2025 was a year of noticeable political and economic dynamics that kept global markets and institutions in motion. The tariffs introduced by the US President on April 2 caused significant market reactions at times and changed many investors' risk assessments. One of the key open questions remains how the Supreme Court will rule on the legal basis of the tariff measures – also because alternative legal avenues exist that would allow the continuation of trade policy. In December, the Federal Reserve made an adjustment to stabilize short-term liquidity in the financial system. Previously, bank reserves had declined, temporarily creating tensions in the important overnight funding market. With the new T-bill purchase program, it created targeted stability for short maturities. Discussions about its future leadership and monetary policy orientation currently draw additional attention without fundamentally calling market functionality into question. The picture for Switzerland was noticeably more positive: The KOF Economic Barometer rose further toward the end of the year, indicating a solid start to 2026. Manufacturing in particular proved robust. While some demand indicators remain subdued, overall sentiment clearly points to a moderate cyclical improvement. Overall, 2025 can be described as a year in which political decisions and institutional adjustments worldwide created movement – accompanied by areas showing stable or even increasingly positive trends despite global turbulence.
The past year brought a significant shift in the global market structure: While US equities posted solid gains in local currency, they were clearly outperformed – for the first time in years – by various international markets after currency adjustments. European equities, Japan, China, and numerous emerging markets benefited from cheaper valuations, a weaker US dollar, and new technological impulses. Additionally, global perceptions of the US came into sharper focus. Trade policy tensions and growing political uncertainty led international investors to rethink their strong dependence on the US stock market and diversify more geographically. Massive investments in AI infrastructure drove enormous capital flows in the technology sector. High valuations in the tech sector remain controversial: While some see a rational innovation-driven boom, others identify clear signs of a speculative bubble in the AI hype. Both views are understandable from our perspective. For leading US technology firms, the development of AI marks a strategically decisive moment. Holding back on investments risks losing ground in the technological competition and jeopardizing core elements of their business models. At the same time, building modern AI infrastructure is extremely capital-intensive. Since these companies have substantial financial resources, a dynamic competition for capacity and technological leadership has emerged. Under these conditions, it appears rational to expand AI infrastructure quickly and comprehensively to secure long-term competitiveness. Whether these investments pay off for all companies remains unclear – but for equity investors, this question is central. This holds especially true because the so-called 'hyperscalers' carry significant weight in nearly all global equity indices. Their investment decisions and their likelihood of success therefore directly affect large parts of global markets.
Gold and silver moved into the spotlight during the year, rising to new record highs. Many investors used precious metals as protection against political risks, inflation concerns, and growing uncertainty around US monetary and trade policy. An equally notable development occurred in the European bond market: Italy and Spain moved significantly closer to Germany as their risk premiums declined, while other classic core countries such as France lost some attractiveness. In the US, an exceptional issuance boom shaped the corporate bond market, driven by the massive AI investments mentioned earlier. This trend is also clearly visible in private credit markets, as US technology companies now finance over USD 120 billion in AI data centers through off-balance sheet special purpose vehicles. While this protects their credit ratings, it merely shifts the associated risks. On the currency side, the US dollar weakened noticeably. Overall, 2025 saw an environment in which capital increasingly flowed into real assets such as gold and silver and into more geographically diversified investments.
2026 promises to be a politically and economically intense year. The Supreme Court decision on tariffs, another potential government shutdown, and the appointment of a new Fed Chair add additional tension. At the same time, international conflicts shape the geopolitical landscape. Despite global growth projections of around 3% by the IMF, doubts about the sustainability of the AI boom persist. Our focus on real assets will remain in place in early 2026. We continue to be convinced about precious metals but made targeted rebalancing adjustments in December, slightly increasing our allocation to the Swiss real estate market. In equities, we remain overweight in Switzerland, while in the global allocation we further expanded the quality factor in December. Thanks to our asymmetric hedging strategies, we continue to participate in market gains while limiting downside risks. Overall, our portfolios remain broadly and robustly diversified as before.