Our positioning: Weak US dollar creates opportunities
The US dollar is on a downward trend. Given its continued overvaluation and the economic policy uncertainties in the USA, this trend is likely to continue for the time being. We’re increasing our position in emerging market equities and currency-hedged gold.
Historically, emerging market equities in particular have benefited from a weak US dollar.
Financial markets continued to display an air of nonchalance last month. Most government bonds trended sideways, while corporate bonds benefited from a further narrowing of credit spreads. At the same time, stock markets continued their upward trend, with some reaching new all-time highs, at least in local currency terms. Economic uncertainty and the escalating tariff conflict have had little impact so far.
However, the current euphoria could give way to corrections if conditions change. On the one hand, the situation in the real economy remains difficult. Europe continues to lack positive momentum, and there are growing signs of an economic slowdown in the USA. On the other, with the deadline due on 9 July, President Trump reiterated his threats of new punitive tariffs. They are set to come into effect on 1 August and would increase the average tariff burden in the USA from 2.5 percent at the moment to over 20 percent – a substantial increase that’s unlikely to leave the US economy unscathed. Companies will face a choice of either absorbing higher costs through lower margins or passing them on to consumers in the form of higher prices. The latter could fuel inflation, leaving less and less room for further price rises among US stocks. Against this difficult backdrop, we remain underweighted in the US stock market.
US dollar’s downward trend likely to continue
These tougher conditions have so far been particularly evident in the US dollar. It has been in a downward spiral since the beginning of the year, losing around 10 percent of its value on a trade-weighted basis – a considerable devaluation. Investors from countries with stronger currencies such as the Swiss franc are feeling this clearly. Despite new all-time highs on the US stock markets, the dollar’s weakness is weighing on their portfolios. And there seems to be no end in sight. Even after the most recent decline, the US dollar remains overvalued in terms of purchasing power parity. Given Trump’s trade and debt policies, the economic environment also looks set to remain tough for some time to come. This means the dollar’s downtrend is likely to continue.
Purchase of additional emerging market equities and gold
Historically, emerging market equities in particular have benefited from a weak US dollar. This is because export industries in these countries were more competitive when their currencies were directly or indirectly pegged to the US dollar. The threatened US import tariffs will likely do little to change this as essential inputs and raw materials from these countries cannot be replaced in the short term. With this in mind, we’re increasing the weighting of emerging market equities in our portfolio. Besides emerging markets, gold typically also benefits from a weak US dollar. Given the growing uncertainty surrounding trade policy, demand for the precious metal as a safe haven is likely to remain high, if not increase. We’re therefore increasing our gold allocation and hedging this position against a further devaluation in the dollar.
Performance of asset classes
Currencies 1 month in CHF YTD More information
Year-to-date: since the start of the year in CHF 1 month in LC More information
Local currency YTD More information
Year-to-date: since the start of the year in LC More information
Local currency
Currencies EUR
1 month in CHF –0.8%
YTD More information
Year-to-date: since the start of the year in CHF
1 month in LC More information
Local currency –0.8%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency –0.8%
Currencies USD
1 month in CHF –3.0%
YTD More information
Year-to-date: since the start of the year in CHF –12.1%
1 month in LC More information
Local currency –3.0%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency –12.1%
Currencies JPY
1 month in CHF –4.0%
YTD More information
Year-to-date: since the start of the year in CHF –5.6%
1 month in LC More information
Local currency –4.0%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency –5.6%
Equities 1 month in CHF YTD More information
Year-to-date: since the start of the year in CHF
1 month in LC More information
Local currency YTD More information
Year-to-date: since the start of the year in LC More information
Local currency
Equities Switzerland
1 month in CHF –1.1%
YTD More information
Year-to-date: since the start of the year in CHF 8.9%
1 month in LC More information
Local currency
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 8.9%
Equities World
1 month in CHF 0.3%
YTD More information
Year-to-date: since the start of the year in CHF –2.9%
1 month in LC More information
Local currency 3.4%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 10.5%
Equities USA
1 month in CHF 1.0%
YTD More information
Year-to-date: since the start of the year in CHF –5.7%
1 month in LC More information
Local currency 4.1%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 7.4%
Equities Eurozone
1 month in CHF 0.1%
YTD More information
Year-to-date: since the start of the year in CHF 14.4%
1 month in LC More information
Local currency 0.9%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 15.3%
Equities United Kingdom
1 month in CHF –1.0%
YTD More information
Year-to-date: since the start of the year in CHF 6.5%
1 month in LC More information
Local currency 1.5%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 11.8%
Equities Japan
1 month in CHF –3.5%
YTD More information
Year-to-date: since the start of the year in CHF –4.9%
1 month in LC More information
Local currency 0.5%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 0.7%
Equities Emerging markets
1 month in CHF –0.1%
YTD More information
Year-to-date: since the start of the year in CHF 2.2%
1 month in LC More information
Local currency 2.9%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 16.3%
Fixed income 1 month in CHF YTD More information
Year-to-date: since the start of the year in CHF
1 month in LC More information
Local currency YTD More information
Year-to-date: since the start of the year in LC More information
Local currency
Fixed income Switzerland
1 month in CHF –0.8%
YTD More information
Year-to-date: since the start of the year in CHF –0.6%
1 month in LC More information
Local currency
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency –0.6%
Fixed income World
1 month in CHF –2.1%
YTD More information
Year-to-date: since the start of the year in CHF –6.4%
1 month in LC More information
Local currency 1.0%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 6.5%
Fixed income Emerging markets
1 month in CHF –1.1%
YTD More information
Year-to-date: since the start of the year in CHF 8.9%
1 month in LC More information
Local currency –1.1%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 8.9%
Alternative investments 1 month in CHF YTD More information
Year-to-date: since the start of the year in CHF
1 month in LC More information
Local currency YTD More information
Year-to-date: since the start of the year in LC More information
Local currency
Alternative investments Swiss real estate
1 month in CHF 0.1%
YTD More information
Year-to-date: since the start of the year in CHF 4.5%
1 month in LC More information
Local currency
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 4.5%
Alternative investments Gold
1 month in CHF –3.7%
YTD More information
Year-to-date: since the start of the year in CHF 11.6%
1 month in LC More information
Local currency –0.8%
YTD More information
Year-to-date: since the start of the year in LC More information
Local currency 27.0%
Our positioning – Swiss focus
Liquidity TAA old More information
Tactical asset allocation: short- to medium-term positioning TAA new More information
Tactical asset allocation: short- to medium-term positioning
Positioning More information
Positioning compared to long-term investment strategy
Liquidity CHF
TAA old More information
Tactical asset allocation: short- to medium-term positioning 4.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 1.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Liquidity Money market CHF
TAA old More information
Tactical asset allocation: short- to medium-term positioning 0.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 0.0%
Positioning More information
Positioning compared to long-term investment strategy Heavily underweighted
Liquidity Total
TAA old More information
Tactical asset allocation: short- to medium-term positioning 4.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 1.0%
Positioning More information
Positioning compared to long-term investment strategy Heavily underweighted
Equities
TAA old More information
Tactical asset allocation: short- to medium-term positioning TAA new More information
Tactical asset allocation: short- to medium-term positioning
Positioning More information
Positioning compared to long-term investment strategy
Equities Switzerland
TAA old More information
Tactical asset allocation: short- to medium-term positioning 23.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 23.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Equities USA
TAA old More information
Tactical asset allocation: short- to medium-term positioning 8.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 8.0%
Positioning More information
Positioning compared to long-term investment strategy Heavily underweighted
Equities Eurozone
TAA old More information
Tactical asset allocation: short- to medium-term positioning 4.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 4.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Equities United Kingdom
TAA old More information
Tactical asset allocation: short- to medium-term positioning 2.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 2.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Equities Japan
TAA old More information
Tactical asset allocation: short- to medium-term positioning 2.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 2.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Equities Emerging markets ex China
TAA old More information
Tactical asset allocation: short- to medium-term positioning 5.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 6.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
Equities China
TAA old More information
Tactical asset allocation: short- to medium-term positioning 2.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 3.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
Equities World value
TAA old More information
Tactical asset allocation: short- to medium-term positioning 2.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 2.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
Equities Total
TAA old More information
Tactical asset allocation: short- to medium-term positioning 48.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 50.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Fixed income TAA old More information
Tactical asset allocation: short- to medium-term positioning TAA new More information
Tactical asset allocation: short- to medium-term positioning
Positioning More information
Positioning compared to long-term investment strategy
Fixed income Switzerland
TAA old More information
Tactical asset allocation: short- to medium-term positioning 17.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 17.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Fixed income World More information
Hedged against the Swiss franc
TAA old More information
Tactical asset allocation: short- to medium-term positioning 10.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 10.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Fixed income Emerging markets More information
Hedged against the Swiss franc
TAA old More information
Tactical asset allocation: short- to medium-term positioning 6.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 6.0%
Positioning More information
Positioning compared to long-term investment strategy Neutral
Fixed income US government bonds More information
Hedged against the Swiss franc
TAA old More information
Tactical asset allocation: short- to medium-term positioning 2.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 2.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
Fixed income Total
TAA old More information
Tactical asset allocation: short- to medium-term positioning 35.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 35.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
Alternative investments TAA old More information
Tactical asset allocation: short- to medium-term positioning TAA new More information
Tactical asset allocation: short- to medium-term positioning
Positioning More information
Positioning compared to long-term investment strategy
Alternative investments Swiss real estate
TAA old More information
Tactical asset allocation: short- to medium-term positioning 8.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 8.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
Alternative investments Gold More information
Hedged against the Swiss franc
TAA old More information
Tactical asset allocation: short- to medium-term positioning 5.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 6.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
Alternative investments Total
TAA old More information
Tactical asset allocation: short- to medium-term positioning 13.0%
TAA new More information
Tactical asset allocation: short- to medium-term positioning 14.0%
Positioning More information
Positioning compared to long-term investment strategy Overweighted
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