Markets:

Our Funds rose between +1.17% and +2.39%, in euros. Altex Momentum and Altex Quality protracted their gains, while Altex Growth and Tactical recovered significantly.

June was good proof that the Momentum factor works in the markets. The fast recovery of indices from April lows continued in May, and in June too. Strong uptrends are often longer than the average investor expects, and many end up reducing risk sooner than they should, thereby missing a great part of the rally.

The USD continued in a downtrend, falling by -3.68% vs. the Euro, which rallied to +1.18. We were 100% hedged in the US currency throughout the month, allowing us to post positive returns in the Euro classes as well.

In the macro arena, June brought strong geopolitical tensions with the Israel-Iran war and the US’s direct intervention in it. The US Federal Reserve (FED) maintained rates at its meeting and showed caution, concerned with the uncertainty surrounding the Trump administration’s decisions and the impact they might have on inflation and growth.

May inflation data, released in June, was slightly below than expected, although the PCE consumer price survey was disappointing. Markets took the rough with the smooth and expectations of a delay in future rate cuts were fueled. For now, 2 rate cuts in the US are foreseen before year end, which would leave rates between 3.75% and 4%, while it is possible there will be no further cuts in Europe.

Economic growth remains positive, and the labor market is strong. Both indicators point to an expansionary cycle, with moderate inflation and growth.

On the political and fiscal front, the tariff negotiation was postponed until July 9, and later on further delayed to August 1. Uncertainty over tariffs and their impact continues, although markets have become largely insensible to it, after the April reactions.

The sectors most threatened by tariffs are Semiconductors, Healthcare (big pharma) and Consumer Technology.

Despite these uncertainties, the US indices rose strongly in June, driven by the weakness of the USD: + S&P 500 +4.96%, Nasdaq 100 +6.27%, and Dow Jones Industrial +4.32%. In euros, the S&P 500 was down -1.28% and the Nasdaq 100 up +2.54%. By company size, extremes posted the best returns: the top 50 +6.03%, the smallest (Russell 2000) +5.26%. The S&P 500 Equal Weight +3.43%, and medium-sized companies +3.38%.

By factors, Growth Big Caps and Growth Small Caps gained: +6.40% and +6.15%, respectively. At the bottom of the list: Low Vol Equities -0.71%, and High Dividend +0.88%.

By sector, AI, Semiconductors and Telecom shined: all three were above 15% for the month. The worst performers were Real Estate, Utilities, Retail and Consumer Discretionary, nor was it a good month for the Healthcare sector, threatened by tariffs and drug price intervention.

Outside the US, the results were more modest, although positive: China and India, +3.36% and +2.52%, respectively; Japan 1.97% and Brazil 1.33%. The Eurostoxx 50 dropped -1.18%.

Bond yields fell in June: US10Y was down from 4.4% to 4.24%, while European bonds were almost flat (GR10Y between 2.50% and 2.59%). Europe lowered rates to 2.15% and suggested it would pause rate cuts until it confirms the effect its monetary policy is having on inflation and growth.

Outlook and positioning:

The bull market continues, now temporarily overbought. The DIPS hedging strategy continues to reveal bullishness and has entered few times in June. EURUSD appears overbought as well, although we remain hedged, since USD downtrend signals are still active. Inflation risks have picked up slightly and economic slowdown risks have diminished. The economic expansion cycle continues, and our equity portfolios are well positioned to capture it. In Altex Momentum we are overexposed to Industrials and underweight in Technology. In Altex Quality we are also overweight in Industrials and underweight in Financials and Staples. In Altex Growth (Mid-Caps) we are overweight in Healthcare and Consumer Discretionary and underweight in Financials. Many of the more specialized and less well-known companies have very attractive growth and valuation features.