Forty-three years in the job is quite a long time. Anyone who has been around as long as fund manager Klaus Kaldemorgen at DWS has seen it all. Market crashes, years of bear markets or seemingly endless rallies – and also the resurrection of companies or entire industries that seemed doomed to failure.

Kaldemorgen, who has been working for DWS since 1982, has now identified one such candidate: the German automotive industry. „We have bought German car manufacturers again for the first time in a long time,“ he explains. He justifies his assessment by saying that the sector is now extremely undervalued. The industry has its fate in its own hands, he says. Kaldemorgen sees considerable upside potential here. This sets the manager of the DWS Concept Kaldemorgen fund apart from most other experts, who have sounded the death knell for Germany's former flagship industry.

What does a weatherproof, diversified securities portfolio look like in a stock market characterised by uncertainty? DWS invited guests to a discussion to find answers to questions like this. In addition to veteran Kaldemorgen, co-lead portfolio manager Christoph Schmidt, and DWS Global Head of Multi Asset Henning Postada, were on hand to answer questions.

The current market situation certainly raises quite a few questions. Despite numerous negative factors, many stock indices are trading close to their highs. Neither the DeepSeek shock at the beginning of the year, US President Donald Trump's Liberation Day and the subsequent tariff increases, nor the escalating conflict in the Middle East, have been able to change this.

The tariffs burden has risen dramatically as a result of the new US policy, for example from 2.5% to 15% for the important automotive industry. Tariffs of this magnitude naturally also leave their mark on economies. Nevertheless, most stock markets have performed strongly so far this year. Why is this the case? DWS's expert Postada sees the reason for this in a combination of falling key interest rates and sustained modest economic growth. This is likely to remain the case for the time being. In his opinion, the Fed is likely to cut interest rates in September, and he also expects the ECB to take further action on rates.

The Fed faces a difficult situation here, as it wants to stabilise the labour market on the one hand and keep inflation low on the other. These are two goals that are difficult to reconcile. Postada is convinced that, in the current situation, the US labour market is more important to the Fed than inflation, so it will resort to cutting interest rates, which is likely to be at the expense of inflation. The DWS expert expects inflation in the US to reach 3% to 3.5% by the end of the year, well above the central bank's target of 2%. However, Postada does not believe that inflationary pressure will persist, predicting that it will ease again next year.

According to portfolio manager Christoph Schmidt, corporate earnings growth has supported the stock market this year. US companies have also benefited from the weak dollar, which has lost a good 10% of its value this year.

The changed macroeconomic conditions have also led to changes in the DWS Concept Kaldemorgen. After the cluster risk of foreign currencies was recognised in view of the weak dollar, the biggest change was on the currency side. The dollar has gone from being a stabiliser to a risk factor, says Kaldemorgen. Accordingly, the multi-asset fund that bears his name has reduced its dollar weighting by two-thirds since the beginning of the year. This was done in a first step via hedging, but in a second step, US government bonds were also significantly reduced. There are no plans to reduce US equities.

With the reduction in Treasuries, the fund is already one step ahead of many other international investors, explains Postada. Currently, DWS Concept Kaldemorgen has an equity allocation of 36%. In the bond segment, the motto is go for European investment grade securities. Corporate bonds currently account for 20%, government bonds only 14%, most of which are located in Europe. Gold currently stands at 8%, while cash holdings are above 15%.

Kaldemorgen reveals himself to be a fan of the tech sector, which will remain an important anchor for the multi-asset fund in the future. At the same time, the renowned fund manager explains that AI should not become a cluster risk. As long as interest rates remain favourable, the tech sector will remain attractive. To balance this out, he recommends defensive European stocks and cyclicals.

US President Donald Trump is like an elephant in the room for every asset class. However, Trump's attacks on the independence of the Fed have not caused the DWS managers too much concern so far. Only when Treasuries yield 5% or more at the end of the year are the markets likely to sound the alarm. But we are currently „still a long way from that“. Nevertheless, Kaldemorgen criticises the fact that some economic data in the US is now estimated rather than collected: „Transparency in the US is slowly approaching that of China", he says.

For the time being, Kaldemorgen views Germany'sinfrastructure package, comprising hundreds of billions of euros, positively. Additional German bonds are attractive due to the lack of currency risk and minimal credit risk, and will find buyers. However, the experienced DWS executive believes that recommending infrastructure stocks is going too far. This is risky - and infrastructure is a very narrow sector.