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CIO View Portfolio: Perspectives

Portfoliomanagement
CIO View
Multi Asset
Bonds
Währungen
Fixed Income
Equities

7/16/2025

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

Headshot of Vincenzo Vedda, CIO of DWS

Vincenzo Vedda

Chief Investment Officer

Overview

Idea of the month
Our take on duration & risk
Whats up in the segments?
CIO View Model Portfolio positioning vs. anchor

Idea of the month

For some time now, divergent trends have been evident in the MSCI World and the corresponding healthcare indices. This is reflected not only in price performance but also in the widening valuation gap, particularly with regard to forward price-earnings (P/E) ratios, which have increased significantly for the broad index. However, earnings-per-share growth expectations for the next two years are roughly the same. Against this backdrop, we view the healthcare sector as attractive, particularly given some very positive long-term fundamentals. Nevertheless, the impact of Donald Trump's policies on the healthcare sector should be monitored closely.  

De-rating of the MSCI Healthcare sector on forward P/E

Line chart with 3 lines.

The chart has 1 X axis displaying Time. Data ranges from 2022-01-03 00:00:00 to 2025-07-09 00:00:00.
The chart has 1 Y axis displaying values. Data ranges from 13.4621 to 24.1191.
End of interactive chart.

Source: Bloomberg Finance L.P., DWS Investment GmbH as of 7/9/25

Our take on duration & risk

Risk

Economic uncertainty should recede somewhat further in our view and we are not expecting the worst case scenario when it comes to tariffs. Estimates for Q2 earnings season seem to be low enough that it should be easy to jump the bar, providing a positive catalyst for equity markets. Nevertheless, valuation levels of U.S. equities are quite rich compared to history. Therefore, there is only limited room for error. From a technical perspective we see equity markets consolidating over a one-month horizon. Thus, we advise to slowly phase-in into higher equity quotas.

lWe upgrade our risk preference to neutral

  Top 5 active risks  

  Overall risk  

Source: DWS Investment GmbH as of  7/9/25  

Duration

Risk-reward seems mostly balanced at current yield levels. We keep our steepening bias, especially at the long end of the curve. In EUR duration, Germany has shown clear intent to use its fiscal space, putting pressure on EUR long-end rates. However, relative to the U.S., we see the safe-haven status of Bunds strengthened due to the ongoing weakening of the USD. In USD duration our bias remains to sell Treasury rallies close to 10y yield levels around 4.2% as we have become more concerned over the willingness of the rest of the world to continue financing bigger and bigger external deficits.

We stick to our neutral duration stance

  Active rates risk contribution  

  Overall duration  

Source: DWS Investment GmbH as of 7/09/25

Whats up in the segments?

We are becoming a little more optimistic about stocks, albeit cautiously

We suggest to raise global equities to neutral, in particular during set-backs, as a tactical -1 trade should not become strategic. We reiterate our international preference over the U.S., but downgrade Japan from +1 to neutral (since it worked well since initiation in March) and upgrade Europe from neutral to +1. Europe has fiscal and monetary support and EPS revisions seem to have bottomed out despite a strong euro. On sectors we stay defensive. Healthcare still looks attractive to us in terms of valuation, and it seems that EPS revisions are stabilizing, we confirm our +1 stance. As the overall market environment for equities should remain volatile, we still like a diversifying style bias and confirm our +1 for MinVol and highlight again the S&P 500 Equal weight. Within rates our core bias remains the long-end steepener trade. Our relative rates preference is currently structured as follows: Gilts > Bunds > Treasuries > JGBs. Despite tight spreads and expensive valuations across the board, we still prefer EUR Investment Grade as fundamentals and demand remain strong. Thus, we stay +1 in EUR Investment Grade and neutral on USD Investment Grade as well as EUR and USD High Yield. In Emerging Markets Sovereigns, we upgrade back to neutral. Looking at FX, we stay strategically long EUR vs. USD as well as JPY vs. USD, but neutral JPY vs. EUR. Short term we could see some consolidation after the recent strong EUR appreciation.

Taking profits in Japan (back to neutral), upgrading Europe back to +1

Short-term performance MSCI Japan vs MSCI Europe  

Line chart with 2 lines.

The chart has 1 X axis displaying Time. Data ranges from 2025-03-13 00:00:00 to 2025-07-09 00:00:00.
The chart has 1 Y axis displaying values. Data ranges from 84.37 to 105.62.
End of interactive chart.

Source: Bloomberg Finance L.P., DWS Investment GmbH as of 7/9/25

Forward P/E MSCI Europe vs MSCI USA  

Line chart with 2 lines.

The chart has 1 X axis displaying Time. Data ranges from 2002-01-01 00:00:00 to 2025-07-09 00:00:00.
The chart has 1 Y axis displaying values. Data ranges from 7.4719 to 32.1372.
End of interactive chart.

Source: Bloomberg Finance L.P., DWS Investment GmbH as of 7/9/25 

CIO View Model Portfolio positioning vs. anchor

This allocation shows how we implement the above-mentioned CIO View into a Multi-Asset portfolio of liquid securities

This allocation may not be suitable for all investors and can be changed at any time without notice. Source: DWS Investment GmbH as of 7/9/25

 1   Including equity derivatives, which inflate cash position.  

 

CIO View Portfolio Perspectives

Miscellaneous Jul 2025

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