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 currently poised on the cusp between stagflation (weak growth coupled with high inflation) and expansion.
The crisis in the Middle East has been shaping market sentiment since February. The stock market price of oil continues to hover around $100 per barrel, which has once again fueled inflation fears worldwide. In the United States, April’s inflation data already reflected higher energy prices, with the headline rate rising to 3.8%. Due to the oil shock triggered by the conflict in Iran, energy costs rose by nearly 18% year-over-year. But even core inflation, calculated without accounting for rapidly changing short-term components such as household energy, vehicle fuels, Medicare-covered drugs, and government-priced services, jumped to 2.7%. The U.S. labor market remains resilient; however, consumers’ assessment of the labor market remains pessimistic. Growth forecasts are declining, and higher oil prices are negatively impacting both industrial and retail sales.
In the eurozone, the average rate of consumer price inflation rose to 3.2% in May, the highest level since the fall of 2023. The main driver was the rise in energy costs, which increased by a total of 10.9% compared to the same period last year. In China, however, deflation (a sustained decline in the general price level) appears to have come to an end: both the consumer price index (1.2% in April) and the producer price index (2.8%) have begun to rise. At the same time, the protracted conflict in the Middle East is increasing the risk of stagflation.
VIG EUR Portfolios
We have made changes to both of our euro-denominated model portfolios, which have different risk exposures. In both the more cautious “prudent” portfolio and the “aggressive” portfolio, which follows a bolder investment strategy, we have increased the weight of the VIG Emerging Markets ESG Equity Investment Fund, which invests in emerging markets and stands to benefit from the prospect of a resolution to the Middle East conflict (in which case, investors’ greater appetite for risk will drive global capital toward emerging markets, which are considered cheap and boast numerous AI-related companies). We also carried out a rebalancing in the “prudent” portfolio: we realized a portion of the profits in the VIG Active Beta Flexible Allocation Fund, which invests in shares of trending companies. We then reallocated the freed-up capital to the VIG Panorama Absolute Return Investment Fund, which performs well during periods of higher inflation, and we are currently experiencing just such a period.
VIG USD Portfolios
We have also made changes to the tactical allocation of our dollar-based model portfolios similar to those made to the euro-based ones. We have made adjustments to both of our model portfolios, which have different risk exposures. In both the more cautious “prudent” portfolio and the “aggressive” portfolio, which follows a bolder investment strategy, we increased the weight of the VIG Emerging Markets ESG Equity Investment Fund, which invests in emerging markets and could benefit from the conflict in the Middle East drawing to a close (in which case, investors’ greater appetite for risk will drive global capital toward emerging markets, which are considered cheap and boast numerous AI-related companies). We also carried out a rebalancing in the “prudent” portfolio: we realized a portion of the profits in the VIG Active Beta Flexible Allocation Fund, which invests in shares of trending companies. We then reallocated the freed-up capital to the VIG Panorama Absolute Return Investment Fund, which performs well during periods of higher inflation, and we are currently experiencing just such a period.
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.