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
The VIG Global Investment Clock, a scientifically based tool that uses indicators to forecast economic cycles, is signaling expansion; however, the conflict in Iran has been causing high volatility in the market since late February. This has already begun to be reflected in the survey-based indicators of our model.
Although the world economy is less dependent on oil today than it was a few decades ago, higher oil prices clearly pose a risk to the global inflation outlook and economic growth. Fears of stagflation (high inflation and low growth) are mounting, and previous interest rate cuts have been priced out both in the United States and in the Eurozone.
Even if the war ends quickly, it will take time for the flow and production of energy products and derivatives to normalize. However, if the war escalates and drags on, much higher energy prices could cause stagflation in the short term. At least, that is what equity markets appear to be pricing in: the energy sector and defensive sectors such as healthcare, utilities, and consumer goods are outperforming.
VIG EUR Portfolios
We have significantly increased the weighting of the VIG Developed Markets Short Term Bond Investment Fund in both the „conservative” portfolio, which follows a more cautious investment policy, and the „aggressive” portfolio, which offers higher returns in exchange for higher risk.
European yields have surged following the outbreak of the war; however, due to its short maturity, the Fund assumes minimal risk, and is also ideally suited for preserving capital, should it be needed at a later stage to take advantage of an attractive investment opportunity.
Here in parallel, we proportionally reduced the weight of the funds with higher exposure to riskier emerging market equities (the VIG Emerging Market ESG Equity and VIG Marathon Selection Fund investment funds), while the largest weighting (35%-35%) continues to be represented by the VIG Active Beta Flexible Allocation Investment Fund, which invests in the most popular U.S. and European stocks.
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.
The largest allocation remains the VIG Active Beta Flexible Allocation Investment Fund, which holds a significant proportion of the most popular European stocks, while also employing robust risk management.
However, the VIG Developed Market Short Term Bond Investment Fund has caught up: U.S. yields surged following the outbreak of the war, but due to its short maturity, the Fund assumes minimal risk, and is excellently sited for preserving capital.
Here, too, we proportionally reduced the weight of the funds with riskier emerging market equity exposure ( the VIG Emerging Market ESG Equity and VIG Alfa Absolute Return investment funds), which now account for only 10% each of the total portfolio value.
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.