During the period, the Fund posted a positive performance, although it lagged its reference indicator.
The primary driver of our performance was our exposure to equities. However, our investments in emerging markets, gold positions, and hedging strategies negatively impacted the performance.
Top equity contributors included pharmaceutical distributor McKesson, Amazon, and oil services company Schlumberger.
In a market characterized by a coordinated fall in long-term interest rates, our low modified duration weighed on relative performance. Conversely, our inflation-linked strategies positively contributed to performance, benefiting from the rebound in producer and consumer price indices.
US growth is expected to remain resilient, bolstered by Fed rate cuts and the forthcoming Trump 2.0 administration. In contrast, European growth is likely to remain sluggish.
Disinflation continues, but the trend remains uncertain due to the arrival of Trump and the widening of deficits. In this context, the Fed may consider pausing rate adjustments in early 2025.
We maintain a positive outlook on equities, particularly in the US. However, given current valuation levels, we are exercising caution by implementing hedging strategies.
Regarding interest rates, we are maintaining a low sensitivity and anticipate steeper yield curves.
To enhance the overall construction of our portfolio, we have implemented several decorrelation strategies, including exposure to emerging local rates, gold miners, South American currencies, and the Yen.
North America | 64.2 % |
Asia | 16.7 % |
Europe | 12.3 % |
Latin America | 5.1 % |
Asia-Pacific | 1.8 % |
Total % Equities | 100.0 % |
Market environment
Trump's decisive victory in the US election is expected to provide him with significant leverage to advance his policy agenda.
US indices hit record highs as investors anticipated the potential growth benefits of the Trump 2.0 tax cuts and deregulation policies.
In contrast, stock markets in China, Europe and Latin America suffered from the risks of tariffs being introduced by the incoming US administration.
The US Federal Reserve once again cut its key rate by 25bp, despite inflation stagnating at 2.6% year-on-year and 3.3% for the core component of consumer price indices.
Inflation in Europe rose to +2.3% in November, while underlying inflation remained anchored at +2.7%. On the other hand, economic publications showed signs of slowing down.
Despite an environment of strong growth and resurgent inflation, yields fell on both sides of the Atlantic this month, notably following the appointment of Scott Bessent as the future US Treasury Secretary.