Monthly report of our funds as of June 30, 2024

Another good month for our funds, with returns ranging from 2.02% for Altex Tactical to 6.08% for Altex Prudent Growth. Altex Quality and Altex Momentum closed the month at +4.21% and +2.23%, respectively.

Markets:

Technology and US head global performance (Semiconductors +8.41%, Nasdaq 100 +6.18%, S&P 500 +3.47%).

Large companies outperform small companies (S&P Top 50 +5.73%, S&P Equal Weight -0.90%, S&P 600 Small caps -2.38%).

Growth, Quality and Momentum outperform Value, Low Volatility and Dividend Yield.

Although Europe lowers rates from 4.5% to 4.25%, the Eurostoxx 50 ends negative (-1.80%). Europe’s growth outlook remains well below that of the US.

The US keeps rates at 5.5% and its ambiguous discourse on short term changes, although it is still biased to lower rates and little likelihood of hikes.

Positioning:

• In a growth and inflation environment tending to moderation, we remain heavily invested in both equities and bonds.
• Overexposed to Growth vs Value.
• High exposure to Mid Caps in Altex Momentum and Altex Prudent Growth. Underweight in Megacaps vs Indices in Altex Quality.
• Long USD vs EUR.
• In fixed income, we favour long US government tranches (50% US 10-year bond in Altex Momentum).

Hedges and Risk:

In the Equity funds (Momentum, Quality and Prudent Growth), we made a profit on shorts on S&P 500 (+0.03%) and Nasdaq 100 (+0.65%) thanks to the market pullback of June 24. Hardly any activity in the Altex Trend Following strategy during the rest of the month.

The Altex Risk Thermometer remained in a risk on area throughout the month, favouring short volatility positions in the Altex Tactical fund.

2024 Outlook:

We expect a relatively sideways second half of the year with dips and bounces in equities until November (US elections) and a return to the uptrend at the end of the year. Economic growth is a good support for equities, but there are already signs of a slowdown in several sectors and in the US labour market. Companies that have driven the indices to record highs are trading at demanding valuations and we expect some profit taking over the summer, while the existing high dispersion between large and small companies will tend to reverse. This scenario would be especially beneficial for us as we are buying companies with an average capitalisation below indices, which we will exit as they turn bearish. The coming months and years should no longer be as favourable for indices vs. markets as a whole, bringing active management and company selection strategies to the forefront.

Political turbulence and weak European growth will continue to favour the US dollar against the euro, and we will hold long dollar positions until the trend reverses. At the time of writing, the outcome of the French elections is known. Markets did not react to the division of the French assembly into 3 blocs, with a marked increase of the extreme left triggered by the support received by the extreme right in the first round. However, given that neither  party reached the necessary majorities, they will not be able to impose their agenda. However, we foresee that Europe’s image will weaken, as it will seem more fragmented than it already is. In the UK and France, the elections have favoured left-wing parties, which will have an impact on European competitiveness and growth in the coming years.

We expect a slight rise in fixed income prices (lower implied interest rates) to year end. We maintain long fixed income positions in our portfolios and Altex Momentum, with long duration in US government and shorter duration in global and European corporate bonds.