Newsletter

February 2025

What should a long-term portfolio look like?  

The financial market is constantly analysing information and, although sometimes erratic, it also offers situations that are more predictable. One such opportunity arose at the beginning of2 024, when it became clear that global inflation was gradually coming under control, which led to a reduction in key interest rates by central banks and a corresponding fall in interest rates on popular term deposits. For example, one-month Czech koruna term deposits reached levels close to 6.00% p.a. in early 2024, only to fall by almost half to around 3.00% p.a. by the end of the year.  

According to economic theory, an expected decline in interest rates is a driver of economic recovery and, indirectly, of stock market movements. This hypothesis was confirmed in a number of cases in 2024, with the US S&P 500, Dow Jones and NASDAQ benchmark indices closing the year with double-digit gains, driven mainly by technology stocks.

Source: Česká spořitelna, a.s.

Performance over a period of less than 12 months is of limited predictive value. Past performance is no guarantee of future performance. Where performance is denominated in a foreign currency, the risk of exchange rate fluctuations must be taken into account. 

How do you build a long-term investment portfolio?

At Erste Private Banking, we believe that diversification is crucial. Savings accounts and term deposits are suitable for higher liquidity, but for long-term and strategic financing it is attractive to use other asset classes such as equities, bonds and alternative investments, which offer higher potential for growth.

How did selected investment solutions fare through 2024?  

Source: Česká spořitelna, a.s., data as of 31 December 2024

The performance of investment solutions only includes the internal costs associated with their management and does not take into account any upfront fees that may be charged by the distributor.

Because we know that the first step is the most difficult, but also the most important, we invite you to contact your private banker to discuss a portfolio allocation.

The investment advisory service is provided on the basis of your knowledge and experience, wealth or relationship to risk. The investment offer will be in line with your needs, characteristics and objectives. A private banker will advise you of all the potential risks of a particular investment opportunity and take advantage of all appropriate options. The information contained in this communication does not constitute investment advice or investment recommendations as it does not take into account the specific circumstances of individual investors. The value of investment instruments may go down as well as up and there is no guarantee of getting back the amount originally invested. Past performance is no guarantee of future results.

TIP: Find out about changes to tax on investment income that are effective from 1 January 2025. We will be happy to put you in touch with our partners for tax advice.

Private equity and the modern investment portfolio

For many years, a traditional long-term investment portfolio of 60% equities and 40% bonds has been considered an attractive choice in terms of risk and return. More recently, however, alternative investments such as commodities, real estate, hedge funds and, in particular, private equity have become increasingly important. The composition of a modern investment portfolio is therefore characterised by a mix of bonds, equities and private equity or other alternative investments.

What is private equity? Private equity is primarily an investment in unlisted companies and other assets. Investors acquire stakes in companies with the aim of increasing their value through active management, restructuring and strategic changes to improve operating efficiency and then selling them at a profit. In selecting companies, there is a risk of making the wrong choice and realising a potential loss.

What can private equity add to your long-term portfolio?

Benefits:

  • not correlated with equity or bond markets
  • attractive long-term growth potential
  • allows for the inclusion of unlisted companies, start-ups, innovative young businesses, etc.

Important to note:

  • a long-term form of investment
  • limited liquidity
  • a narrowly focused / concentrated part of your portfolio investments
  • a significantly higher risk of loss 
  • less regulated and therefore less transparent than traditional investments 

At Erste Private Banking, we believe that modern long-term investment portfolios should contain around 10% alternative investments. Therefore, in 2024 we added two qualified investor funds focused on private equity to our offering. These are the Jet 3 fund of funds, which focuses on industrial companies in the Central European region, and the EMUN Semi-liquid Global Private Equity fund, which offers continuous liquidity and focuses on investments in global private equity funds in the US and Western Europe. In the area of alternative investments, we continue to expand our product portfolio, adding Penta Equity Fund SICAV, Inc. and EMUN Global Private Infrastructure in 2025.  

Please do not hesitate to contact your private banker for further information.    

The full names of the qualified investor funds and full product information can be found in the funds' prospectuses. The information contained herein is for promotional purposes only. The information contained in this communication does not constitute investment advice or investment recommendations as it does not take into account the specific circumstances of individual investors. The value of investment instruments may go down as well as up and there is no guarantee of getting back the amount originally invested. Past performance is no guarantee of future results. A visitor to this website may be outside the target market for the investment instruments listed herein. 

Investment Center has new content, features and look

The Investment Center portal has undergone a major transformation. You can now find information not only about Česká spořitelna's investment funds, but also about those of its competitors. The number of funds available on the portal has increased five times. All products have detailed characteristics and can be easily compared with each other thanks to interactive charts. The range of market data on the performance of indices, stocks, ETFs, commodities, currencies and cryptocurrencies is also exceptional and available free of charge. 

Interested in a product on the Investment Centre? If it's tradeable, just click on the “Buy” button. This will take you straight to your George where you can place your order.

The portal also allows you to track the performance of structured products' underlying assets at the product level. What's more, you can access a wider range of analyses, investment know-how and market highlights. 

A mobile version of the Investment Center can be downloaded from Google Play and the App Store.