Multi-asset strategy

Portfolio positioning at a glance

Thanks to our constructive view on equities and precious metals, our multi-asset portfolios performed very well in the fourth quarter. The minor sell-off in November had little impact on our portfolios thanks to a broad diversification. At the turn of the year, we are maintaining our overweight position in equities, without any major regional preferences. We are optimistic thanks to favourable corporate outlooks, low investor positioning and support from share buyback programmes. If the outlook remains unchanged, we believe that a setback would even present a buying opportunity. However, we are very vigilant with regard to economic and valuation risks.

Our view that, in an environment of exploding government debt and structurally higher inflation, real assets should be preferred over nominal government bonds is clearly reflected in the portfolio. Accordingly, our largest overweight position remains in precious metals. Bonds, especially government bonds, are underweighted. In bonds, we prefer covered bonds, high-yield bonds and niche segments such as local currency bonds from frontier markets or catastrophe bonds.

Review of the fourth quarter – healthy correction

The fourth quarter was characterised by greater volatility. After gold and other precious metals had staged a phenomenal rally from September to mid-October, there was a significant profit-taking phase. Gold fell by almost 10% from its all-time high, but then recovered significantly and is now up more than 40% in euro terms YTD. Global equity markets declined subsequently from mid-November onwards due to growing concerns about tech valuations and the temporary pricing out of Fed interest rate cuts. They then recovered once it became clear that the Fed would most likely cut interest rates in December after all. All three equity regions gained more than 3% in the fourth quarter. Overall, the fourth quarter was positive for our structural overweight positions, equities and gold, but was characterised by increased volatility. Bonds, on the other hand, remained flat.

Economic outlook – slight regional shifts

The global economy is expected to grow at a similar rate in 2026 as in 2025, but regional dynamics will shift. The US economy is likely to lose some momentum due to a weakening labour market and declining domestic demand. Europe is likely to experience a slight recovery thanks to investments in defence and infrastructure. China and Asia are likely to remain resilient overall, supported by China's 15th Five-Year Plan, to be announced in spring 2026, which will focus on AI, high tech and productivity. Artificial intelligence remains a global growth driver thanks to massive capital investments in data centres and energy infrastructure. In the run-up to the midterm elections in November, the White House is likely to focus on curbing tariff-related inflation. We believe further easing of some trade agreements and measures to cap food prices are possible. Ultimately, the development of US inflation in the new year is likely to have a major impact on the outcome of the elections – and Donald Trump has some ground to make up in this area. His approval ratings have plummeted this year, particularly on the issue of inflation. Higher tariffs, looser fiscal policy and more restrictive immigration rules are likely to fuel inflation, even if the net economic effect is less clear. Deregulation and AI productivity gains are likely to counteract this. In addition, Trump is likely to do everything he can to keep energy prices low. So far, inflation expectations have remained anchored thanks to the credibility that central banks have built up over decades. However, the independence of monetary policy can no longer be taken for granted – in a world where even politicians in major industrialised countries such as the US are increasingly taking unorthodox positions.

2026 is likely to be more micro-driven

US monetary policy under a new Fed chair from May onwards and pro-cyclical stimulus measures should create a favourable environment for capital markets: markets can turn away from global macro issues in 2025 and instead focus on sector-specific idiosyncrasies that are likely to drive returns over the next 12 months. In contrast to 2025, when trade conflicts and political uncertainty dominated events, especially in the first half of the year, markets are likely to follow their own rules more closely in 2026. We expect market breadth to pick up again next year if the Fed continues to ease monetary policy. This would give many sectors that have been weak in recent years due to high interest rates the potential to catch up, especially small caps.

Equities and gold preferred, but with less potential in 2026

We expect 2026 to be a positive year for capital markets, albeit with more moderate upside potential for equities and gold than this year. Volatility is likely to increase, not least because of the US midterm elections in November, which historically caused some market turmoil. In fact, the last two midterm election years, 2018 and 2022, were anything but positive for equity investors. Nevertheless, several factors favour risky assets: fiscal dominance, financial repression and high budget deficits should continue to support real and scarce assets over the US dollar and government bonds. The dollar should continue to weaken in the medium term, but at a much more moderate pace than this year. As long as no financial crisis with sharply rising bond yields forces a fiscal correction in the US or parts of Europe – a long-term risk that we do not expect in the short term – the bull market in equities and precious metals is likely to continue in 2026. As we have argued in the past: Without tighter monetary policy from the Federal Reserve or a recession, investors should not underweight equities. Without one of these scenarios, it still makes sense to hold equities at least neutral to the benchmark. Although setbacks are more likely after the strong recovery since April and in view of high valuations, President Trump is likely to act in a supportive manner for the economy and markets in view of the midterm elections. We would therefore be sceptical of overly pessimistic positions on risk assets. Historically, equities perform well in midterm election years until March/April. After that, volatility increases, and it is only after the elections that the market picks up again. We can imagine this pattern repeating itself in 2026.

For government bonds, we expect the interplay between growth concerns and inflation fears to keep bond yields within a certain range, as was the case this year. An M&A renaissance and increased credit-financed AI investments are also likely to lead to further IG spreads and greater heterogeneity in corporate bonds.