Our positioning: the stock exchanges are speculating on an upturn

The equity markets entered the new year with a strong tailwind. Momentum is particularly strong on the US market. We are neutralizing our US position.

Strong start to the year

Our decision in December to increase our equity allocation has paid off. Not only did the stock markets enjoy an impressive year-end rally, they also started the new year strongly. The signing of a first partial agreement in the trade dispute between the US and China gave the markets fresh impetus. Tech stocks – which dominated on both the Asian and US exchanges and their lead indices – enjoyed a particularly strong start to the year. Increasing the allocation to emerging market equities, where Asian equities predominate, paid off handsomely.

We consider the current valuation of real estate funds to be sustainable.

The economy is stabilizing

The economy is in good shape despite global economic growth being held back by sustained, weak industrial performance. The weakness in industry is putting particular strain on economies with a significant industrial sector. The German economy, for example, is being hit.

By contrast, the other sectors are stabilizing. Thanks to robust performance from the services sector, the labour market trend remains positive in almost all major countries. In the USA and the eurozone, unemployment is at its lowest level for over 20 years. The strong labour market is increasing consumer income and in turn boosting economic growth.

Swiss companies with robust earnings performance

For the financial markets, most importantly this means that slipping into a much-feared recession can be ruled out for the time being. We also share this view. We are slightly more sceptical about the performance of corporate earnings. Company profits have not risen in most countries for months.

The only exception to this is Switzerland where both corporate earnings and margins continue to grow. A high weighting of Swiss equities remains advisable at present. On the other hand, we see sub-par potential in the eurozone where corporate earnings are being hit by the effects of weak global industry.

Elsewhere, we are changing our position on US equities. In light of the economic stabilization and strong price trend on the US market, we recommend that our customers raise the positioning in this market up to the strategic quota.

Real estate funds run out of steam

Swiss real estate investments also got off to a flying start in the new year. Real estate fund prices climbed by almost 5 percent on average in the first few days of trading. They rose significantly above a level we would consider to be adequate in view of interest rates. This means the sharp slide in prices since then has not come as a surprise to us. We see the current valuation as sustainable and continue to recommend neutral positioning in line with the strategy.

Performance of asset classes

Currencies 1 month in CHF YTD in CHF
Currencies
EUR
1 month in CHF
-1.9%
YTD Year-to-date: since the start of the year in CHF

-1.0%

Currencies
USD
1 month in CHF
-1,8%
YTD Year-to-date: since the start of the year in CHF
-0.2%
Currencies
JPY
1 month in CHF
-2.3%
YTD Year-to-date: since the start of the year in CHF
-1.7%

Equities 1 month in CHF YTD in CHF
1 month in LC YTD in LC
Equities
Switzerland
1 month in CHF
1.6%
YTD Year-to-date: since the start of the year in CHF
0.9%
1 month in LC Local currency

1.6%

YTD Year-to-date: since the start of the year in LC Local currency
0.9%
Equities
World
1 month in CHF
1.2%
YTD Year-to-date: since the start of the year in CHF
1.9%
1 month in LC Local currency
3.0%
YTD Year-to-date: since the start of the year in LC Local currency
2.1%
Equities
USA
1 month in CHF
2.3%
YTD Year-to-date: since the start of the year in CHF
2.6%
1 month in LC Local currency
4.2%
YTD Year-to-date: since the start of the year in LC Local currency
2.8%
Equities
Eurozone
1 month in CHF
-1.1%
YTD Year-to-date: since the start of the year in CHF
0.3%
1 month in LC Local currency
0.8%
YTD Year-to-date: since the start of the year in LC Local currency
1.3%
Equities
United Kingdom
1 month in CHF
-2.4%
YTD Year-to-date: since the start of the year in CHF
-0.7%
1 month in LC Local currency
1.3%
YTD Year-to-date: since the start of the year in LC Local currency
1.0%
Equities
Japan
1 month in CHF
-2.4%
YTD Year-to-date: since the start of the year in CHF
-0.9%
1 month in LC Local currency
0.0%
YTD Year-to-date: since the start of the year in LC Local currency
0.8%
Equities
Emerging markets
1 month in CHF
3.2%
YTD Year-to-date: since the start of the year in CHF
2.1%
1 month in LC Local currency
5.1%
YTD Year-to-date: since the start of the year in LC Local currency
2.3%

Fixed income 1 month in CHF YTD in CHF
1 month in LC YTD in LC
Fixed income
Switzerland
1 month in CHF
0.0%
YTD Year-to-date: since the start of the year in CHF
0.7%
1 month in LC Local currency

0.0%

YTD Year-to-date: since the start of the year in LC Local currency
0.7%
Fixed income
World
1 month in CHF
-1.5%
YTD Year-to-date: since the start of the year in CHF
-0.2%
1 month in LC Local currency
0.3%
YTD Year-to-date: since the start of the year in LC Local currency
0.0%
Fixed income
Emerging markets
1 month in CHF
-0.1%
YTD Year-to-date: since the start of the year in CHF
0.8%
1 month in LC Local currency
1.8%
YTD Year-to-date: since the start of the year in LC Local currency
1.0%

Alternative investments 1 month in CHF YTD in CHF
1 month in LC YTD in LC
Alternative investments
Swiss real estate
1 month in CHF
3.5%
YTD Year-to-date: since the start of the year in CHF
3.3%
1 month in LC Local currency

3.5%

YTD Year-to-date: since the start of the year in LC Local currency
3.3%
Alternative investments
Gold
1 month in CHF
3.3%
YTD Year-to-date: since the start of the year in CHF
2.1%
1 month in LC Local currency
5.2%
YTD Year-to-date: since the start of the year in LC Local currency
2.3%

Our positioning – Swiss focus

Liquidity TAA old TAA new
Liquidity
CHF
TAA old Tactical asset allocation: short- to medium-term positioning
6.0%
TAA new Tactical asset allocation: short- to medium-term positioning
5.0%
Liquidity
JPY
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Liquidity
Total
TAA old Tactical asset allocation: short- to medium-term positioning
8.0%
TAA new Tactical asset allocation: short- to medium-term positioning
7.0%

Equities
TAA old TAA new
Equities
Switzerland
TAA old Tactical asset allocation: short- to medium-term positioning
28.0%
TAA new Tactical asset allocation: short- to medium-term positioning
28.0%
Equities
USA
TAA old Tactical asset allocation: short- to medium-term positioning
7.0%
TAA new Tactical asset allocation: short- to medium-term positioning
8.0%
Equities
Eurozone
TAA old Tactical asset allocation: short- to medium-term positioning
3.0%
TAA new Tactical asset allocation: short- to medium-term positioning
3.0%
Equities
United Kingdom
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Equities
Japan
TAA old Tactical asset allocation: short- to medium-term positioning
2.0%
TAA new Tactical asset allocation: short- to medium-term positioning
2.0%
Equities
Emerging markets
TAA old Tactical asset allocation: short- to medium-term positioning
5.0%
TAA new Tactical asset allocation: short- to medium-term positioning
5.0%
Equities
Total
TAA old Tactical asset allocation: short- to medium-term positioning
47.0%
TAA new Tactical asset allocation: short- to medium-term positioning
48.0%

Fixed income TAA old TAA new
Fixed income
Switzerland
TAA old Tactical asset allocation: short- to medium-term positioning
13.0%
TAA new Tactical asset allocation: short- to medium-term positioning
13.0%
Fixed income
World
TAA old Tactical asset allocation: short- to medium-term positioning
12.0%
TAA new Tactical asset allocation: short- to medium-term positioning
12.0%
Fixed income
Emerging markets
TAA old Tactical asset allocation: short- to medium-term positioning
8.0%
TAA new Tactical asset allocation: short- to medium-term positioning
8.0%
Fixed income
Total
TAA old Tactical asset allocation: short- to medium-term positioning
33.0%
TAA new Tactical asset allocation: short- to medium-term positioning
33.0%

Alternative investments TAA old TAA new
Alternative investments
Swiss real estate
TAA old Tactical asset allocation: short- to medium-term positioning
5.0%
TAA new Tactical asset allocation: short- to medium-term positioning
5.0%
Alternative investments
Gold
TAA old Tactical asset allocation: short- to medium-term positioning
7.0%
TAA new Tactical asset allocation: short- to medium-term positioning
7.0%
Alternative investments
Total
TAA old Tactical asset allocation: short- to medium-term positioning
12.0%
TAA new Tactical asset allocation: short- to medium-term positioning
12.0%
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