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. ESG considerations remain important, particularly in emerging markets and mixed-asset funds.
Investment Approach
Our investment approach has become somewhat bolder compared to earlier periods. As the global economy is showing signs of recovery—suggesting we may have already passed the deepest point of the latest downturn—we have upgraded equities while slightly reducing bond positions. Within the bond category, Hungarian government securities appear the most attractive: the forint remains stable, interest rates are high, and the yield premium is significant not only compared to the U.S. or the eurozone, but also relative to neighboring countries.
Our forecasting tool, the VIG Investment Clock, points to expansion on a global scale. To fully confirm this trend, however, we would need three consecutive months indicating the same direction. In the meantime, this outlook especially favors emerging market equities. With the U.S. dollar on a weakening trajectory, many investors are reallocating part of their capital to other regions. As a result, several Latin American and Asian stock markets could emerge as winners, given their stronger economic and corporate growth prospects compared to traditional Western markets—and with local currencies appreciating against the dollar (not a particularly high bar at present). Of course, there are also attractive opportunities on Wall Street and in Frankfurt, where indices have reached new historic highs on the back of expected rate cuts, led by major technology companies. With careful selection, these markets also offer compelling equity opportunities.
Investing is not limited to forint-denominated assets. Euro-based portfolios may be a valuable option, particularly as a hedge against potential forint weakness. The U.S. dollar, on the other hand, remains on a downward path: erratic policy decisions by the President continue to erode confidence in the world’s leading currency.
VIG EUR Portfolios
We have adjusted the tactical allocation of our USD-based model portfolios. The VIG Central European Equity Investment Fund, along with the VIG Marathon ESG Absolute Return Fund (which also carries a significant regional exposure), has been replaced with a broader, globally diversified investment: the VIG Emerging Markets ESG Equity Investment Fund—this time with a higher weight than in the previous month.
We have also increased the allocation to the VIG Developed Markets Short Term Bond Investment Fund, as the upcoming rate cuts by the U.S. Federal Reserve are expected to favor shorter-maturity bonds, given the reduced short-term risk of rising inflation.
At the same time, we maintained a slightly smaller—but still significant—allocation to the VIG Active Beta Flexible Allocation Investment Fund, which invests in some of the world’s most popular companies. These high-profile stocks, often spotlighted by the media, have the potential to continue outperforming and appreciating above the market average.
VIG USD Portfolios
We have also adjusted the tactical allocation of our USD-based model portfolios. The VIG Central European Equity Investment Fund has been replaced here as well with the VIG Emerging Markets ESG Equity Investment Fund, which invests across a broader, global spectrum, and now carries a higher weight than last month.
We have also increased the allocation to the VIG Developed Markets Short Term Bond Investment Fund, as the upcoming interest rate cuts by the U.S. Federal Reserve are expected to favor shorter-maturity bonds, given the reduced short-term risk of rising inflation.
At the same time, we have kept a slightly smaller—but still significant—allocation to the VIG Active Beta Flexible Allocation Investment Fund, which invests in the world’s most popular companies. These high-profile stocks, often in the media spotlight, may continue to appreciate at an above-average pace.
Disclaimer
This is a distribution announcement. In order to make well-founded investment decisions, 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 Fund Manager’s website (www.vigam.hu). Past returns do not predict future performance. 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.