The technology-heavy US index heavyweights once again set the tone, while the rest were at best treading water. This was despite the fact that interest rate cuts by the US Federal Reserve were once again put on the back burner - the US economy is currently too resilient. On this side of the Atlantic, key interest rate cuts have already begun. Following the Swiss National Bank's move in Q1 (and another interest rate cut in Q2), the ECB has now followed suit. The weaker economic situation in Europe gave it the necessary leeway to do so.
Continued declining volatility and positive equity markets combined with the outperformance of "big tech" created a headwind for our risk-optimized and diversified equity strategies. Defensive stocks and sectors received little attention in the second quarter. Accordingly, our funds lagged behind the respective benchmark index in all investment universes. The underperformance was most pronounced in China. The Chinese stock market has recovered significantly since the beginning of the year and also made very strong gains in Q2. The underperformance of our Swiss equity funds was the lowest.
The OLZ Equity World Dynamic 0-100, which was launched a good six months ago and adjusts its equity allocation to the current risk environment, was also fully invested in equities in the second quarter. This is also an indication that the market risk indicators are currently at a very low level and that the global equity markets are in a clearly positive trend.
For the most part, we observed a slight rise in interest rates on the global bond markets in Q2, which resulted in a negative performance in the final tally. This was most pronounced in Australia and (surprise, surprise) Japan, and least pronounced in Canada and the USA. Overall, these movements led to an outperformance for our government bond fund with a longer duration (long term), while the fund with medium maturities fell slightly behind the index. In Switzerland, interest rates fell slightly, thanks to the SNB. Due to the shorter duration of our Bond CHF fund compared to the benchmark, it was in positive territory in the quarterly statement, but lagged behind the market index.
