Monthly report of our funds as of September 30, 2024

This month marks two years since we began using our dynamic protection system on indices, which we have abbreviated as DIPS. Its incorporation into the funds has been key to maintaining high exposure to equities in a bull market that very few recognized in its earliest stages.

Fund Performance:

Since September 2022, our Equity funds have appreciated +37% (Momentum), +43% (Quality), and +29% (P. Growth).

Altex Momentum (+11.82% YTD and -0.44% in September) has been the fund with the highest asset growth, thanks to its diversification and greater flexibility to adapt to economic cycle changes. It has grown nearly 80% in volume over the past 24 months. We maintain a portfolio with low exposure to megacaps and a well-balanced factor allocation. In this late market cycle, it has been very effective to have exposure to both secular growth and cyclicals. At the end of the month, we removed exposure to the U.S. 10-year bond after a strong revaluation.

In Altex Quality (+12.46% YTD, +0.71% in the month) and Altex P. Growth (+5.60% YTD, -0.92% in the month), we have improved the stock pre-selection engines, which we use to build a concentrated universe of companies that meet the characteristics we seek: higher quality for the former and higher growth for the latter. In a second phase, we analyze each company to determine which ones enter the final portfolios. In Quality, we include large companies, while in P. Growth, we focus on medium and small companies, as this segment offers greater growth potential.

In P. Growth, we have just rebalanced the portfolio at the beginning of October. We reduced exposure in sectors such as technology and healthcare and increased exposure in industrials and consumer discretionary. Medium-sized companies now offer a high revaluation potential.

Lastly, Altex Tactical (-0.32% YTD, -3.96% in the month), which operates on VIX futures, options, and stock indices, declined this month due to the increase in volatility (the VIX spiked above 23 at the beginning of the month). Despite the indices being near their highs, the perception of risk has increased, and our thermometer has moved to the zone where we need to be defensive. It is likely high volatility will continue until after the U.S. elections.

Market Analysis:

U.S. equities performed better than expected in September: The S&P 500 rose by +2.02%, and the Nasdaq 100 by +2.48%. The early-month correction, driven by fears of slower economic growth, quickly recovered thanks to the boost markets received from the FED. The U.S. Federal Reserve cut interest rates by 50 basis points, bringing them to 5%. This was a strong statement of intent from Powell, which led to an increase in long-term inflation expectations. Long-term bonds fell from the 16th, and the USD remained weak for a few days, although it now seems to have strengthened due to higher U.S. growth compared to Europe.

 Outlook:

Bull market continues, with demanding valuations and a slowdown in momentum in the sectors that had led the index growth. October could bring a correction, which would be a good opportunity to increase equity exposure in anticipation of the last two months of the year, which should maintain the current market trend.

The hedging strategy we use in our funds allows us to remain invested without having to speculate on market entry or exit. We have rotated our portfolios toward sectors with higher potential and better momentum. We remain long on USD and with some cash in the funds to take advantage of any corrections.