Market Comments - Q5 2025
Market development
The new investment year started where the old one ended, with decent increases in the equity market. However, this was replaced by significant declines as from mid-February - see figure 1 below.
As we wrote in our last quarterly comment, it would be interesting to see in 2025 whether President Trump would succeed in implementing his plans for the US economy. And after the first three months of 2025, we can see that the president has been busy and has certainly delivered on his promises to introduce tariffs and taxes on other countries and regions.
It has also been an eventful quarter in terms of foreign policy, with the Ukraine-Russia conflict taking centre stage, but also continued tensions between Israel and Hamas remain unresolved.
In Europe, the quarter has seen a historically large framework for investment in rearmament, which has led to decent increases in the equity market, especially defence shares. On the other hand, this has also meant that interest rates on the bond market have been rising.
|
|
The fund* |
Benchmark |
Diff. |
|
Latest quarter |
-3,28% |
-2,05% |
-1,23% |
|
Year-to-date |
-3,28% |
-2,05% |
-1,23% |
|
*See past performance under the tab Past Performance |
|||
Right now
The turmoil in the financial markets has continued into the second quarter. The reason is the tariff increases announced by the US on 2 April. The tariffs were significantly more wide-ranging than expected and the effects of the increased tariffs (if maintained) could weaken global trade and increase the risk of global growth being significantly lower. The equity markets reacted with large declines, and we have thus had a negative and turbulent start to the second quarter.
The development in early April is, of course, something we are following closely. As mentioned above, a trade war could weaken the economy and increase the risk of a slowdown in global growth.
At the same time, the market will also focus on how the various countries, including the EU, will respond to the US tariff hikes.
Declines in equity markets, even of the size we have seen recently, are a natural part of investing in equities – this is part of the “equity market’s DNA”. Often, opportunities arise when we see large declines in the markets, as equities have historically delivered positive returns over time. However, sometimes things get worse before they get better – most recently in 2022 – and of course that's a risk this time too.
As always, we follow our investment process, which continues to suggest that we should see opportunities in the recent declines in the equity market. This is especially supported by our sentiment indicator, which has fallen to a very fearful level. For the time being, we therefore maintain our increased share of equities in the portfolios.
Please note
Past performance is not a reliable indicator of future results. The value of and return on your investment may fall, and you may not get back the full amount invested. An initial charge is usually made when you purchase and sell units. The fund may invest in instruments denominated in various currencies. At least 75% of the fund assets will at all times be invested in EUR or hedged to EUR. You should be aware that changes in exchange rates may have an adverse effect on your investment. This may also be the case if EUR is not your base currency.
Information in this text should not be regarded as investment advice, and investors should consult their own investment and tax advisers before buying or selling.