Ethenea: where to invest?

When is the right time to increase the duration of a bond portfolio? Where to invest in equities: the US or Europe? And does the current turbulence in China offer investment opportunities? Ethenea’s portfolio managers discuss the current positioning of the Ethna funds.

"We are close to reaching the peak in interest rates, but it is not impossible that the central banks in the US and Europe will raise interest rates again," says Volker Schmidt, Portfolio Manager of the Ethna-DEFENSIV fund. Consequently, he is carefully managing the duration of the fund’s bond portfolio. “We have recently established a strategic long position in Bond futures and extended the duration to 4. Meanwhile, as the pendulum is swinging upwards in Europe, being driven by stubborn inflation and a possible further rate hike by the ECB, we have closed the futures position and reduced the duration. The portfolio duration in Ethna-DEFENSIV is currently 3.1. Despite recent tactical adjustments to our duration profile, our strategic outlook remains unchanged as we still expect slightly higher returns at the long end of the curve, especially in Europe. In the US, the situation is more complex, with significantly lower inflation and more robust economic growth. Even Fed Chairman Powell has stated that the central bank's task is not yet complete and that a renewed acceleration in economic activity may compel the Fed to further raise rates. Therefore, we will increase portfolio duration if we see stronger signs of weaker economic performance and slowing inflation, but for now we think such a move is premature.”

US or European equities?

Regarding equities, Michael Blümke, Portfolio Manager of the Ethna-AKTIV fund, concentrates on the US market, pointing out that the world's most prosperous companies have emerged from this huge domestic market with a high level of innovation. “Many of them have become global leaders and operate in sectors that should continue to benefit from structural growth trends.”

“In principle, we seek comparable company attributes in the Ethna-DYNAMISCH fund,” says Portfolio Manager Christian Schmitt. “However, we are somewhat more flexible in terms of market capitalisation preference and geographical focus. As a result, we also invest in European stocks that are smaller on average, but also in market leaders. The preference for geographic selection is still determined on a case-by-case basis. On both sides of the Atlantic, there remain attractive prospects; however, the number of US companies on our watch list is significantly higher.”

Many of the stocks in the portfolio of Ethna-DYNAMISCH are focused on technologies, pharmaceuticals and consumer sectors. These areas benefit from structural developments such as digitalisation, demographical changes and wealth growth. Christian Schmitt notes, “We tend to steer clear of sectors with no structural growth or with excessive cyclicality. However, we do occasionally make tactical moves when there are significant divergences between price and fundamentals.” This has been the case in the past, for instance, with European banks. As we do not currently observe any persuasive or tradable divergences in these tactical sectors, we persist in favouring the structural growth sectors of technology, pharmaceuticals and consumer staples.

China: only tactical positions

Strategically, Michael Blümke, Portfolio Manager of the Ethna-AKTIV, rules out an investment in China. “Mainly because of the political uncertainty, but also because the long-term growth story is no longer right for us. However, the Chinese government has already implemented several stimulus measures in response to current challenges, resulting in potential short-term opportunities. Therefore, we intentionally adopt a tactical approach, potentially investing up to 5% through an index investment.”

Press contact

Wim Heirbaut

Senior PR Consultant, Befirm

Get updates in your mailbox

By clicking "Subscribe" I confirm I have read and agree to the Privacy Policy.

About Ethenea

ETHENEA offers a wide range of attractive investment opportunities for different investor profiles: risk-minimised, balanced and equity-focused.

Capital preservation and the achievement of stable long-term returns are key components of the investment philosophy of the Ethna Funds. The fund management consistently realises this objective through active management and flexible asset allocation across various sectors and asset classes.

ETHENEA wants to make a contribution and offer responsible and sustainable investment solutions. Therefore, ESG criteria are an important part of the investment processes of all Ethna Funds (Article 8 SFDR).

Further information and legal information can be found at ethenea.com.

 

PRESS RELEASE – not an official document

We would like to point out that all data and information made available to you has been thoroughly researched by ETHENEA. However, with regard to its correctness and completeness, we cannot assume any liability or warranty for damages incurred either by the recipient of this information or by third parties, either directly or indirectly. In the event that this text is published in any form and to any extent, the publishing entity (editorial office of the newspaper or associated or commissioned third parties, website, podcast, etc.) is obliged to include the necessary disclaimers and legal notices. In addition, in this context, we refer to our legal information: The information contained in the attached document does not constitute a solicitation, offer or recommendation to buy or sell units in the fund or to engage in any other transaction.  It is intended solely to provide the reader with an understanding of the key features of the fund, such as the investment process, and is not deemed, either in whole or in part, to be an investment recommendation. The information provided is not a substitute for the reader's own deliberations or for any other legal, tax or financial information and advice. Neither the investment company nor its employees or Directors can be held liable for losses incurred directly or indirectly through the use of the contents of this document or in any other connection with this document. The currently valid sales documents in German (sales prospectus, key information documents (PRIIPs-KIDs) and, in addition, the semi-annual and annual reports), which provide detailed information about the purchase of units in the fund and the associated opportunities and risks, form the sole legal basis for the purchase of units. The aforementioned sales documents in German (as well as in unofficial translations in other languages) can be found at www.ethenea.com and are available free of charge from the investment company ETHENEA Independent Investors S.A. and the custodian bank, as well as from the respective national paying or information agents and from the representative in Switzerland. The paying or information agents for the funds Ethna-AKTIV, Ethna-DEFENSIV and Ethna-DYNAMISCH are the following: Austria, Belgium, Germany, Liechtenstein, Luxembourg: DZ PRIVATBANK S.A., 4, rue Thomas Edison, L-1445 Strassen, Luxembourg; France: CACEIS Bank France, 1-3 place Valhubert, F-75013 Paris; Italy: State Street Bank International – Succursale Italia, Via Ferrante Aporti, 10, IT-20125 Milano; Société Génerale Securities Services, Via Benigno Crespi, 19/A - MAC 2, IT-20123 Milano; Banca Sella Holding S.p.A., Piazza Gaudenzio Sella 1, IT-13900 Biella; Allfunds Bank S.A.U – Succursale di Milano, Via Bocchetto 6, IT-20123 Milano; Spain: ALLFUNDS BANK, S.A., C/ Estafeta, 6 (la Moraleja), Edificio 3 – Complejo Plaza de la Fuente, ES-28109 Alcobendas (Madrid); Switzerland: Representative: IPConcept (Schweiz) AG, Münsterhof 12, Postfach, CH-8022 Zürich; Paying Agent: DZ PRIVATBANK (Schweiz) AG, Münsterhof 12, CH-8022 Zürich. The paying or information agents for HESPER FUND, SICAV - Global Solutions are the following: Austria, Belgium, France, Germany, Luxembourg: DZ PRIVATBANK S.A., 4, rue Thomas Edison, L-1445 Strassen, Luxembourg; Italy: Allfunds Bank S.A.U – Succursale di Milano, Via Bocchetto 6, IT-20123 Milano; Switzerland: Representative: IPConcept (Schweiz) AG, Münsterhof 12, Postfach, CH-8022 Zürich; Paying Agent: DZ PRIVATBANK (Schweiz) AG, Münsterhof 12, CH-8022 Zürich. The investment company may terminate existing distribution agreements with third parties or withdraw distribution licences for strategic or statutory reasons, subject to compliance with any deadlines.