What the markets taught us: Lessons for investors

From shifting interest rates to changes in global markets, these developments have shaped how portfolios perform and what we can expect moving forward.

Here's a look at the key developments – bonds, emerging markets, and sustainability – and the most important takeaways to help you achieve your long-term goals.

Top 3 takeaways of past years

1. Time in the market is more important than timing the market
   
   Markets tend to recover over time. Try to ignore their short-term ups and downs – even if it's hard! You might have heard the saying: "Investing is not a sprint but a marathon." But actually... Investing is neither a sprint nor a marathon but a long-distance trail run with many hills (ups and downs)! 🙃 Focus on your long-term goals and continue to invest in a broadly diversified portfolio.
   
2. Investing regularly proved to be a successful strategy
   
   Investing regularly helps you to build your investments also at times when prices are lower and markets are cheaper. Those who invested consistently saw significant benefits during the recovery phases. This is an important takeaway from the past.
   
3. Make sure your investments continue to fit your investor profile
   
   Your level of diversification is tailored to your Selma investor profile. By keeping your profile updated, Selma ensures that your investments align with your goals and life situation, creating the optimal long-term mix for you. Keeping your investor profile updated also means that you can benefit from fast, tailored support from Selma's team of experts.

What the markets taught us about diversification

Bonds and interest rates

What happened?
Rapidly rising interest rates in 2022 and 2023 dominated financial markets. Central banks worldwide increased rates to fight inflation, which had spiked due to events like the war in Ukraine and rising energy prices. This rise impacted interest-rate-sensitive investments, such as bonds, whose value tends to drop as rates go up.

Why this matters to you
If bonds are part of your Selma portfolio, this volatility may have been reflected in your returns. However, bonds play an important long-term role. While rising rates lower their short-term value, they also increase the potential for higher interest income over time.

The bigger picture
As central banks began to lower rates in late 2023, bond prices started to recover. This rebound demonstrates why bonds remain a critical component of a well-diversified portfolio, helping balance risk and offering steady income over the long term.

💡 We've talked about bonds in last year's webinar at length. Tune in to watch the recording featuring our CEO Patrik Schär.

Emerging markets

What happened?
Emerging markets, included in all Selma portfolios, showed strong potential in 2023 and 2024 after the bumpy years leading up to this recovery. Emerging markets comprise investments in areas like information technology and financial services, including global companies like the chip giant TSMC, Tencent, or Samsung.

Why this matters to you
Emerging markets diversify your portfolio by adding exposure to rapidly growing economies. While they can be more volatile, their long-term potential makes them a valuable piece of a well-rounded investment strategy. Emerging markets are an important component of the global efficient market portfolio.

The bigger picture
Emerging markets are positioned to benefit from structural shifts in global industries like information and semiconductor technology. By investing in them, Selma helps you tap into this growth potential while balancing it with other assets.

Sustainable investing

What happened?
Sustainable investments, which prioritise companies meeting environmental, social, and governance (ESG) criteria, have experienced varied performance. Global political and economic factors like wars and heightened defence spending have tilted investor focus towards traditional industries, often excluded from sustainable portfolios. Similarly, some tech giants driving economic growth get excluded due to strict ESG screening processes. The reasons range from larger carbon footprints to issues revolving around data privacy or labor rights.

Why this matters to you
It is often difficult to see what impacts the performance of a sustainable investment strategy. Returns between classic strategies and sustainable strategies can be different at times – these variances depend on the industries sustainable investments avoid or focus on.

The bigger picture
Sustainable investing is a long-term strategy aligned with global shifts toward renewable energy, responsible practices, and sustainable tech innovation. While these portfolios may underperform in specific market conditions, their potential remains strong as governments, consumers, and businesses prioritise sustainability. ESG criteria also constantly evolve and become more nuanced as the demand for sustainable strategies grows.

What you can do next

• Get personalised advice: Use Selma AI or reach out to us via live chat to understand how these trends have impacted your individual portfolio.
• Review your profile: Log in and update your investor profile to make sure your investments match your life situation.
• Get in touch: If you have any questions, please reach out to our team of financial experts. They can review the history of your trades or portfolio adjustments with you and identify opportunities to improve your setup.
• Review your preferences: Are you happy with your sustainable strategy? Would you like to customise your portfolio further? There might be more customisation options coming up 😉