The model portfolios have been constructed based on the VIG Investment Clock and our tactical asset allocation strategy, using following principles: we have selected 4-5 investment funds from our own range.
In all three currencies, the Conservative Portfolio targets a composition of 40% equities and 60% bonds, while the Dynamic Portfolio focuses on 60% equities and 40% bonds. The key economic factors behind these allocations include global and regional economic trends, expectations of central bank interest rate cuts, and investor sentiment.
Conservative portfolio focuses more on stability and fixed income assets (bonds), whereas dynamic portfolios aim for higher-yield outlook, using the volatility of equities. Conservative portfolios tend to focus on stability and safer assets (bonds), while aggressive portfolios rely on higher-yielding but riskier equities. In its investment decisions, VIG Fund Management pays close attention to sustainability, particularly in ESG and sustainable funds.*
Investment Approach
The VIG Global Investment Clock, a scientifically based tool that uses indicators to forecast economic cycles, is shifting toward stagflation (weak growth coupled with high inflation).
Geopolitical tensions involving Iran are affecting both growth and inflation outlooks. Uncertainty remains high, and although periodic diplomatic efforts are underway, there are no clear signs of a comprehensive agreement. Global fuel prices have risen significantly, posing an upside risk to inflation. In the United States, 12-month inflation rose by 0.9 percentage points last month, and in the eurozone it also moved above target.
Economic activity has been stronger in the U.S., but GDP growth in the eurozone may be weaker in the first quarter. The U.S. labor market has weakened relative to historical averages, with labor supply exceeding demand. If tensions surrounding Iran persist and prove protracted, secondary effects could further drive up inflation, increasing the risks of stagflation.
VIG EUR Portfolios
We have included the VIG InnovationTrend ESG Equity Fund in both the “conservative” euro portfolio, which follows a more cautious investment strategy, and the “aggressive” portfolio, which offers the potential for higher returns in exchange for greater risk. The Fund has significant exposure to the technology sector, which is a major beneficiary of the resurgent AI boom: demand for the technology and the tools required for it appears insatiable, and the sector’s companies’ first-quarter results consistently exceeded expectations. Due to the worsening inflation outlook, we also increased the weighting of the VIG Panorama Absolute Return Investment Fund here; by monitoring global economic trends, this fund seeks to identify medium-term trends and themes – such as inflation or deflation – and aims to generate returns through related investments. We have, however, reduced our exposure to developed market bonds: inflation in the eurozone has surged due to the war in the Middle East, and central bank interest rate cuts that would boost bond prices are becoming increasingly unlikely.
VIG USD Portfolios
We have also made changes to the tactical allocation of the dollar-based model portfolio similar to those made to the euro-based one. We have added the VIG InnovationTrend ESG Equity Fund to both the “conservative” dollar portfolio, which follows a more conservative investment policy, and the “aggressive” portfolio, which offers higher returns but involves greater risk. The Fund has significant exposure to the technology sector, which is a major beneficiary of the resurgent AI boom: demand for technology and the necessary tools appears insatiable, as the sector’s companies consistently exceeded expectations in their first-quarter results. Due to the worsening inflation outlook, we also increased the weighting of the VIG Panorama Absolute Return Investment Fund here; by monitoring global economic trends, this fund seeks to identify medium-term trends and themes – such as inflation or deflation – and aims to generate returns through related investments. We have reduced our exposure to developed market bonds: U.S. inflation has surged due to the war in the Middle East, and central bank interest rate cuts that would boost bond prices are becoming increasingly unlikely.
Detailed information on the consideration of sustainability aspects is available on our website: https://www.vigam.hu/en/esg-investments/
Disclaimer
This is a distribution announcement. Detailed information is needed to make a well-founded investment decision. Please inform yourself thoroughly regarding the Fund’s investment policy, potential investment risks and distribution in the Fund’s key investment information, official prospectus and management regulations available at the Fund’s distribution outlets and on the Asset Management’s website (www.vigam.hu). The costs related to the distribution of the fund (buying, holding, selling) can be found in the fund’s management regulations and at the distribution outlets. Past returns do not predict future performance. Please note that in comparison with other investment funds, the return achieved may be affected by differences in the reference index and therefore the investment policy.
The future performance that can be achieved by investing may be subject to tax, and the tax and duty information relating to specific financial instruments and transactions can only be accurately assessed on the basis of the individual circumstances of each investor and may change in the future. It is the responsibility of the investor to inform himself about the tax liability and to make the decision within the limits of the law.
The information contained in this leaflet is for informational purposes only and does not constitute an investment recommendation, an offer or investment advice. VIG Asset Management Hungary Closed Company Limited by Shares accepts no liability for any investment decision made on the basis of this information and its consequences.
The Asset Management’s license number for managing alternative investment funds (AIFM) is: H-EN-III-6/2015. The Fund Manager’s license number for UCITS fund management (collective portfolio management) is: H-EN-III-101/2016.