"German car manufacturers have been purchased by us again"
In a discussion held at DWS, portfolio managers Klaus Kaldemorgen, Christoph Schmidt, and Henning Postada delved into the strategies behind the DWS Concept Kaldemorgen fund, a fund that has weathered the storms of this year's volatile market.
The fund, which has an equity allocation of 36%, is diversified across various sectors. Kaldemorgen, a fund manager at DWS since 1982, is a fan of the tech sector and recommends a balance with defensive European stocks and cyclicals.
In the bond segment, the DWS Concept Kaldemorgen fund focuses on European investment grade securities, accounting for 14% of the fund. Most of these government bonds are located in Europe. The fund also holds 20% in corporate bonds.
Kaldemorgen has identified the German automotive industry as being extremely undervalued and has bought German car manufacturers for the first time in a long time. He attributes this to a combination of falling key interest rates and sustained modest economic growth, as suggested by Postada.
Cash holdings in the DWS Concept Kaldemorgen fund are above 15%. Kaldemorgen has reduced the dollar weighting of the fund by two-thirds since the beginning of the year, reflecting his cautious approach to the US economy.
Postada predicts that the Fed is likely to cut interest rates in September, and he also expects the ECB to take further action on rates. He expects inflation in the US to reach 3% to 3.5% by the end of the year, well above the central bank's target of 2%.
According to Schmidt, corporate earnings growth has supported the stock market this year. Despite numerous negative factors such as the DeepSeek shock, tariff increases, and escalating conflicts, most stock markets have performed strongly. US companies have also benefited from the weak dollar, which has lost a good 10% of its value this year.
Kaldemorgen views Germany's infrastructure package positively, but believes recommending infrastructure stocks is risky. He advocates for a weatherproof and diversified stock portfolio in an uncertain market, typically including a mix of defensive stocks, such as consumer staples and utilities, combined with growth stocks from various sectors, balanced by geographic and industry diversification to reduce risk.
Kaldemorgen criticizes the fact that some economic data in the US is now estimated rather than collected. Gold stands at 8% in the DWS Concept Kaldemorgen fund, providing a measure of safety in these uncertain times.
In these turbulent economic times, the DWS Concept Kaldemorgen fund offers a balanced approach, navigating the market with a weatherproof and diversified portfolio.
