Market:

Spectacular rally of our equity funds in a month when the major indices underperformed. Altex Growth (mid-cap companies) +16.96%, Altex Quality +5.53%, and Altex Momentum +6.45%. Altex Tactical, which tracks the major indices more closely, fell -3.10%.

Hedging strategies made a slightly negative contribution this month.

S&P 500 -0.87%, Nasdaq 100 -2.32%, MSCI World +0.64%. Europe fared much better, with the Euro Stoxx 50 up 3.20%. Mid-cap and small-cap companies also outperformed large-caps: S&P 400 Mid-Cap +4.02%, S&P 600 Small-Cap +2.07%.

By sector, defensive stocks shone the brightest: Low Volatility Equities +5.28%, High Dividend Aristocrats +4.20%. Big Cap Growth Stocks bore the brunt of the decline, down 3.38%. The “Magnificent Seven” ETF fell an average of 7.3%, with Amazon and Meta down 12.2% and 9.5%, respectively.

It was a month of wide dispersion across sectors, with remarkable rises in Gold Miners (+22%), followed by Telecoms (+11.1%) and Utilities (+10.3%). Bringing up the rear were Financials (-3.9%), Technology (-3.6%), and Consumer Discretionary (-3.6%).

Our funds were well positioned in the strongest performing sectors and underweight in mega-caps, thanks to which we significantly outperformed indices. Despite the relatively modest falls in indices, equity volatility was high, and market rotation is significant.

U.S. government bonds rose (the yield on the 10-year bond fell to 3.95%), while the USD remained relatively stable vs. the euro.

Outlook:

At the end of February, war broke out in the Middle East with the Israeli-U.S. attack on Iran. While Gold and Bonds had anticipated the conflict to some extent, oil prices did not skyrocket until the news was made public. Brent rose 4.87% for the month, closing at $73 on Friday the 27th, just before the bombings began.

The war in Iran is yet another chapter in the region’s never-ending conflict. The U.S. seems to have seized a historic moment when its major rivals, Russia and China, are weakened for several reasons: while Russia is worn out by the Ukraine war and sanctions, and is unable to offer much support to Iran, China, with significant internal imbalances and still reeling in the aftermath of its mismanagement of the Covid pandemic, lacks the military strength to stand up to the U.S. With the world’s major powers worried about other issues, Israel and the U.S. chose not to wait any longer to try to overthrow the only remaining regime in the Middle East with sufficient military capability to threaten Western interests in the region.

The attack, which was planned well in advance, consisted of several phases ranging from the request for $1 trillion from Congress in May 2025, to the capture of Nicolás Maduro to gain control of Venezuela’s oil and limit the impact the war might have on the oil market. In early March, stock prices reversed their trend, and oil peaked at almost $120 before stabilizing around $100. This nearly 40% increase from February 27th sufficed to affect inflation and global growth. The closure of the Strait of Hormuz, where Iran threatens to sink oil tankers attempting to pass through, will worsen the situation if it persists for many weeks. Around 20% of the world’s oil and 30% of liquefied natural gas pass through this strait.

Following the initial bombings, asset performance has been mixed. Government bonds have fallen, reflecting more concern about inflation than about recession. However, Gold also fell, giving back some of its previous gains, as if it had anticipated higher inflation than was warranted. The Central Banks’ reaction will be critical in a scenario where both inflation and job creation are threatened.

March appears to have begun as a trend reversal month – the upshot of the shock caused by the war – but these events typically have greater impact in the short term and lose effect in the medium and long term, if the conflict does not escalate beyond the region. The uneven military power of the countries involved will affect how the war unfolds as one of the sides loses its capacity to respond. Iran is stronger than Iraq or Afghanistan, so the war –barring a willingness to negotiate – is likely to last longer than previous ones in this region.

Positioning:

We continue to execute our strategies with discipline. We have a high exposure to Industrials and Metals and are underweight in Technology and the “Magnificent Seven.” In Altex Momentum, we also maintain high exposure to the Healthcare sector. In Altex Quality, Healthcare carries much less weight, and we have greater exposure to Industrials and Materials, followed by Consumer Discretionary. In Altex Growth, where the engine prompted the highest exposure of all to Metals, we limited our positions in the Materials sector to keep within the risk limits we set for ourselves.