Tareno View July 2025

This signi­fi­cant devalua­tion comes as no surprise: the USD was clearly overva­lued at the start of the year, supported by capital inflows due to attrac­tive yields. All that was missing was a catalyst, and that was the unpre­dic­table US policy. This caused the dollar to lose its shine and confi­dence. The role of the US dollar as the backbone of the global finan­cial system is incre­a­singly being called into question. However, there is currently no viable alter­na­tive in sight. Nevert­heless, global investors and govern­ments will try to reduce their depen­dence. In the medium term, we there­fore expect the US dollar to weaken further towards purcha­sing power parity.

From a short-term perspec­tive, however, we believe that the weakness of the USD is exagge­rated. In combi­na­tion with the high hedging costs of currently 4.5% p.a., we have there­fore reduced our currency hedging ratio in the CHF portfo­lios from 50% to 40%.

Invest­ment policy

Taking asset alloca­tion further

The political surprises and diver­gent market develo­p­ments in the first half of 2025 once again reinforce our invest­ment policy, which is based on a balanced, forward-looking and dynamic asset alloca­tion.

Balanced.

Many investors focus too heavily on sub-optimal indices and thus uninten­tio­nally take on high cluster risks. For example, the world stock index is US and techno­logy-heavy, while the Swiss index is heavily dominated by a few stocks and lacks sectors such as techno­logy, commo­di­ties and energy. Efficient risk manage­ment, on the other hand, requires genuine diver­si­fi­ca­tion across curren­cies, regions, sectors, invest­ment styles and asset classes.

Forward-looking.

The asset manage­ment industry has tradi­tio­nally based its strategic alloca­tion prima­rily on histo­rical return and risk metrics. The disad­van­tage of this approach is that invest­ments focus mainly on the winners of the past and important changes and trends in the invest­ment world are often overlooked. For example, it can be observed that portfo­lios are uninten­tio­nally incre­a­singly geared towards the US currency after a prolonged period of USD appre­cia­tion or continue to be invested in CHF bonds, even though these hardly generate any income with negative interest rates.

A forward-looking and successful asset alloca­tion, on the other hand, is based on forecast returns and risks. Although these key figures cannot be observed directly and must be carefully estimated, it is precisely this sophi­sti­cated approach that promises the decisive added value. Only with such a forward-looking strategy can investors invest early in new asset classes such as Bitcoin and emerging sectors such as cyber security.

Dynamic.

Finan­cial markets are prone to exagge­ra­tions and regime changes that require portfolio adjust­ments. A purely static alloca­tion would there­fore be too infle­xible and ineffi­cient. At the same time, frequent tactical reallo­ca­tions in antici­pa­tion of short-term market movements are usually not very promi­sing and often result in high costs with manageable or even negative returns. Our approach is there­fore delibera­tely dynamic with a medium-term horizon of several years. In practice, this means that we react anti-cycli­cally to short-term exagge­ra­tions, identify new techno­lo­gies and long-term economic changes and conti­nuously and carefully adjust the alloca­tion to the invest­ment environ­ment. As the focus of the finan­cial markets can quickly shift from one topic to another, agility is also required. We have recently increased this further by adding our “Hawk-Eye” to our portfo­lios. This innova­tive equity strategy has been very successfully identi­fying global trends and the winners of tomorrow since the begin­ning of 2023.