Seizing opportunities: combining flexibility with valuation discipline – an important success factor in turbulent capital markets

ChampionsNews: Mr Roßner, could you briefly explain your special investment approach to start with, for all readers who are not yet familiar with it?

Martin Roßner: Our macroeconomic, multi-asset approach is based on a systematic strategy which uses short-term economic forecasts to identify historical cause-and-effect chains in real time, anticipating their impact on the financial markets. This combination of quantitative technology and fundamental logic is known as a ‘quantamental’ strategy.

What factors are important for the success of an investment strategy in turbulent times such as these?

Fundamentally, effective risk management is paramount. In our view, maintaining a low correlation with major indices such as the MSCI World is just as important to success as combining flexibility with valuation discipline firmly anchored in our ART Global Macro fund (ISIN: DE000A2P0U66). During these challenging times, valuation signals enable us to act effectively and respond promptly to changes in the market environment, while retaining the necessary flexibility.

How does this work in practice?

'Based on the signals, we can, for example, take a defensive position in the event of major sell-offs, realise profits from hedges, or benefit from an impending recovery in structural long-term investments'. But these are only some of the possibilities. Our strategy is designed to capture opportunities and actively manage risks in all market phases.

Now, let's move on to current developments in the US. How would you describe the ongoing issue of customs policy?

Since June, data has confirmed the inflationary impact of higher US tariffs. At the same time, the Trump administration is calling into question the independence of the Fed. The unique status of US markets is therefore under threat from both political uncertainty and reduced credibility. This is creating risks across all asset classes.

Based on your ‘quantamental strategy’, what conclusions do you draw as an investor?

As US markets remain close to all-time highs, investors can capture targeted opportunities while prudently reducing their overall US exposure. For instance, companies in the artificial intelligence sector are currently being valued at very optimistic levels, even though leading indicators point to an increased risk of recession. Additionally, the weak US dollar continues to signal the growing relative attractiveness of other countries and of real assets.

Let's look ahead. What economic developments do you anticipate in the second half of the year?

Our indicators clearly point to an economic downturn, masked by deceptively strong activity data driven by imports brought forward ahead of new tariffs. In the US, we are witnessing stagflationary tendencies, and we anticipate an international recession. The Fed has so far responded moderately, but in our view the cycle of interest rate cuts is likely to continue or even accelerate.

What impact do the short- and medium-term analyses have on the ART Global Macro portfolio allocation?

In the current environment, our focus is on diversification across countries and asset classes. For the first time since the fund’s launch, we are also focusing heavily on defensive bonds. Market-friendly policies in countries such as Germany and China are driving positive economic impulses and acting as a catalyst for value investments. Higher tariffs in the rest of the world are also having a disinflationary impact, creating value opportunities in bonds that would benefit from the continuation and possible acceleration of the interest rate reduction cycle. If the particularly risky early phase of a recession is confirmed, we are prepared to take short positions in equity indices.