We closed November with strong performance and great news for the Funds. We have changed the name of our dear long-standing Luxembourg SICAV “Sigma Fund” to “Altex”, a more modern name that reflects our management style. The Funds will now be:
Altex Momentum (formerly Sigma Fund Real Return): +7.01% (13.65% YTD)
Altex Quality (formerly Sigma Fund Quality Stocks): +7.33% (+26.11% YTD)
Altex Prudent Growth (formerly Sigma Fund Prudent Growth): +5.54% (+14.82% YTD)
Another important development is the addition of our trend-following hedging strategies to the Altex Quality fund, to better control corrections in indices and in the US dollar. This strategy gives our investors access to the performance of the most profitable factors (Momentum, Quality and Growth), while a daily risk control will limit the largest declines to less than half.
In addition, we will soon announce the launch of our next fund: “Altex Tactical”. This strategy currently represents 20% of Altex Momentum’s assets, with a performance of +22.51% YTD. The market exposure of this strategy is based on the readings of our ART (Altex Risk Thermometer), which gives us early warnings of the likelihood of an imminent correction, allowing us to adopt very defensive positions when risk increases.
As to our monthly commentary, in November markets reacted positively to the lowering of implied interest rates on medium and long term US bonds. The month started with the US Federal Reserve meeting, and no changes in interest rates. Later on, US economic data showed little inflationary pressure, with US producer prices in the contraction zone, new non-farm payrolls slightly lower than expected, and unemployment at 3.9% (a decimal point higher than the previous figure). Mixed data on the services side, with less pressure on PMIs although prices are still rising. On November 14, the US inflation figure for October was released: +3.2% vs 3.3% expected (4.0% vs 4.1% expected, excluding food and energy). This data underpinned the feeling that rates had peaked, and that the next moves will be most likely downward… and markets love to recollect the sweet times of low rates and easy money. Lower rates from mid-2024 is the new expectation.
As tempting as it is to dream of a scenario of gradual inflation containment, with regular and systematic rate cuts up to around 2%, reality is never that smooth. We used to say that markets take the staircase up and the lift down. Now, the rises are also dizzying and the risk of missing out is greater than that of being in. In November the US indices soared, literally: S&P 500 +8.92%, Nasdaq 100 +10.67%. In Europe, indices also rallied, Euro Stoxx 50 +7.91%. It is very significant that this month almost all companies participated in the market rally: large, medium, small, and all factors starting with Growth +10.97% and ending with Low Vol equities +5.12%. The high-growth and financially dubious companies ETF (ARKK) was up +31.44%. By sectors, the top performers were artificial intelligence +16.07% and semiconductors +15.49%, while the worst were Oil & Gas exploration -4.97%, and Energy -0.72%. By countries, the only laggard was China -1.41% (large Chinese companies).
In fixed income, bonds rallied sharply (lower implied interest rate), especially in the long end of the curve. The US 10-year bond fell from 4.93% to 4.32%, which equals a rise of around 6% in the bond price. The USD continued to exhibit its negative correlation with bond prices and lost close to 3% in the month against the EUR.
As this is the last monthly commentary we will be sending out in 2023, we would like to wish all our investors and friends a happy end of 2023, which has brought more returns than initially estimated, significant advances in our management processes and has strengthened us as managers, given the discipline, perseverance and rigour it has demanded from us – both investors and Altex Team – to adapt quickly to a new market environment that brings great challenges and great opportunities.
The best is yet to come.