Portfolio Manager Update

Market view

State: 30/11/2025

November was characterized by noticeable volatility, leading to the first meaningful market correction since “Liberation Day.” Paradoxically, this was triggered by exceptionally strong earnings from NVIDIA. Although the results fully met high expectations, they did not spur additional buying. Instead, investors used the opportunity to realize gains, and profit-taking broadened across equity markets.

On the macroeconomic front, the end of the U.S. government shutdown brought relief, yet its effects continue to weigh on the monetary policy discussion through delayed and partly distorted economic and inflation data. At the same time, initial cautious signals of a potential shift in negotiating positions regarding the war in Ukraine entered market considerations, partly linked to Donald Trump’s proposed 28-point plan.

Following a largely very strong earnings season, market attention is now returning to central banks. The ECB and the Federal Reserve will hold their final meetings of the year in December. Toward month-end, sentiment improved as recent Fed statements indicated openness to an immediate rate cut. Despite sharp interim declines, the S&P 500 ultimately closed the month slightly positive. Market breadth continues to improve, reducing the dominance of a few mega caps and increasing the potential for a year-end rally.

We expect a pick-up in growth in 2026, and investors should begin preparing for it today. Contrary to current market consensus, we anticipate inflation to remain well anchored—neither declining sharply nor accelerating uncontrollably. From this perspective, the rate cuts currently priced into U.S. markets appear justified. Under new Fed leadership, an even more ambitious easing path may be possible. The ECB is likely to respond in a data-dependent manner once European economic conditions warrant it.

We used the recent market correction to align portfolios more closely with this medium-term scenario. Select positions in structural beneficiaries of renewed global growth have been expanded, while maintaining a disciplined balance across allocations. The key remains to avoid reacting tactically to a rapid flow of headlines and instead translate market developments into a clear strategic positioning for 2026.

Ethna-DEFENSIV

State: 30/11/2025

Key points at a glance

• Ethna-DEFENSIV (T) declined by 0.29% in November and generated a year-to-date return of 3.6%.
• Duration increase: Modified duration was raised further to 8.09 (from 7.69) to strengthen positioning for the expected decline in yields.
• Strategic focus: Trading activity was characterized by extending maturities while selectively reducing credit risk in Europe, particularly in the high-yield segment.
• Performance driver: The moderate negative performance was primarily due to the high duration exposure. Interest rate expectations fluctuated during the month and increased slightly toward month-end, weighing on returns.

Market development

Credit markets were volatile in November. In the U.S., many new issuances—particularly from hyperscalers—led to increasing dispersion within the investment-grade segment: spreads widened more noticeably for higher-rated IG bonds.
These bonds experienced de-compression, although overall market sentiment remained resilient. Following the end of earnings season, it became clear that profits in the tech sector remain close to all-time highs.

The moderate correction in the high-yield segment is viewed as having further upside potential, supported by robust fundamentals and positive year-end expectations.

Strategy and portfolio adjustments

Over the course of the month, we continued to position the portfolio as strongly as possible for a easing in interest rates. Modified duration increased further to 8.09, reflecting our conviction that rates in both the U.S. and Europe have reached their peak.
We continued to shift risk away from credit and toward interest rate exposure: we selectively purchased very long-dated bonds (with maturities out to 2055) to extend duration.
At the same time, several credit positions—particularly in the high-yield and lower investment-grade (BBB) segments—were sold. As a result, the high-yield allocation has now declined to just under 10%.

A notable development was the significant reduction of real estate and industrial holdings in Europe (including divestments of P3 Group, REWE, and Techem), while at the same time Vonovia was added in a long-dated maturity.
This reflects a targeted selection of issuers with strong credit quality and upside potential, even in sectors currently under pressure.

Ethna-AKTIV

State: 30/11/2025

Key points at a glance

• Ethna-AKTIV (T) declined by 0.49% in November and generated a year-to-date return of 7.27%.
• The bond allocation increased by 1.4 percentage points to 56%. The average credit rating improved slightly to A / A+.
• Modified duration remained unchanged at 9.7. There is currently no overlay in place.
• The net equity allocation was raised by 2.7 percentage points during the month to 45%.
• Currency exposure currently stands at 22.7% (20.9% USD and 1.8% CHF).

Equity strategy

The increase of nearly 3 percentage points in the net equity allocation was implemented just before the recent mini correction.
Pullbacks of this size (–5.8% for the S&P 500 and –8.9% for the Nasdaq-100) are typical patterns within a bull market and do not provide sufficient reason to change our strategic positioning.
Moreover, the market reacted strongly at important technical support levels and is now approaching new all-time highs with broader participation.

Whether the current momentum will extend into a year-end rally remains uncertain, but the probability has increased.
We expect 2026 to deliver another bull year, pushing equities to new highs, and we are already positioned accordingly.
There are no noteworthy changes in sector weightings. Despite a 5% allocation to European stocks, we continue to maintain a U.S. focus.
The portfolio currently holds 37 positions.

Bond strategy

The bond portfolio was only marginally adjusted. It currently consists of 22.9% government bonds and 33.1% corporate bonds.
The average credit rating remains in the A to A+ range. Given the current quality and maturity profile, the portfolio generates a yield of 4.1%.

The modified duration of 9.7 reflects our expectation of a stable to slightly declining interest rate environment.
No additional duration overlay is currently in place.

Currency strategy

The decision to hedge U.S. dollar exposure for most of the year has proven beneficial. The U.S. dollar allocation currently stands at approximately 20%.
It is still unclear which factors will drive currency developments over the coming months.
We believe that a widening growth differential could support the greenback.
If this scenario does not materialize, the current level of exposure still offers a meaningful diversification effect—particularly given the portfolio’s high equity weighting, which makes this consideration even more relevant.

Ethna-DYNAMISCH

State: 30/11/2025

Key points at a glance

• Ethna-DYNAMISCH (T) declined by 0.62% in November and generated a year-to-date return of 8.98%.
• The net equity allocation increased from 83.6% to 88.1% over the course of the month.
• Currently, 9.1% of the fund is invested in cash-equivalent bonds. The cash position amounts to 3.9%.
• The portfolio’s currency exposure stands at 26.4%, of which 20.4% is in USD.

Equity strategy

The increase of nearly 5 percentage points in the net equity allocation was implemented just before the recent mini correction.
Pullbacks of this magnitude (–5.3% in the MSCI World Index) are a normal component of any bull market and do not justify a change in strategic positioning.
Moreover, the market reacted strongly at key technical levels and is now advancing toward new all-time highs with broader participation.

Whether current momentum will be sufficient to fuel a year-end rally remains uncertain, though the probability has increased.
We expect 2026 to be another bull year, pushing equity markets to new highs, and we are already positioned accordingly.

Beyond a few minor adjustments, the only notable shift has been a thematic rotation out of defense stocks into banks and construction companies.
The ongoing progress in negotiations toward a peace agreement in Ukraine has prompted us to take this admittedly optimistic step. The portfolio currently holds 52 positions.

Bond strategy

There were no changes in the bond portfolio. 9.1% is invested in short-dated, high-quality bonds, which—together with a cash position of 3.9%—serve as a stabilizer and liquidity pool for opportunistic equity purchases.
The increase in the equity allocation was financed using existing cash positions.

Currency strategy

We continue to refrain from hedging currency risk, with the exception of the U.S. dollar. For each individual currency pair, exposures are typically kept in the low single-digit percentage range.

The decision to hedge the U.S. dollar for most of the year has proven beneficial. The allocation to the dollar is now back at approximately 20%. It remains unclear which factors will drive currency developments in the coming months. We believe that a widening growth differential could support the greenback.
If this scenario does not materialize, the current level of exposure still offers meaningful diversification—particularly in light of the portfolio’s high equity weighting, which makes this consideration even more important.

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