Expert Panel

Sustainable investing has been under pressure for some time, not least due to the policies of U.S. President Donald Trump. This shift in sentiment has also hit ecology funds hard.

Morningstar’s flexible allocation category includes a diverse group of funds with largely unconstrained mandates. These strategies typically have significant leeway to adjust weightings between equities and bonds and to incorporate alternative asset classes into the mix. Private markets have recently garnered more attention, and the rally in gold hasn’t gone unnoticed by investors either.

During the first quarter of 2025, the European Central Bank and the Bank of England cut rates as inflation fell, and markets reacted positively to an announced 1 trillion euro package for defense and infrastructure spending in Germany. Shorter-duration bonds outperformed longer-duration bonds—paving the way for high-yield fare, which typically has a shorter duration than investment-grade fare.

Emerging markets struggled in the first quarter, but Neuberger Berman and Pimco’s global emerging market bond strategies still shine. One with conviction, and the other with diversification.

The 2025 stock market got off to a turbulent start. The once unwavering confidence in U.S. equities—particularly the Magnificent 7—is beginning to show cracks. At the same time, European and Chinese stock markets have surged out of the gate, a scenario few investors anticipated at the end of 2024, given the prevailing narrative of American exceptionalism.

New BaFin draft guidelines clarify that investor involvement in asset-level decisions risks disqualifying a fund as an AIF under EU rules—a shift with implications far beyond Germany, writes Sebastiaan Hooghiemstra at Loyens & Loeff.

Throughout the financial sector, technology is an important topic and leads to major changes in procedures, with financial companies themselves and also with the regulators. The new rules in Luxembourg for prospectuses should make life easier. In the Netherlands, the regulators lay a focus on the Digital Operations Resilience Act which gives an additional layer of supervision.

This week, we are comparing two asset managers rather than individual funds. When analysts evaluate a fund, they assess and assign ratings to its People and Process pillars while the methodology for Morningstar Medalist Ratings also incorporates and assessment of the Parent pillar. This Parent pillar is our focus this week.

Final clarity at last? Luxembourg ends long-running VAT saga on directors’ fees with new guidance and refund framework in Circular 781-2.

For investors in alternative energy companies, the election of an American president whose slogan is “drill, baby, drill” was bad news. Since Donald Trump won the election on November 6 and became the 47th president of the United States, funds in the Morningstar Equity Sector Alternative Energy category have significantly underperformed global equities.