Portfolio Manager Update

To the latest Market Commentary

Macro and markets at a glance

State: 06/08/2026

Here’s what you should keep an eye on this month

• Global economic growth remains resilient, with the IMF lowering its forecast to 3.1%
• Inflation remains stubborn, and the situation in the Middle East is keeping price pressures volatile
• Central banks remain restrictive; rising market interest rates have already priced in some of the rate hikes

The global macroeconomic environment appears divided in mid-2026. Despite significant geopolitical tensions, the global economy grew more robustly than expected in the first half of the year. A global recession is off the table for the time being, although economic momentum has slowed noticeably. Regionally, the US leads the way with GDP growth of around 2.3%. This is driven by massive investment in AI, stable consumer spending by affluent households and a robust labour market. Europe and China, by contrast, are showing significantly weaker momentum, but are also proving more resilient than originally expected.

At sectoral level, the manufacturing sector is receiving a strong boost from expansionary fiscal programmes and the massive global investment cycle in AI infrastructure and data centres. The services sector has so far proved surprisingly resilient – employment growth in the services sector and public sector contracts have prevented a more severe slump.

Whilst expansionary fiscal policy is supporting productivity and growth, it has driven public debt in many countries to historically high levels and severely restricted fiscal manoeuvre.

Key conclusions:

For 2026 as a whole, the IMF forecasts global GDP growth of 3.1%. The risk of negative surprises outweighs the positives. Unpredictable peace negotiations in the Middle East, ongoing supply chain disruptions and the fragmentation of world trade, accelerated by new tariffs, are dampening growth prospects.

The acute risk continues to stem from the Middle East conflict. Given historically low strategic oil reserves, a prolonged blockade of the Strait of Hormuz could drive the oil price sustainably above the US$100 per barrel mark.

The global disinflationary process has stalled for the time being. The IMF has raised its forecast for global headline inflation in 2026 by 0.3% to 4.7%. Whilst a return to the extreme levels seen in 2022 is unlikely, potential disruptions to oil and gas production, as well as ongoing supply chain disruptions, will keep price pressures high and volatile for the foreseeable future.

Central banks are responding with vigilance. In June 2026, the ECB raised key interest rates by 25 basis points for the first time in three years. The Fed is leaning towards an interest rate hike in the near future, even though it is still maintaining a pause in tightening. The market is pricing in further monetary policy tightening on both sides of the Atlantic. However, we consider the extent of these expectations to be exaggerated, particularly as rising market interest rates have already acted as a corrective.

Asset classes

Bonds / Yields

The bond market faced dual headwinds in July – from both the interest rate and spread sides. Resurgent concerns in the private credit segment and fundamental doubts about the refinancing prospects of current AI investments drove credit spreads in the high-yield (HY) segment up moderately by around 20 basis points. Spreads in the investment-grade (IG) segment, by contrast, rose only slightly.

The renewed outbreak of hostilities in the Middle East had a direct impact on the price of oil and an indirect impact on inflation expectations. Against this backdrop, it is not surprising that yield curves on both sides of the Atlantic rose almost in parallel by around 20 basis points. The fixed-income market is thus acting as a forward-looking inflation fighter, even before central banks are forced to act. This is precisely what the new Fed chairman, Kevin Warsh, is likely to have been referring to when he remarked at the recent press conference that “market participants are learning to play the ball [inflation] rather than the referee [the Fed]”.

Summary/Outlook

The peak in interest rates is being further delayed. Nevertheless, given that inflationary pressures are already priced in, we continue to expect yields to fall in the medium term. A narrowing of risk premiums appears unlikely in the short term. However, as we continue to expect a rotation rather than a full-scale correction in the equity market, we do not anticipate any sustained widening of spreads in the short term either.

Equities

July saw a profound rotation in global equity markets, with capital shifting from AI and semiconductor stocks to other sectors. Whilst the volatility we had anticipated did not materialise in the main indices, it was all the more evident in individual stocks. Some of the big winners of recent months corrected, in some cases dramatically, as part of this movement. The broader market benefited from this reallocation: whilst the Philadelphia Semiconductor Index fell by over 27% at its peak, the equally weighted S&P 500 Index even reached new all-time highs. The same applies to the Stoxx Euro 600, which closed the month slightly up and close to its record high. For the market as a whole, this represented a welcome consolidation at a high level. The second-quarter earnings season once again underlined the positive earnings momentum at index level.

Summary/Outlook

From a seasonal perspective, there are many indications that this volatile phase will continue. Firtst, concerns regarding the financial viability and profitability of AI investments have not yet been fully allayed. Second, the crucial phase of the US election campaign is now beginning. Furthermore, the renewed escalation in the Middle East poses a genuine threat to any positive growth scenario. However, we are strategically sticking to our positive assessment of the broad US market and, in view of the advanced stage of consolidation, have even unwound our tactical hedges.

Currencies

The US dollar weakened slightly against the euro over the course of the month, mainly due to the Fed’s reluctance to raise interest rates. However, a clear trend is still lacking. The currency market remains characterised by a lack of momentum, with movements taking place predominantly within narrow ranges.

Summary/Outlook

The potentially narrowing interest rate differential between the US and the euro area remains, in our view, the key argument for a weaker US dollar in the longer term. The ‘dollar smile’ theory also supports this view: a moderate global growth environment tends to point towards a weaker US currency. Against this backdrop, we continue to anticipate structural dollar weakness and have largely hedged the associated currency risk.

Ethna-AKTIV

State: 06/08/2026

Key points at a glance

• Negative monthly performance of -1.80% (YTD: 4.36%)
• 7% bond allocation (average rating from A to A+); 9.2% cash allocation
• Modified duration: 9.9; overlay closed
• 4% gross equity allocation; option hedges have expired and not been renewed
• 9% currency risk (2.2% USD, 1.2% JPY, 0.5% CHF)

Bonds: Base portfolio unchanged and overlay unwound

The bond portfolio was the main driver of losses in July. In addition to slight spread widening, the relatively sharp rise in interest rates across the entire yield curve resulted in a negative contribution to performance of 1.4%. As we continue to expect lower euro interest rates, we are maintaining the high duration of 9.9. However, we have for the time being unwound the extension of duration via the overlay. The number of securities held increased by two to 60, without changing the average rating from A to A+. The 13.2% of government bonds in the portfolio are exclusively from European issuers. The USD allocation in the bond portfolio fell from 3.1% to 2.5%.

Equities: Tactical options hedge closed

We have taken advantage of the consolidation in equities observed over the course of the month to, on the one hand, close out the existing hedge via put options and, on the other hand, increase the gross equity allocation from 30% to 34.4%. As a result, the net equity allocation is now approximately 15% higher than at the start of the month. This reflects both our continued tactically neutral stance and the active management of the portfolio. As part of these transactions, the number of holdings rose from 21 to 24. The four hyperscalers in which we have invested account for 11.2% of the exposure. The estimated P/E ratio of the equity portfolio for the coming year stands at 17.9 and the estimated dividend yield at 1.3%. Looking ahead, given the convincing earnings season, we are on the lookout for buying opportunities rather than further hedging.

Currencies: FX risk largely hedged

The fund’s currency risk fell slightly from 4.7% in June to 3.9%. The main reason for this change is a further reduction in US dollar exposure to just 2.2% after hedging. The structural expectation of longer-term US dollar weakness remains unchanged. Minimal positions in the JPY (1.2%) and CHF  (0.5%) remain unhedged.

Ethna-DYNAMISCH

State: 06/08/2026

Key points at a glance

• Negative monthly performance of -3.38% (YTD: 4.00%)
• 4% gross equity allocation, no derivatives
• 2% bond allocation (short-term AAA bonds); 3.3% cash allocation
• 8% currency risk (2.6% CHF, 2.6% JPY, 1.6% USD)

Equities: Earnings season used to make additional purchases

Although the sector rotation, which intensified over the course of the month, had a negative impact on the fund’s performance, we remain firmly committed to the fund’s identified themes. In the wake of the extremely positive earnings season, we took the opportunity to increase the gross equity allocation by 8.4% to 70.4%. Apart from a reduction in the consumer sector, positions were increased in almost all sectors, particularly technology stocks. As a result, the number of individual stocks rose from 34 to 38. We expect consolidation in the semiconductor sector to be largely complete and plan to further expand our exposure here.

Consequently, the bond allocation fell by 5% to 27.2%. The fund’s cash holdings now stand at 3.3%.

Currencies: CHF exposure reduced, USD exposure still hedged

The Ethna-DYNAMISCH is invested 63.7% gross in USD-denominated equities (previous month: 56.2%). After hedging, the USD exposure stands at just 1.6%. The expectation of structural US dollar weakness is thus being consistently implemented. The JPY exposure remained stable at 2.6%, whilst the CHF position was reduced from 4.4% to 2.6% via a single-security transaction.

Ethna-DEFENSIV

State: 06/08/2026

Key points at a glance

• Monthly performance down by -2.17% (YTD: -0.39%)
• Bond allocation virtually unchanged at 97.1%; cash allocation at 2.9%
• High-yield allocation continues to decline to 5.1% (previous month: 5.4%); new investments focused on the long investment-grade segment
• Modified duration: 9.0 (previous month: 10); overlay closed

Strategy and portfolio: Overlay closed, quality focus unchanged

July was a difficult month for long-dated euro bonds. The rise in yields at the long end of the curve weighed on the portfolio and led to the weakest monthly performance year to date. As expected, the most significant valuation losses were incurred on the long-dated supra positions, in particular the EU bonds maturing in 2040, 2045 and 2039.

The main adjustment of the month relates to interest rate management. The duration overlay managed via the Buxl future was completely unwound in July. The fund’s modified duration thus once again matches that of the core portfolio, standing at 9.0 instead of 10.0. The synthetic duration increase has been removed, whilst the structural orientation of the cash portfolio – quality-oriented, long-dated, EUR-dominated – remains unchanged. Just under 86% of the bonds do not mature until 2035 or later.

At 97.1%, the bond allocation is almost at the previous month’s level, spread across 94 positions (previous month: 96 positions). Trading volume remained modest. In the investment-grade segment, an AT&T 2045 bond (BBB+) was added towards the end of the month; the BBB+ segment grew accordingly from 20.8% to 21.8%. In return, a government bond position was sold, reducing the government bond allocation from 19.5% to 18.9%. The top positions – the EU bonds maturing in 2040, 2039 and 2042, as well as the EDF Green Bond 2045 and EnBW 2036 – remained virtually unchanged in terms of weighting and composition. The average rating remains in the A- to A- range. The investment-grade share rose slightly to 91.0%. AAA-rated securities account for 17.6%, whilst the BBB segment accounts for around 32.9%.

The high-yield segment was reduced by a further 0.3 percentage points to 5.1%; the number of positions fell from 19 to 17. No new investments were made in the high-yield segment and there are still no plans to increase the high-yield allocation on a structural basis.

Foreign exchange risk remains low, with the USD share standing at 2.4% (previous month: 2.7%). One USD position was closed.

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