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CIO View Portfolio: Perspectives

Portfoliomanagement
CIO View
Multi Asset
Bonds
Currencies
Fixed Income
Equities

23/06/2025

In our monthly Multi-Asset update we describe the translation of our CIO View into the CIO View model portfolio.

Vincenzo_Ved-8781

Vincenzo Vedda

Chief Investment Officer

Idea of the month

Even though the ten-year U.S. Treasury yield and the U.S. dollar very briefly moved in tandem again recently – following the publication of the latest U.S. inflation figures – it must be noted that “Liberation Day” caused a structural break. The “sell-America” thesis has since been reflected in the respective yield and price trends, which are now moving in opposite directions. A critical look at U.S. assets appears to be the new course of action, and the bond market is always a particularly sensitive barometer in such phases. Therefore, caution regarding Treasuries seems appropriate to us. Only time will tell, however, whether this recent trend is here to stay.  

Dollar and Treasury yields no longer moving in tandem  

Chart

Line chart with 2 lines.
The chart has 1 X axis displaying Time. Data ranges from 2008-01-01 00:00:00 to 2025-05-07 00:00:00.
The chart has 1 Y axis displaying values. Data ranges from -45.833 to 303.984.
End of interactive chart.

Source: Bloomberg Finance L.P., DWS Investment GmbH as of 6/12/25

Our take on duration & risk

Risk

Although economic uncertainty remains high, valuations of U.S. stocks have moved towards pre-'Liberation Day' levels, despite the low visibility surrounding tariffs, which could lead to an increased risk of recession or stagflation. Considering the low expectations for GDP growth, EPS estimates, especially for U.S. equities, still seem too high. From a technical/sentiment perspective, a more positive outlook on the equity markets is warranted, although the seasonality of the equity markets worsens in May/June. Given the strong upward movement in May, we remain cautious about risk.

We reiterate our -1 risk preference stance

  Top 5 active risks  

  Overall risk  

Source: DWS Investment GmbH as of 6/12/25

Duration

We see risk-reward mostly balanced at current yield levels. We maintain our preference for a steeper curve, particularly at the long end. Bunds seem to be relatively more shielded from the ongoing trade war, and supported by disinflationary trends, the ECB having more scope to cut rates if necessary and the potential for further diversification away from the U.S. Regarding USD duration, we remain biased towards selling Treasury rallies close to 10-year yield levels ~4.25%, as we are concerned about the rest of the world's willingness to continue financing larger and larger external deficits.

We stick to our neutral duration stance

  Active rates risk contribution  

  Overall duration  

Source: DWS Investment GmbH as of 6/12/25

Whats up in the segments?

We believe that our cautious approach to global equities is still appropriate

We maintain our cautious approach to global equities ahead of the typically subdued summer period. We stick to our risk rating of -1. A better-than-expected Q1 earnings season and more 'constructive' developments in U.S. trade policy led to a recovery in global equities in May. Despite low visibility on the tariffs front, which could lead to weaker economic fundamentals and growing recession/stagflation risks, the valuation of U.S. stocks is moving towards pre 'Liberation Day' levels. A prolonged market correction in 2025 is not unlikely in our view. We also maintain our 'defensive' sector positioning. Healthcare still looks attractive to us in terms of valuation, and EPS revisions seem to be stabilising. Positive news around tariffs should support the sector. Due to the positive underlying long-term trends, we are maintaining our +1 rating for healthcare. Regarding styles, we still anticipate an overall volatile market environment for equities, especially following the recent trend. We therefore remain cautious and maintain our +1 rating for MinVol. Within rates, our core bias remains the long-end steepener trade. Our relative rates preference is currently structured as follows: Gilts > Bunds > USTs > JGBs. Despite tight spreads and expensive valuations across the board, we still prefer EUR investment grade, as fundamentals and demand remain strong, and our total-return outlook remains relatively more attractive versus EUR sovereigns and USD investment grade. We maintain a neutral position on USD and EUR high yield and USD investment grade. We have cut our +1 signal on the Italy-Bund spread and return to neutral.

Economic and inflation surprise indices for Japan and China

Inflation is playing an increasingly important role in Japan …  

Line chart with 2 lines.
The chart has 1 X axis displaying Time. Data ranges from 2022-01-31 00:00:00 to 2025-05-31 00:00:00.
The chart has 2 Y axes displaying values, and values.
End of interactive chart.

Source: Bloomberg Finance L.P., DWS Investment GmbH as of 6/12/25

… while price pressure in China remains moderate  

Line chart with 2 lines.
The chart has 1 X axis displaying Time. Data ranges from 2022-01-31 00:00:00 to 2025-05-31 00:00:00.
The chart has 2 Y axes displaying values, and values.
End of interactive chart.

Source: Bloomberg Finance L.P., DWS Investment GmbH as of 6/12/25

CIO View Model Portfolio positioning vs. anchor

This allocation may not be suitable for all investors and can be changed at any time without notice. Source: DWS Investment GmbH as of 6/12/25

1 Deviation of portfolio allocation from 100% due to derivatives exposure.
2 Including equity derivatives, which inflate cash position by 8.6%.  

Source: DWS Investment GmbH as of 6/12/25