and emerging markets.

In the bond portfolio, we take a positive view of European government bonds. If the ECB actually continues its interest rate cuts in the second half of the year, European bond prices will rise (bond prices move inversely to interest rates). We therefore believe that European government bonds could be an attractive alternative to savings accounts (where interest rates are also falling).

We currently favor investment grade corporate bonds over the riskier high yield segment. When investors started to worry about economic growth after Trump's Liberation Day, the risk premiums for high-yield bonds rose significantly. This makes this segment more attractive again. With credit risk premiums between 400 and 500 basis points, it could be interesting to invest more in high-yield bonds (provided a recession can be avoided; if a recession does occur, credit risk premiums are likely to rise even further).

The price of gold continued to rise in the first half of 2025. Economic uncertainty and geopolitical unrest are enabling the precious metal to fulfill its traditional role as a safe haven. Despite this price increase, we continue to see upside potential and have recently added gold to our investment portfolio.

Find out more about our view on gold here.

And finally, when people talk about gold, they often also talk about the US dollar. Since gold is traded in dollars, dollar movements also influence the gold price.

Want to know more about the dollar? Steffen Kunkel, Chief Financial Strategist, has written an insightful article about its status as a reserve currency.