Monthly report of our funds as of July 31, 2024
FUNDS | MTD | YTD | 12 months | 5 years |
Altex Momentum | 1,47% | 9,52% | 14,96% | 34,61% |
Altex Quality | 0,41% | 10,80% | 14,26% | 58,79% |
Altex Prudent Growth | -4,15% | 2,99% | 2,72% | 35,88% |
Altex Tactical | -1,25% | 4,04% | N/A | N/A |
July has been a more favorable month for diversification due to the strong trend shifts we’ve seen.
Altex Momentum had a very good month (+1.47%), with more balanced weightings by factor, asset type, and within each equity strategy, more equal weighting by company.
Altex Quality delivered a good result, holding up well throughout the month despite its bias towards large companies (+0.41%).
Altex Prudent Growth experienced a setback, losing ground (-4.15%) due to its bias towards technology and semiconductors on the one hand, and the negative contribution of two companies following earnings reports on the other.
Altex Tactical saw a modest decline due to the rise in volatility, which weighed on performance at the end of the month.
The market has witnessed significant dispersion:
- S&P 500 +1.13% vs Nasdaq 100 -1.65%
- Small companies (VIOO) +11.08% vs large companies (XLG) -0.42%
- U.S. Construction Sector (XHB) +16.93% vs Semiconductor Sector (SMH) -5.26%
Value and Size factors (small companies) performed better than Growth and large companies. Small Value +12.42%, Small Growth +8.16%, Large Value +5.11%, Large Growth -1.73%. The Low Vol factor also saw a good recovery after lagging in previous months, +4.19%.
Corporate earnings continue to be strong, but companies have begun to temper their optimism and are sending more conservative messages, leading to a bearish reaction in those that had risen the most following earnings reports.
On the macroeconomic front:
U.S. inflation data was reassuring (annual CPI +3.0% vs 3.1% expected), with the monthly Core Inflation figure at +0.1%.
Expectations for future interest rate cuts increased, and medium- and long-term fixed income yields declined. The 10-year U.S. Treasury yield dropped from 4.4% to 4.03%, representing an approximate 4% increase in price.
The USD lost ground against the Euro, with EURUSD appreciating more than a full figure from 1.0710 to 1.0825.
Our analysis:
We are in a market consolidation phase, with sector and factor rotation adjusting excesses. Inflation is easing and leaving the focus on growth. Sales, employment, and economic sentiment data are beginning to occupy more space in central bank discourse and are moving the market more.
The correction that started in July is, for now, just that—a correction. It is logical after significant gains and a market with an economy that has the interest rate brake starting to cloud optimism.
We are in an election year, which is typically good for the stock market, but volatile in the months leading up to the voting date. Biden announced his withdrawal from the electoral race, and Kamala Harris has been regaining some lost ground in the polls. The race will likely even out as Democrats rally around their new candidate. This will create more uncertainty and keep the markets in a sideways phase with high volatility from now until November.
At present, nothing suggests an imminent crisis, so the risk of a rebound is high. We continue to rotate portfolios into assets with the best momentum and keep our hedging strategies very active to respond to any volatility that may arise.