Despite geopolitical tensions, heightened inflationary pressures and long-term interest rates at multi-year highs, the environment for stocks remains constructive. Robust growth, rising investment and solid corporate profits continue to support US and Swiss stocks. Bonds remain underweight.

Easing tensions in the Middle East are providing relief for energy prices and curbing inflation. We are raising the equity allocation and increasing our holdings of Swiss stocks. Comparatively high costs have prompted us to hedge the US dollar slightly less than before. We remain cautious when it comes to bond investments.

The blockade of the Strait of Hormuz continues. The conflict with Iran is dragging on. The result is growing worries about growth. Nevertheless, equity investments retain a high weighting in the portfolio – even on a tactical basis. We see opportunities in US equities and Swiss yield stocks. What matters is being selective.

The escalating conflict between the USA plus its ally Israel and Iran has significantly exacerbated the geopolitical risks in the Middle East, causing noticeable volatility on financial markets in recent weeks. Joint air strikes have hit key military and political targets, including the country’s leadership. So far, this has not resulted in a power vacuum. The leadership continues to function, and the government and military retain their capacity to act for the time being. At the same time the situation is escalating regionally, with Israeli operations against Hezbollah in Lebanon and drone attacks on other states in the Gulf by Iran.

The events of the last 12 months have once again brought it home to investors that a broadly diversified portfolio offers good protection in times of political uncertainty and general market turbulence. Our “Review & outlook” publication provides you with in-depth information on our assessments of possible developments over the coming year.

The events of the last 12 months have once again brought it home to investors that a broadly diversified portfolio offers good protection in times of political uncertainty and general market turbulence. Our “Review & outlook” publication provides you with in-depth information on our assessments of possible developments over the coming year.