This month’s numbers are dazzling. Record monthly performance for Altex Prudent Growth (+14.82%). Second best month for Altex Quality (+13.16%) and, also, second best month in its long history for Altex Momentum (+9.54%). The latter two had only performed better in April 2020, the first month of the post-Covid recovery. However, this spectacular month took place with markets at record highs, which meant that many managers reached the most important event of the year –the US elections– with insufficient risk.

At Altex, we had already rotated into smaller companies and more cyclical sectors thanks to our stock picking engines, and held long US dollar positions, in line with our EURUSD trend strategy.

Our DIPS hedging strategy closed virtually flat this month (+10bps for Altex Momentum, -5bps for Altex Quality and -4bps for Altex P. Growth).

Active management based on strategies in which we increasingly minimize human intervention has allowed us to outperform both indices and other active managers this month.

We were awarded first place in Rankia’s contest both in active equities (+25.46% in the year) and active fixed income (+16.52% in the year), and we have been named Manager of the Month, for our track record and continuous innovation in our investment processes.

Although November is a month to remember and 2024 will end spectacularly, our objective is not to win awards or recognition; our main goal remains unchanged: to deliver the highest possible returns to an increasingly wide range of investors.

AUM of our funds continues to grow (approx. 170 million euros) and so does the number of investors. The funds may be subscribed through all major platforms, and this month we learned that a large international bank with a strong presence in Spain has included us in its focus list (list of recommended funds). We are very grateful for their trust and that of all the investors who are accompanying us on this journey. We will continue to work every day to maximize profitability in each of the segments in which we operate: All Caps (Altex Momentum), Big Caps (Altex Quality), and Mid Caps (Altex P. Growth).

Markets:

In November, markets were conditioned by the US elections. The S&P 500 rose +5.73% in the month, Nasdaq 100 +5.23%, while Europe lagged, with the Eurostoxx 50 declining -0.48%.

By company size, U.S. Small Caps rose +10.90%, Mid Caps +8.66% and Big Caps +5.40%.

By factors, Growth outperformed Value, and Quality outperformed Low Vol equities, although differences were larger by company size than by factor.

Emerging countries were penalized: China -4.40%, Brazil -3.12% and India -0.07%.

The USD appreciated strongly against the Euro (+2.88%) and, in general, against all currencies (DXY +1.82%) except the Yen (-1.53%).

The Fed lowered rates on November 7^th to 4.75% (upper band) and the US 10-year rate climbed to 4.5% intra-month, ending at 4.18% on November 29^th. Thus, despite doubts about inflation, the price of the 10-year bond appreciated, reflecting that expectations were the opposite.

The Fed minutes confirmed members’ confidence that the path towards inflation control will not be curtailed, and that they expect to be able to continue to gradually lower rates. The curve between the 3-month and 10-year US yield remains inverted and will have to correct in the future (for now, it seems that this correction will materialize in lower rates rather than in higher 10-year bond yields).

In the US, the outlook remains positive, with higher growth than in the rest of the developed world and a slightly higher inflation as well.

In Europe, the outlook is somewhat grayer. Low growth and low inflation. Germany is suffering from its energy dependence and the collapse of its automotive sector due to growing competition from the US and China. The war in Ukraine and Trump’s victory will force resources to be allocated to defense, to the detriment of other more productive sectors. In southern Europe, we continue to enjoy the sweetness of the end of the cycle, which favors tourism and consumption, but the party won’t last if northern Europe does not recover its tone.

Outlook:

Trump’s victory has important implications for financial asset markets.

He will lower taxes on individuals and businesses, although in that area he had already done most of the lowering in his previous term. That will encourage economic growth.

He will raise import taxes, especially on products that compete with important U.S. sectors such as automobiles, food, and medical devices, with tariffs on products from China, Europe and Mexico. Trump will also impose tariffs on Canada, from whom the US imports oil and raw materials such as wood, aluminum, and uranium, all of which are essential for construction, industry, and energy.

This policy threatens inflation control, although there are three factors in Trump’s plans that will help to reduce it:

• Less regulation: this encourages competition and innovation, and the best mechanism to lower inflation is greater market liberalization as it increases the supply of products and services, making cheaper options easily available for consumers.

• Reduced government spending: with less government spending, public demand for workers will favor private employers, who will have access to a labor market with more supply at moderate prices. Lower government spending will also drive investment back into the private sector, favoring the growth of the most profitable and efficient projects.

• Strengthened dollar: The lower deficit will need less monetary expansion and the dollar will strengthen, allowing Americans to export their products more cheaply, and offset higher tariffs.

Looking ahead to 2025, we remain bullish, with more balanced portfolios by factor and company size, and are ready to quickly meet any downturns, thanks to our DIPS hedging system. The expected recession never happened, and we were right when we paid more attention to markets than to great financial strategists, who so rarely get it right. We will continue to perfect our systems and strategies to make the most of what liquid markets have to offer.

All the team at Altex wish you a very Merry Christmas and happy beginning of 2025! Enjoy the vacations with family and friends, while we take care of investments for you.