Current Investment Traffic Lights
May 2025 – Asset Allocation Framework Highlights
Equities Developed Markets
In May, all equity indices in the industrialized countries recorded price gains, with the sole exception of the Swiss stock exchange, where prices stagnated. Investors withdrew capital from ETFs on British and German equities, while there were inflows in all other categories. The CIO View remained unchanged in May.
Equities Emerging Markets
The emerging market equity indices recorded price gains in May. New investor capital flowed into ETFs in the categories of global emerging markets equities and Asia ex Japan. Funds flowed out of China equity ETFs. There was no change in the CIO outlook.
Sovereign Bonds
The performance of government bonds stagnated in May. Investors withdrew money from ETFs on German government bonds, while there were inflows in all other categories. There was no change in the CIO View.
Corporate Bonds
The prices of European high-yield bonds developed positively in May, while there was little movement in the other categories. ETFs on all corporate bond categories recorded capital inflows. The CIO outlook for European high-yield securities deteriorated from positive to neutral.
Commodities
Prices for both gold and the broad basket of commodities stagnated in May. There were little capital flows in products based on gold, while investors withdrew money from those based on the broad basket of commodities. The CIO view for gold improved from neutral to positive.
The concept of the Asset Allocation Traffic Light
Defining and applying the correct asset allocation – that is, the distribution of the various components in a portfolio – can be crucial for a portfolio's returns. Risk diversification can be indispensable, and therefore more important than, the choice of a single correct investment exposure. Many investors now intuitively understand the importance of asset allocation in terms of establishing a risk-diversified portfolio. In this case, the Asset Allocation Traffic Light could serve as an information guide to assist in making future investment decisions. The Asset Allocation Traffic Light provides information at a glance on developments in the main equity, bond and commodity categories. To this end, three analyses are clearly summarised for a total of 29 categories.
Asset Allocation Traffic Light – Threefold information for investment decisions
- According to the CIO View:
The DWS Chief Investment Office (CIO) outlook for the next 1-3 months - How the markets performed in the previous month:
Performance of a representative index for the respective category in the preceding month (e.g. the MSCI World for global equities in developed countries) - What ETF flows were like in the global equity, bond and commodity markets: inflows and outflows in approx. 1,500 ETFs in the European ETF market in the previous month
Questions and answers on the Asset Allocation Traffic Light
What is asset allocation?
Why might asset allocation be important for investors?
According to research the success of an investment can be explained to a large extent by overall asset class price moves, as opposed to the selection of individual securities or market timing (source: William F. Sharpe; Journal of Portfolio Management, 1992). However, there is no right or wrong distribution of assets. Rather, at investment inception it is necessary to assess which risks the investor would like to accept and the period over which funds are to be invested. The asset allocation should be derived from this.
How does the Asset Allocation Traffic Light work?
The Asset Allocation Traffic Light provides information at a glance on developments in the main equity, bond and commodity categories. To this end, three analyses are summarised for a total of 29 categories. First, the performance of a representative index for the respective category over the past month. Second flows in the European ETF market in each segment in the preceding month, and third the CIO View from DWS for the respective investment class, looking ahead to the next 1-3 months.
What do the colours of the Traffic Light mean?
Green means:
- Growth of two per cent or greater in the past month
- ETF flows in the past month: Inflow of EUR 100 million or greater
- CIO View: positive outlook for the category for the next 1-3 months
Yellow means:
- Growth in the previous month: between minus two per cent and plus two per cent
- ETF flows in the past month: between inflow of EUR 100 million and outflow of EUR 100 million
- CIO View: neutral outlook for the category or no substantial price movements expected for the next 1-3 months
Red means:
- Growth in the previous month: minus two per cent or less
- ETF flows in the past month: Outflow of more than EUR 100 million
- CIO View: negative outlook and/or price drop for the category expected for the next 1-3 months
How can the Asset Allocation Traffic Light serve as guidance for future investment decisions?
Do three greens mean "buy" or three reds mean "sell"?
No. A green light only means that the index performance and the ETF inflows in the relevant segment were positive and that the CIO has given a positive assessment.
How can investment decisions be implemented with ETFs?
Legend
Disclaimer
Source: ETF flows: DWS, Bloomberg; Performance: Reuters; CIO View: CIO Office DWS. China equity views are given relative compared to the MSCI Emerging Markets Index. All other equity views are given in relation to the MSCI AC World Index
Without limitation, information contained herein does not constitute an offer, an invitation to offer or a recommendation to enter into any transaction, nor does it constitute investment advice. The CIO View is a document produced for information purposes only and is not intended to be an offer or solicitation, or the basis for any contract to purchase or sell any security, or other instrument, or for Deutsche Bank to enter into or arrange any type of transaction as a consequence of any information contained herein. The information contained herein, inclusive of the CIO View, has been prepared without consideration of the investment needs, objectives or financial circumstances of any investor. Before making an investment decision, investors need to consider whether the investments are appropriate, in light of their particular investment needs, objectives and financial circumstances. When making an investment decision, investors should rely on the final documentation relating to the investment. Further information is available upon investor’s request. The "green" indicator for a category does not mean that DWS recommends an investment in a particular asset class and/or product. The "red" indicator for a category does not mean that DWS advises against an investment in a particular asset class and/or product. Past performance is not a reliable indicator of future results. Forecasts are not a reliable indicator of future results and no guarantee is assumed that forecasts and objectives will actually be fulfilled. Forecasts are based on assumptions, estimates, beliefs and hypothetical models or analyses that may prove to be incorrect. No guarantee can be assumed that investment goals will be achieved or earnings expectations met.
Archiv
April 2025 – Asset Allocation Framework Highlights
Equities Developed Markets
Despite major price fluctuations during the month, the performance of the industrialized countries' share indices stagnated in April. Only the Swiss stock market recorded a net loss. Investors withdrew capital from US equity ETFs, while there were inflows into all other categories. The CIO outlook for European equities improved from neutral to positive.
Equities Emerging Markets
April brought losses for Chinese equities, otherwise there was little price movement. New investor money flowed into ETFs on emerging market equities worldwide, while the other categories saw outflows. There was no change in the CIO View.
Sovereign Bonds
German government bond prices rose in April, while the other categories stagnated. ETFs on emerging market government bonds faced outflows, while there were inflows in the other categories. The CIO outlook remained unchanged.
Corporate Bonds
There was little change in the prices of corporate bonds in April. Fresh investor money flowed only into ETFs on high-yield securities from the USA, while investors withdrew capital from the remaining ETF categories. The CIO view improved from neutral to positive for European investment-grade corporate bonds and from negative to positive for European high-yield bonds.
Commodities
The gold price performed positively in April, while the broad basket of commodities recorded a negative performance. Investors withdrew capital from ETFs in both categories. The CIO outlook remained unchanged.
March 2025 – Asset Allocation Framework Highlights
Equities Developed Markets
The performance of German equities stagnated in March, while all other industrialized country indices recorded price losses. Investors withdrew capital from ETFs on British, Japanese and US equities. Fresh money flowed into equity ETFs in the categories Germany, Europe, the eurozone and industrialized countries worldwide. The CIO outlook for the coming months remained unchanged.
Equities Emerging Markets
There was little movement in share prices in the emerging markets category in March. Outflows were recorded by ETFs on Asian equities. New investor money flowed into products on Chinese and global emerging markets indices. There was no change to the CIO outlook.
Sovereign Bonds
Global government bond prices fell in March, while there was little change in the other categories. ETFs on German government bonds received inflows, while money flowed out of all other categories. The CIO view for emerging market government bonds changed from neutral to negative.
Corporate Bonds
Corporate bond prices stagnated in March. Capital flowed out of ETFs in all categories. The CIO view remained unchanged.
Commodities
Both gold price and the broad basket of commodities gained in value in March. New investment capital flowed into gold products, while the broad basket of commodities stagnated. The CIO outlook remained unchanged.
February 2025 – Asset Allocation Framework Highlights
Equities Developed Markets
In February, the German and Swiss stock markets as well as the eurozone and European share indices recorded price gains. Performance on the US and UK stock markets stagnated, as did the broad index of industrialized countries. Japan's stock market suffered price losses. Fresh investor capital flowed into equity ETFs on almost all industrialized stock markets. Investors withdrew money from ETFs on UK equities alone. The CIO outlook remained unchanged.
Equities Emerging Markets
China equities recorded price gains in February, while prices stagnated on the other emerging market stock exchanges. New investor money flowed into ETFs in all emerging market categories. The CIO view for Chinese equities improved from neutral to positive.
Sovereign Bonds
US government bond prices rose in February, while prices in other categories stagnated. New investor money flowed into ETFs on German and US government bonds, while the movement of funds stagnated in the other categories. The CIO outlook for US government bonds changed from positive to neutral.
Corporate Bonds
US corporate bonds recorded price gains in February, while there was little price movement in the other categories. Fresh investor money flowed into all corporate bond ETFs categories – with the exception of products on European high-yield securities. There was no change in the CIO View.
Commodities
Gold prices rose in February, while the performance of the broad basket of commodities stagnated. ETFs in both categories saw inflows. The CIO view on gold changed from positive to neutral.
Legend
As of 30.06.2017
Source: ETF flows: Deutsche Bank Research; Performance: Reuters; CIO View: CIO Office Deutsche Asset Management. Emerging Markets equity views are given relative compared to the MSCI Emerging Markets Index. All other equity views are given in relation to the MSCI AC World Index
Without limitation, information contained herein does not constitute an offer, an invitation to offer or a recommendation to enter into any transaction, nor does it constitute investment advice. The CIO View is a document produced for information purposes only and is not intended to be an offer or solicitation, or the basis for any contract to purchase or sell any security, or other instrument, or for Deutsche Bank to enter into or arrange any type of transaction as a consequence of any information contained herein. The information contained herein, inclusive of the CIO View, has been prepared without consideration of the investment needs, objectives or financial circumstances of any investor. Before making an investment decision, investors need to consider whether the investments are appropriate, in light of their particular investment needs, objectives and financial circumstances. When making an investment decision, investors should rely on the final documentation relating to the investment. Further information is available upon investor’s request. The "green" indicator for a category does not mean that Deutsche AM recommends an investment in a particular asset class and/or product. The "red" indicator for a category does not mean that Deutsche AM advises against an investment in a particular asset class and/or product. Past performance is not a reliable indicator of future results. Forecasts are not a reliable indicator of future results and no guarantee is assumed that forecasts and objectives will actually be fulfilled. Forecasts are based on assumptions, estimates, beliefs and hypothetical models or analyses that may prove to be incorrect. No guarantee can be assumed that investment goals will be achieved or earnings expectations met.