Increasing the Equity Allocation

In October 2024, we reduced the equity exposure. This decision proved valuable during the market downturn that began in mid-February. Now we took a first step back into equities. Below you will find the details of our decision.

In April, the market sell-off intensified, and signs of panic among investors became more apparent. Shortly before markets reached a bottom, we sent a communication to our clients with one key message: Stay calm. In times of extreme market volatility, selling in a panic often leads to exits at the worst possible prices — and raises a difficult question: What now? Reinvest? When? How?

We favor thoughtful, measured steps. Every decision carries the risk of being wrong, but small steps are easier to correct than large ones. For this reason, we made an initial purchase to bring the equity allocation back to its strategic target, after the market decline had left it slightly below that level.

In addition, within our flagship strategy - Gutmann Core Equities - we made selective adjustments at the individual stock level. We increased positions in companies whose share prices had fallen significantly during the turbulence. Conversely, we slightly reduced positions in stocks that had performed better or even risen - always under the condition that we remain confident in the long-term quality of the businesses.

Why an initial purchase now?

Equity markets tend to rebound before the news flow improves. Those who wait for clear skies often end up buying again at new highs, as rising prices typically precede positive headlines - not the other way around.

Over the past weeks, we assumed that this bear market might persist for some time. We continue to expect high volatility. However, the current recovery differs from a typical bear market rally: it is broader-based, with an increasing number of stocks participating. This supports the view that the lows may already be behind us.

Was market pessimism deep enough?

A key question. Only when many investors capitulate is the foundation laid for the next upturn. In fact, major sentiment indicators reached historic lows.

Speculation around U.S. President Trump’s trade policies remains just that - speculation. Are his negotiations part of a calculated strategy, or the result of spontaneous impulses? In our experience, during phases like this, it pays to focus on market data. Financial markets process information faster than the media.

In most cases, the equity allocation was increased by just a few percentage points. Through simultaneous purchases and sales of individual stocks, we are positioning portfolios more precisely towards the best opportunities.

Additionally, we increased the allocation to Gutmann Pure Innovation from 4% to 5% within the equity strategy. These more dynamic stocks had come under particular pressure. With this adjustment, we return to the level of October 2024, when we had previously reduced the strategy.

Current Equity Allocation in Detail: 

• Gutmann Core Equities: 68%    
• Gutmann Global Dividends: 15%    
• Equities Japan: 12%    
• Pure Innovation Strategy: 5%     

For any questions or to discuss your individual investments, please contact your relationship manager.