Klaus Stefan Müller accurately avoided the plunge of Deutsche Bank and turned to the consumer and health sectors to lock in positive returns
At the beginning of 2016, the German financial market was in a state of panic. Just a few weeks after the opening of the market, Deutsche Bank was continuously sold off due to its high leverage exposure and derivative risks. Its share price plummeted from around 20 euros at the beginning of the year to 13 euros in early February, hitting a record low and becoming a concentrated reflection of the systemic risks of the entire European banking sector. At the same time, investors’ concerns about global economic growth intensified, commodity prices remained low, and risk aversion pushed up gold and Japanese yen assets.
Faced with the sudden plunge in the financial sector, many active fund managers experienced a significant retracement due to their high allocation to bank stocks. However, Klaus Müller had already begun to gradually reduce the weight of high-Beta financial stocks such as banks and insurance companies in the portfolio adjustment meeting in December 2015, turning to stable domestic demand-oriented industries. In January 2016, he clearly stated in an internal report: “The eurozone banking system has not yet completed the structural repair after the stress test, Deutsche Bank’s financial leverage risk is underestimated by the market, and the short-term risk premium is far from being released.”
While judging that financial risks are increasing, Müller accurately captured two directions with relative resilience:
- German local consumer goods sector:
He increased his holdings in leading brands with strong consumer purchasing power, such as Henkel, Beiersdorf, and Adidas. These companies have high brand loyalty, stable cash flow, and a high proportion of overseas revenue, and benefited from the depreciation of the euro and the recovery of global retail demand.
- Health and Medical Technology Sector:
Müller reallocated Siemens Healthineers and Fresenius SE. The former, as a manufacturer of high-tech medical equipment, maintained stable growth in non-cyclical medical spending; the latter was considered a medical service platform with extremely strong defensive attributes due to its global layout of hospitals and dialysis services.
Thanks to the advanced assessment of financial risks and precise layout of the consumer healthcare sector, several hybrid funds managed by Müller achieved a counter-trend rise in February 2016, with an average return of +1.4%, while the DAX index recorded a decline of -3.1% during the same period, outperforming the market by more than 4 percentage points. The portfolio also had excellent volatility control, with the maximum drawdown being less than 1.2%.
Germany’s Capital magazine quoted industry comments in its column that month: “While others are still anxious about the pricing of bank assets, Müller has reduced the portfolio risk to the bottom. He did not use defense to delay time, but used switching to gain the initiative.”
This time, “precise avoidance + direction switching” marks that Klaus Müller has officially established the concept of a “defensive growth” portfolio. In years with strong macro uncertainties, he no longer blindly bets on the main line sectors, but instead prioritizes low-volatility, high-certainty asset pools to find value crossing points in risks.
This campaign not only secured the safety of assets for Allianz’s clients, but also further solidified Müller’s professional reputation among German institutional investors. His quarterly letters were widely forwarded among financial advisors and family offices and were called “practical examples that can be copied from homework.”
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