Monthly Report March 2026

‍Market development in the first quarter of 2026

After most major equity markets were able to show positive developments in the first two months of the new year, the attack by Israel and the USA on Iran led to an temporary correction. Among western markets, the Swiss Performance Index (SPI) performed best with a decline of 2.1%, thanks to the strong performance of index heavyweight Novartis. The German DAX lost 7.4% in EUR and the S&P 500 and the world stock index MSCI World fell by 5.1% and 4.1%, respectively (both in USD). The war in Iran led to a jump in oil prices well above USD 100, fueling inflation fears and thus restricting central banks' room for manoeuvre. Accordingly, long-term interest rates in the major currencies USD, EUR and CHF rose by 0.2% to 0.4% and bond prices fell. Gold gave back a significant portion of its gains achieved by the end of February in March, but at the end of the quarter it was still 8.1% higher than at the beginning of the year.

Escalation in the Middle East

Since the end of February, Israel has been carrying out air strikes on Iran together with the USA and, according to its own statements, has achieved air supremacy after just a short time. In the first few days, the attacks killed key members of the regime, including Iran's Supreme Leader Ayatollah Ali Khamenei. After Khamenei's death, his son Mojtaba Khamenei was elected as the new supreme leader. In retaliation for the attacks, Iran shelled American targets in various Gulf states and extended the conflict to the entire region. As a further measure, the Strait of Hormuz between Iran and Oman was effectively blocked. Around 20 percent of the world's crude oil exports are transported through this strait. A prolonged blockage would lead to significant bottlenecks on the world market.

US President Trump primarily justifies the war against Iran with a nuclear threat. Because Iran stores a large part of its enriched uranium deep underground, these stocks could not be destroyed, as was the case last summer, according to current knowledge. It remains unclear whether the US will use ground forces to seize uranium supplies.

Wars are usually ended by the surrender of one side or through negotiations. So far, the positions of the two parties have been so far apart that a diplomatic agreement is a long way off.

It remains to be seen whether the two-week ceasefire agreed on April 7 can help the negotiations achieve a breakthrough.

Fund and mandate performance

In line with market developments, Format Vermögensanlagen also lost their previous share price gains in March and have fallen into the negative since the beginning of the year. The development of the Swiss Performance Index was supported by the significant price increase of Novartis and the only slight price losses of the other two heavyweights Nestlé and Roche. Our portfolios are structurally underweight among index heavyweights because equal-weighted investments enable better investment results in the long term. Since stocks from less fast-growing companies with more defensive business models were also able to hold their own better in the current environment, Format portfolio has lagged behind the respective benchmarks over the course of the year so far. The performance of funds and mandates since the beginning of the year can be viewed via the following link.

For the second time in a row, Format Aktien Dividententitel was named the best Swiss equity fund of the last three years by rating agency Lipper from over 140 funds.

outlook

Military events often only put pressure on markets for a short time and previous price levels are reached again within weeks or months. Because of the effects on energy prices, it is clear that the risks for the global economy and, in particular, of a significant increase in inflation, are increasing as the conflict continues. As a result of the midterm elections in November, US President Trump is interested in gasoline prices in the USA falling again rapidly.

Current events on the financial markets are heavily influenced in both directions by news about the war in Iran. Since the best and worst trading days tend to occur close together in such market phases and it is not possible to forecast further developments, it is advisable to stick to a carefully defined investment strategy.

Best regards
Matthias Hug and Markus Lackner

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