Newsletter | February 2026
“The world as we know it has ended,” warned Singapore’s foreign minister.
21.9% PERFORMANCE OF MSCI KOREA
Investment perspective
The Iran conflict has injected a classic geopolitical risk premium into energy and shipping, but it is landing on a very different macro situation from the late 1970s. Euro area inflation is projected to drift slightly below 2% in 2026-27 while growth hovers around 1.25%, and China is trying to pull itself out of a low-inflation, borderline-deflation environment with growth in the 4.25-5.0% range. That combination argues more for a volatility shock and a redistribution of income between energy consumers and producers than for a repeat of the second oil shock’s entrenched stagflation. A prolonged disruption to flows through Strait of Hormuz, or successful attacks on large Gulf production facilities, would turn a risk-premium episode into a genuine supply shock, with far larger and more persistent implications for European inflation and global growth. For now, major central banks, including the ECB, can still frame this as a relative-price shock in an otherwise disinflationary world, which argues for caution rather than a wholesale hawkish pivot. The key systemic risk is disruption around the Strait of Hormuz, where roughly 20% of global oil flows, shutting or severely constraining this route could temporarily remove even after rerouting, which would justify a much larger and more persistent price jump. Running alongside the geopolitical shock is a quieter, but important, repricing in private credit, where Blue Owl’s decision to permanently curtail quarterly redemptions in a flagship retail-oriented fund has become a “canary in the coal mine” for semi-liquid vehicles. The core lesson for investors is that many private credit products have offered public-market-like liquidity on top of fundamentally illiquid, bespoke loans; as outflows rise and secondary markets clear at deep discounts to NAV for some vehicles linked to managers such as BlackRock and KKR, the promised liquidity is being revealed as conditional. This looks less like the start of a systemic default cycle and more like a regime shift in how investors price illiquidity and valuation opacity in a world where 5% government bond yields and attractive spreads are available in transparent, tradable credit.
Investment strategy
Even if disinflation and a soft landing remain plausible, the risk of sustained 90–110 USD oil and a policy mistake has risen, so our margin of error around the central scenario needs to be more evenly balanced than in early-January’s “Goldilocks” mindset. In Europe, where inflation is still expected to undershoot target in 2026–27, higher energy prices are more likely to delay and complicate ECB easing than to reverse it, unless oil moves disorderly well above 100 USD and triggers clear second-round effects. In China, higher import bills are another headwind to fragile domestic demand, but authorities stand ready to counter this with targeted fiscal and credit support to defend growth and break deflation psychology. In a pure growth scare, duration should still rally; in an oil-led inflation shock, the reaction is more ambiguous as central banks hesitate to ease, so duration remains a hedge but with a lower “bang for the buck” than in past geopolitical episodes. Valuations remain rich in developed-markets equities, particularly in the United States, while long-term expected returns cluster in the mid-single digits for stocks and low- to mid-single digits for high quality bonds, implying limited margin for error at today’s prices.
Mark Carney at Davos: “Let me be direct. We are in the midst of a rupture, not a transition”
Portfolio Activity/ News
We are adopting a resilience-maximising stance: keeping risk in our positioning but tilting more explicitly toward assets that either benefit from, or are buffered against, an oil- and inflation-scarred growth path, for example value equities. This argues for slightly less aggregate beta (equities, tight credit), more structural hedging (commodities, gold, liquid hedge funds), and a premium on liquidity so we can add risk into any overshoot or de-escalation. Credit spreads look vulnerable, as all-in yields already embed a benign default cycle; lower-quality high yield and leveraged loans are most exposed to the combination of higher funding costs and weaker growth. In that context, we have reduced credit exposure across our portfolios and redeployed part of the proceeds into a global long/short credit strategy, aiming to capture alpha rather than simply clipping current yield. Since the beginning of the year, we have reduced our equity allocation in two steps, the latest move having been implemented in mid-February. In addition, we have lowered our aggregate market sensitivity in Europe by introducing a European event-driven hedge fund and, at the same time, increased our multi-strategy hedge fund allocation, with the objective of benefiting from a return of volatility and dispersion; so far, this has indeed been rewarded in a more uncertain environment. We remain alert to any change in the situation in the Middle East and do not exclude increasing our equity exposure in the event of an easing of tensions and an interim release of risk premia.
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Forum Finance has a new corporate identity
Geneva, March 04, 2026
FORUM FINANCE has a new Corporate Identity
At FORUM FINANCE, we understand our brand as a direct extension of the way we think, make decisions, and support our clients. For this reason, following a rigorous process of strategic reflection and positioning analysis, we have undertaken a comprehensive update of our corporate identity, including the evolution of our logo and the entire visual system of the brand.
This change responds to a clear objective: to strengthen the recognition of FORUM FINANCE, clarify our message, and more accurately project the values that guide our daily activity. It is not a mere graphic redesign, but a strategic decision aimed at consolidating our positioning and preparing the firm for the present and future challenges of the financial sector.
Reclaiming the Strength of the FORUM Name
One of the central pillars of this repositioning has been the recovery and enhancement of the name FORUM. Rather than relying on our initials that are not always immediately recognizable or universal, we have chosen to highlight the word FORUM in our name: it is short, distinctive, and powerful, directly associated with the world of finance and instantly recognisable across all contexts.
FORUM is a name that requires no interpretation: it is understood, remembered, and pronounced in the same way in every language and cultural environment. This clarity reinforces our commitment to communicating in a transparent, direct, and coherent manner, both with our clients and with the market.
The Roman Forum as a Conceptual Foundation
The central concept inspiring the new visual identity of FORUM FINANCE is the Roman forum, conceived not as a decorative reference, but as a structural and conceptual foundation deeply aligned with our activity. In ancient Rome, the forum was the space where economic, legal, institutional, and public life converged. It was a place of meeting, dialogue, exchange, and decision-making, built upon principles of order, stability, and permanence. This idea of a shared, solid, and structured space lies at the heart of FORUM FINANCE’s renewed identity.
From a formal perspective, the design is based on essential and rational geometry, inspired by the ground plans of Roman forums and their architectural structures. Fundamental shapes — square, semicircle, triangle — are not only present in the logo, but form a distinctive visual language, consistently applied across all communication materials.
The word FORUM, typographically composed in a strong, uppercase treatment, can be interpreted as a top-down view or an abstract perspective of these architectural spaces, reinforcing concepts of structure, balance, and a comprehensive, global vision. This deliberately simple geometry provides clarity, legibility, and timelessness, and has been designed to endure.
An Identity Aligned with Our Values
The new corporate identity has been designed to more precisely reflect the values that define FORUM FINANCE:
- Trust, as the foundation of long-term relationships
- Transparency, in analysis and communication
- Flexibility to deliver tailored solutions
- Excellence, in every decision and every service
- Stability, as guarantee of continuity
- Independence at all times, with a focus on your interest
The choice of a contemporary sans-serif typeface introduces modernity and differentiation from more traditional financial-sector codes, while the color palette, based on deep blue tones with subtle green nuances and carefully selected contrasting accents, reinforces perceptions of solidity, professionalism, and a distinctive identity.
A Brand Designed for All Environments
The result is an identity that is simple, clear, and highly recognisable, designed to perform with equal effectiveness across digital environments, corporate documentation, physical spaces, and institutional communications. A brand that has gained visibility, coherence, and expressive strength, while maintaining the restraint and rigour that characterise FORUM FINANCE.
This new phase reflects our commitment to communicating more clearly who we are, how we work, and what differentiates us, leveraging a unique name and an identity fully aligned with our approach to finance and our relationship with our clients.
We sincerely thank you for the trust you place in FORUM FINANCE and invite you to join us in this evolution, which strengthens our commitment to excellence, clarity, and long-term vision.
FORUM FINANCE
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Newsletter | January 2026
Gold briefly reached a new high of around 5,600 before “flash crashing” to around 4,700
21.3% PERFORMANCE OF URANIUM
Investment perspective
Global risk assets extended last year’s momentum, with equity indices flirting with new highs while precious metals experienced sharp, technically driven swings and investors continued to rotate out of crowded U.S. exposures into European and emerging‑market equities. The economic backdrop remained one of moderating inflation, late‑cycle monetary policy and elevated geopolitical risks from Ukraine to the Middle East. In the latter, regional actors continued to hedge against a tougher U.S. “maximum pressure” posture on Iran, while intra‑Gulf frictions and Yemen‑related strikes underlined the potential for disruption to key maritime and energy routes. Global macro data broadly confirmed the 'soft landing' narrative: growth is expected to slow towards the mid-2% area in 2026, with inflation converging towards central bank targets, helped by easing goods inflation and cooling labour markets. However, central banks struck a cautious tone, viewing rate-cut cycles as being in their later stages and considering further progress on inflation necessary before materially easing financial conditions. Even if precious metals retain a central role as diversifiers against policy and geopolitical shocks, technical overhangs could lead to a choppy trading path. Gold, silver and especially platinum all rallied in the first trading days of the year, supported by ongoing central‑bank demand, concerns about fiscal sustainability and currencies, and tight physical balances, particularly in the more industrial metals. Kevin Warsh’s nomination acted as an important catalyst, but it was not the sole driver of the metals sell‑off, the temporary strengthening of the dollar and the renewed tension along the rate curve. Rather, it amplified moves that were already building on a hawkish shift in Fed expectations and an earlier dollar rebound. In the days around the nomination, precious metals suffered a brutal sell‑off, with silver futures dropping more than 30% in a single session. Major developed‑market indices began 2026 at or near record levels; in Europe, the main benchmarks set fresh all‑time highs, while the UK index traded above the psychological 10,000 mark for the first time. A notable feature of the month was the ongoing rotation away from the most richly valued U.S. growth universe towards international markets. Emerging‑market equities entered 2026 on the back of a strong 2025 rebound, underpinned by a weaker dollar, improving fundamentals and renewed inflows.
Investment strategy
Global activity data continue to signal positive growth momentum, with the United States standing out as the primary potential upside surprise. A combination of easier monetary policy, renewed fiscal stimulus, and regulatory easing is laying the groundwork for a possible reacceleration in US growth. Meanwhile, breakeven inflation rates have moved sharply higher, offering an early warning that current benign inflation readings may not fully reflect medium-term price pressures. Outside the US, inflation risks appear considerably lower. However, sustained public spending across Europe is likely to keep rates anchored at relatively elevated levels and may limit duration appetite among institutional investors. In Japan, the ongoing process of rate normalization marks a structural shift after decades of ultra-low yields. Over time, higher domestic rates could encourage Japanese institutional investors to gradually repatriate capital, reducing their exposure to foreign fixed income and exerting upward pressure on global long-end yields. Across global credit and equity markets, risk assets remain richly valued relative to history. Credit spreads in high-quality credit provide limited margins for error, while equity multiples largely price in a soft-landing scenario with only modest earnings volatility.
President Donald Trump has nominated Kevin Warsh to serve as the next Chair of the Federal Reserve, succeeding Jerome Powell.
Portfolio Activity/ News
Our positioning reflects a modest risk-on stance. Despite this, we reduced our overweight position during the month, recognising the late-cycle environment and asymmetric US inflation risks. We maintain a neutral to slightly overweight stance, favouring regions and sectors that are less exposed to US-specific inflation and policy risks. In the United States, the rotation out of growth stocks and into small caps and value has gained momentum as investors shift from overvalued mega-cap tech, driven by Fed rate cuts, a steepening yield curve and small-cap earnings growth forecasts of 17–22% versus the broad index's 14–15%. In Europe, we reduced market sensitivity by selling eurozone equities in favour of a dedicated European event-driven strategy with limited market beta. Emerging markets offer some of the most attractive opportunities across fixed income, equities, and currencies. Many EM central banks are further along in disinflation and easing, and real rates remain positive and elevated in key regions. This month, we switched from an EM debt corporate-only strategy to a flexible approach spanning sovereigns (hard and local currency) and corporates, mirroring our prior shift in global credit towards bottom-up bond selection and agile management. We maintained our positions in liquid alternatives and increased our gold position marginally during the month. We initiated a Japanese yen position and maintained our cautious stance on the US dollar, keeping it materially underweight.
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Outlook | 2026
In a Nutshell
Economic Outlook
Macro risk shifts from “no growth engine” to “one over‑crowded engine”: policy, regulation, and capital‑allocation decisions around AI will shape both regional performance and the balance between real‑economy gains and financial‑market excess.
U.S. growth shifts from exceptionalism to “slow but positive,” with tariffs and policy uncertainty acting as a drag rather than an outright shock. Europe and Japan emerge as incremental contributors rather than outright laggards, while China remains a structural weak spot.
Tariffs pose upside risks to U.S. and emerging market inflation, while Europe anticipates disinflation from subdued demand; so overall sticky but not accelerating dynamics.
Artificial Intelligence (AI) attenuates the downside in long‑term productivity and potential growth assumptions, especially in advanced economies, and partly offsets tariff and demographics headwinds.
Key Risks
Inflation may rebound due to supply disruptions, strong demand, or wage pressures, complicating central bank easing paths despite disinflation forecasts.
Elevated tensions raise odds of trade wars, and commodity spikes, with US-China frictions and tariffs curbing global trade volumes. Europe faces export weakness from US policy shifts.
Sovereign debt pressures from loose policies, populism, and defence spending could trigger bond sell-offs and tighter conditions. Equity corrections loom from high valuations and earnings misses.
Investment Convictions
We maintain a pro-risk stance as we enter 2026, favouring equities primarily amid the expected Fed easing and global growth. However, we are also aware of the potential for policy volatility.
A dovish monetary cycle, which represents a tailwind for rate-sensitive assets, such as small-cap stocks with a U.S. focus and emerging markets, is undeniably supportive of various asset classes.
We remain underweight in interest rate risk (duration) and core government bonds, favouring credit selectively and considering less directional credit exposure, such as long/short strategies.
The US dollar is likely to weaken further in Q1, driven by Fed rate cuts that are expected to be even more aggressive than currently anticipated, due to the anticipated change at the Chair level, which will narrow the yield differentials with peers such as the ECB and BoE.
Finally, amid equity concentration and bond yield pressures, we remain committed to alternatives and gold to make our portfolios more resilient. Although Bitcoin and similar cryptocurrencies are now part of our investment universe, we have limited conviction in them at this stage.
Table of contents
- OUTLOOK 2026 : IN A NUTSHELL
- 2H 2025 MACRO REVIEW : KEY HIGHLIGHTS
- OUTLOOK 1H 2026
- SCORECARD 2H 2025
- INVESTMENT CONVICTIONS 1H 2026
- ALLOCATION VIEWS
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Newsletter | December 2025
Market expectations of a Fed cut in December surged to around 85-87% from under 40% a few weeks ago
17.2% PERFORMANCE OF SILVER
Investment perspective
The macro backdrop remained resilient, despite the lack of publications due to the US government shutdown. Growth in developed economies remained positive, earnings season was solid, and policy remained incrementally supportive, even as central banks debated the pace of future rate cuts. Despite the strong results from Nvidia, the technology sector was the worst-performing sector in November, and growth indices underperformed value by several percentage points. Pressure undoubtedly stems from growing concerns about overly optimistic profit expectations in the field of artificial intelligence (AI), given the demanding valuation levels. It should also be noted that the sharp downward revision in the probability of a rate cut by the Fed in December had a significant impact on growth assets, given the long duration of these companies' cash flows. Consequently, technology-heavy markets such as Korea and Taiwan, which had outperformed earlier in the year, experienced steeper pullbacks, exacerbating the drag on growth-style assets. The market quickly recovered following comments from John Williams, President of the New York Fed and Vice Chair of the FOMC. He suggested that key interest rates could be lowered in December due to the weak job market, while addressing concerns about future inflation. There has been an ongoing recalibration of market expectations around Fed policy, particularly with regard to the rising optimism and the 80–85% probability of a 25bps cut at the 9–10 December meeting — a significant increase from under 40% just weeks earlier despite the lack of fresh macro data. The market did not provide the usual strength seen in U.S. indices in November. Volatility and a muted performance were the norm, due to macro policy uncertainty, high valuation risk and episodic geopolitical shocks. This unusual November may lead to a stronger December, as markets often rebound from a soft November. Overall, the tone in the final trading days of November transitioned from cautious and volatile to constructive and hopeful, with liquidity returning and investors positioning for a "soft landing" scenario supported by looser monetary policy ahead. This optimism was a critical technical and psychological turning point that set the stage for a more positive market environment heading into December and the year-end period.
Investment strategy
Recent economic data showing weakening employment trends has fuelled optimism about rate cuts, aligning with the Fed's narrative on downside risks to the labour market. Market positioning reflected a growing belief that the Fed would prioritise supporting employment while managing inflation risks, making a rate cut in December more plausible. Although U.S. breakeven inflation rates have declined moderately recently, they remain above the long-term average, signalling a modest easing of inflation expectations. Markets expect inflation to remain moderately above the Fed's target for the time being, favouring cautious policy adjustments over aggressive easing. What can we expect from the change in leadership at the Fed in 2026? The nomination of Kevin Hassett suggests a shift towards more dovish monetary policy. As Trump's chief economic adviser, Hassett has advocated earlier and more substantial rate cuts to support growth and employment, reflecting Trump's stance on the Fed's slow easing. Markets have responded positively to the nomination, with Treasury yields falling due to expectations of cheaper borrowing costs and easier financial conditions. If Hassett or a similarly minded candidate is confirmed, the yield curve is expected to steepen as short-term yields fall quickly with rate cuts, while longer-term yields may rise due to inflation concerns and uncertainty about the Fed's commitment to controlling inflation. This could introduce volatility and risk at the long end of the curve.
The Bitcoin plunged from over $125,000 in early October to below $90,000 in late November
Portfolio Activity/ News
November was a worrying month due to the sharp correction in sectors such as technology, which had previously enabled the markets to reach and exceed their historic highs. Interest in defensive sectors such as healthcare increased, and these sectors performed extremely well in November. Despite the volatility caused by repricing interest rate cuts and expected returns on substantial investments in artificial intelligence, we maintain a pro-risk stance, particularly with regard to equities. We have not made any significant changes to our regional positioning. We continue to have a strong preference for emerging markets and Europe, both of which outperformed the United States in their respective local currencies last month. After reducing our exposure to credit markets by a small amount, we have kept our allocations unchanged. However, we are aware of a situation involving a spread that offers asymmetric payoffs, where the potential for gains apart from the portable portion is becoming less attractive to us. The prospect of a high probability of a rate cut by the Fed immediately put pressure on the US dollar, which depreciated against most currencies, particularly those of emerging markets. We are maintaining our underweight position on the dollar and our preference for emerging countries and currencies. Following the dollar, gold has regained some ground after pausing at around $4,000 and is currently trading at $4,173.
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Newsletter | November 2025
Following its Q3 earnings report on October 30th, Amazon’s stock surged about 10-12% in after-hours trading.
16.64% PERFORMANCE OF NIKKEI 225
Investment perspective
Historically, October has a reputation for being a challenging month for the stock market, largely due to crashes such as those in 1929 and 1987. This has created the psychological expectation that stock prices tend to fall in October. However, this year, October somewhat diverged from this narrative. Equity markets worldwide reached record highs. This rally was supported by strong earnings reports and indications of accommodative monetary policy, including interest rate cuts and tariff negotiations that eased uncertainty. Nevertheless, market sentiment remained relatively cautious among investors, as evidenced by volatility spikes linked to trade tariffs, as well as concerns about US regional banks and credit, which precipitated selloffs in the banking sectors of the US, the UK, and Europe (notably on 17 October). The Fed's decision to lower rates was made amid limited economic data, as the ongoing government shutdown has hindered the release of key indicators such as employment and inflation reports. Despite inflation remaining above its target, the Fed adopted a cautious approach. The outcome of the Fed’s subsequent policy meetings will be pivotal in determining whether the easing trend continues or if a pivot back to tightening occurs, particularly if inflation remains high or economic growth accelerates. The end of quantitative tightening and the prospect of future monetary policy easing continue to support a cautiously optimistic outlook for risk assets. However, uncertainties surrounding fiscal policy and global economic conditions remain a potential source of instability. In early October, gold reached a historic high of over $4,300 per ounce, before correcting to around $4,000. This pullback is seen as normal profit-taking rather than a sign of fundamental weakness, which is consistent with the dynamics of the gold market after periods of rapid growth. The subsequent correction in gold prices occurred amid the stabilisation and strengthening of the US dollar. Investors also locked in gains following a period of rapid growth; prices had appreciated by over 55% year-to-date. In the credit markets, investment-grade corporate bond spreads remained near historic lows despite heavy issuance. The substantial issuance of new bonds by major technology companies such as Oracle did not result in a sustained increase in spreads, as investor demand easily absorbed the new issuance.
Investment strategy
Recent fears about seasonality, valuations and Sino-American trade tensions appear to have eased, making way for a sense of cautious optimism, as indicated by sentiment indicators. Given the positive macroeconomic momentum and improvements in both the US and the rest of the world, this environment is more favourable. This is evident in corporate earnings, which have, on average, exceeded expectations and reinforced the theme of artificial intelligence. We could therefore see this trend continuing to support risky assets, especially since the US Federal Reserve has continued its rate-cutting spree, making a second 25-basis-point cut at its October meeting. The market is anticipating the ongoing normalisation of US short-term rates, a view reinforced by the publication of lower-than-expected inflation figures. This downward cycle is expected to continue until 2026, with a further two to three cuts of 25 basis points. While this environment will continue to support markets, credit may have less potential at this stage given that spreads have already tightened considerably. Although we are optimistic about the markets and the economy, we are not ignoring the challenges posed by valuations and the uncertainties surrounding US policy. This is particularly pertinent given that momentum and technical levels remain intact, despite a few episodes of volatility. This stance is supported by sentiment indicators that remain far from euphoric levels, leaving scope for a year-end rally.
Sanae Takaichi was elected as Japan’s first female prime minister, marking a historic milestone
Portfolio Activity/ News
After adopting a more cautious stance in early September due to concerns about the negative seasonal effects of this time of year, we acknowledged that the market trend remained positive. Testing the upward trend without breaking it provided favourable signals and prompted new buying opportunities. Based on this observation and the strong macroeconomic and corporate results, we increased our equity allocation twice in October. These increases focused on the Eurozone, US mid-caps, emerging markets and Asia, the latter two of which had already been among our favourites for some time. We achieved this increase in equity allocation by eliminating our cash position, created in early September, and by continuing to reduce our investment-grade credit exposure. Although we maintain a favourable allocation bias towards credit, the current spread levels lead us to exercise a degree of caution. We have therefore maintained our investments in hybrid bonds, both corporate and financial, which we believe offer superior returns to traditional corporate bonds. Following the spectacular and rapid rise in the price of gold, we took opportunities to rebalance our portfolios and secure some profits where relevant. The relatively strong performance of emerging markets and US small- and mid-cap stocks has increased our exposure to the US dollar marginally. This remains an underrepresented currency in our allocations. We have kept our alternative allocation, including gold, unchanged to enhance portfolio resilience in the event of a return to greater dispersion of returns across markets.
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Newsletter | October 2025
Gold has climbed above $4,000 a troy ounce for the first time, Gold hit $4,036 early on Wednesday
11.9% PERFORMANCE OF GOLD IN SEPTEMBER
Investment perspective
The global economy is showing resilient, albeit slowing, growth, with projections of around 3.2%-3.3% for 2025 and just below 3.0% for 2026. This growth is being held back by tariff uncertainties and geopolitical risks. The US economy is expected to undergo a brief slowdown, supported by anticipated interest rate cuts and policy stimulus. Labour market risks remain the most critical factor in the near term. The eurozone experienced stagnation in Q3 due to the unwinding of export front-loading and tariff effects. However, underlying growth momentum and government spending are expected to support a rebound in Q4. Private consumption remains a key driver of growth. The European Central Bank (ECB) has stated that recent interest rate cuts should begin to stimulate growth, particularly through robust household spending fuelled by rising real disposable income and a gradual decline in the savings ratio. Despite some temporary setbacks and demanding valuations, corporate earnings growth is expected to remain healthy globally, supporting equities. In this context, the primary US index closed last week at a record high. As the earnings season is about to begin, consensus estimates put year-on-year earnings per share growth at 6.0% in Q3. This seems quite conservative, including for the 'Magnificent Seven', and should therefore easily be surpassed, possibly even exceeding expectations. The outlook remains positive globally. US equities are at record highs, while European equities are supported by fiscal spending and much more attractive valuations. Despite global uncertainties, emerging markets saw stronger growth and relative stability in September. These markets continue to benefit from valuation advantages and improving financial stability. However, risks remain in the form of tariffs, inflationary pressures and geopolitical tensions. Commodity prices, particularly gold, have fluctuated significantly, and the US dollar has weakened moderately due to investor caution and expectations of monetary easing. The depreciation of the US dollar has further amplified the rally in gold prices and provided a tailwind for emerging market currencies. Other commodities showed a mixed performance. While oil prices faced mild downward pressure due to ample supply, industrial metals remained relatively stable amid ongoing demand for infrastructure projects in emerging markets.
Investment strategy
The US equity market recently hit record highs. The IT heavyweight index continues to benefit from strong performance in companies such as AMD (which has a strategic partnership with OpenAI) and Nvidia. Despite tight valuations, momentum has been supported by optimism surrounding the potential for Federal Reserve interest rate cuts later in the year, as well as robust corporate activity. However, the ongoing US government shutdown is a significant source of uncertainty. It has delayed the release of key economic data, including the jobs report. While this has increased the risk of market volatility, it has not yet dampened positive investor sentiment. As with the recent resignation of the French prime minister, the shutdown could create uncertainty around monetary policy decisions, but it may also present opportunities to buy at a low price. Moderate excesses in sentiment and seasonal trends suggest that investors will embrace opportunities ahead of Q3 earnings releases, despite low expectations, as there is potential for positive surprises. The AAII Investor Sentiment Survey shows that although bullish sentiment is above the long-term average, it is nowhere near the extreme euphoria seen at previous market peaks. This reflects a moderate level of optimism among investors. Volatility indices suggest calm markets, indicating that investor fear remains subdued, though there is some greed present. Lower volatility and growing momentum typically signal positive market sentiment and can encourage further equity advances.
France’s Prime Minister Sebastien Lecornu resigned, creating political instability
Portfolio Activity/ News
In early September, in anticipation of challenging seasonality in the equity markets this month and given high valuation levels, we reduced our exposure to the credit markets after achieving strong performance. The cash generated from selling some of our high-yield credit exposure was invested in alternatives, specifically gold and an alternative trend strategy. At the same time, we reduced our overweight position in equities slightly by reducing our weighting in the US market. This reduction was reinvested in short-term liquidity instruments to maintain the flexibility to return to the markets in the event of a sharp decline or confirmation of the September trend. In retrospect, we should have maintained our US equity position. However, gold performed exceptionally well, rising by 11.9% in US dollar terms. Furthermore, to hedge against a potential further decline in the US dollar, we favoured instruments hedged in various portfolio reference currencies. It should also be noted that our alternative investment selection, particularly the alternative trend strategy, had a record month, with an increase of 5.8% in US dollar terms versus 3.6% for the broad US market index. We would like to highlight the continued strong performance of our global and emerging market managers, a segment in which we have a significant presence. The latter recorded a return of 6.7% in US dollars in September and has achieved a return of over 27.5% so far this year. Our stance remains constructive on the equity and credit markets, leading to a mildly risk-on posture. If market dynamics are confirmed, as they were in early October when key support levels were broken, particularly in Europe, we could consider returning to the equity markets selectively to take advantage of the current momentum.
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Newsletter | September 2025
Federal Reserve Chair Jerome Powell opened the door ever so slightly to lowering key interest rate in the coming months
12.8% PERFORMANCE OF THE CHINA A ONSHORE INDEX IN AUGUST
Investment perspective
Forecasts for real GDP growth in the second half of the year suggest slower quarter-on-quarter growth rates in most regions. Although some major economies, such as the US, Canada, the Eurozone and China, have recently reported stronger-than-expected 2Q GDP growth, leading to upward revisions in fore-casts, this momentum is expected to weaken, at least temporarily. As we have often emphasised in previous editions, this slowdown reflects the increase in effective US tariff rates, the unwinding of the initial growth boost from tariff front-running effects, and high levels of uncertainty and restrictive monetary conditions, particularly in the United States. Incidentally, regarding monetary policy, there is a growing probability of mod-est rate cuts in the US. This has caused the dollar to decline by 2.2%, reversing the gains made in July, and has pushed the US Dollar Index (DXY) towards multi-year lows. This was triggered by Federal Reserve Chair Powell’s Jackson Hole speech, in which he highlighted labour market weakness that could soon out-weigh inflation concerns. This has led to market expectations of potential rate cuts starting in September. The weak dollar has caused yields in US Treasury markets to drop as investors anticipate monetary easing. However, concerns about reduced foreign demand for US debt amid fiscal deficits have subsequently raised borrowing costs. Meanwhile, the European Central Bank is expected to keep interest rates at their current level, whereas the Bank of England cut rates by 25bps, from 4.25% to 4.00%, marking its fifth rate cut since August 2023. This was due to rising unemployment, albeit with inflation stubbornly remaining high at 3.6%. Nvidia’s results reinforced confidence in the AI-driven tech sector rally, showing robust growth in AI infrastructure spending. Despite the strong earnings beat, the stock price initially declined in after-hours trading because data centre rev-enue missed a narrow forecast, and the absence of any China sales prompted a cautious investor response. Meanwhile, crude oil prices fell by around 4.1% due to rising supply, increased production and geopolitical tensions dampening bullish momentum, all of which are concerns about demand. Precious metals gained as Federal Reserve Chair Powell’s dovish speech lowered funding costs.
Investment strategy
Trump’s aggressive tariffs, unpredictable immigration poli-cies, and the trajectory of budget deficits have introduced significant economic uncertainty. Tariffs risk pushing inflation higher, restraining Federal Reserve easing and raising long-term bond yields. The hawkish stance of the US central bank has infuriated Pres-ident Trump, who has demanded an aggressive cut in interest rates from the current level of 4.25–4.50% to as low as 1.3%. Trump has intensified his attacks on the Fed's independence by attempting to remove Fed Governor Lisa Cook for alleged financial fraud. This would give Trump a majority on the Fed’s board and potential control over key monetary policy levers. We remain cautious about the trend in long-term interest rates and continue to favour intermediate maturities. In Eu-rope, the highly probable fall of the French government has once again put pressure on peripheral sovereign issuers. Within fixed income, our strongest conviction remains in credit, particularly in emerging market corporate credit, due to its solid fundamentals and attractive yield. As these securi-ties are generally issued in US dollars, we recommend favouring those with currency hedging to avoid the current negative trend in the US dollar. The end of summer is traditionally associated with concerns about September and its unfavourable seasonality. This is more than just a myth; historically, this month has been the worst for the main US stock market index. Since 1945, the in-dex has fallen by an average of 0.75% during September, making it the worst month of the year on average.
French government risks collapse with budget confidence vote in September
Portfolio Activity/ News
Overall, we kept to our original allocation throughout the month, a decision that proved wise given the favourable ongoing trends in the credit and equity markets. However, the negative effects of the weak US dollar, which rebounded in July, were evident once again. The narrowing of credit spreads continued to support this segment of the bond market. Given its current level, we should no longer expect this component to have a positive impact on future returns. We have been monitoring this trend for several months, and at current levels we are considering reducing our positions. After creating a small position in small- and mid-cap US stocks for our US dollar-based portfolios, which we gradually increased, we began the same process for our euro-based investors. In addition to attractive valuations and better earnings growth, Europe’s ongoing structural investments – particularly Germany’s fiscal spending plans and increased defence spending – are positive growth drivers for this sector. Mid-cap stocks also tend to be more domestically focused and less dependent on global supply chains, which can be advantageous amid global trade uncertainties. Despite the risks posed by global trade tensions, US political uncertainty, and inflationary pressures, we maintain a positive stance on emerging market equities. These markets offer balanced opportunities through improved regional cooperation, attractive valuations, and supportive macroeconomic momentum. The Federal Reserve is widely anticipated to implement two to three rate cuts by year-end. However, political challenges affecting Fed independence and ongoing tariff-related legal disputes are adding to market uncertainty, undermining confidence in the US dollar as a safe haven. Consequently, we are minimizing US dollar exposure to mitigate risk amid an accelerating downward trend.
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Newsletter | August 2025
The US Federal Reserve held interest rates steady; speculation persisted regarding potential rate cuts in the fall.
5.8% PERFORMANCE OF THE MAGNIFICENT SEVEN INDEX IN JULY
Investment perspective
Last month was characterised by fragile global economic resilience, buoyant but volatile financial markets, and ongoing political efforts to resolve regional conflicts. Growth risks remain skewed to the downside, particularly if trade uncertainties worsen or fiscal trajectories prove unsustainable. Indeed, persistent uncertainty over trade policy and high tariff levels continue to weigh on the long-term outlook, with the expected decline in the share of global trade in output. The US economy is showing signs of slowing down, with growth now projected to be between 1.3% and 1.9%, depending on the source. Meanwhile, inflation is staying elevated at around 3.0% per annum. A pronounced “risk-on” sentiment emerged during the month as several new trade agreements were announced. This boosted global equities and pushed up bond yields, particularly in the US. Short-term US Treasury yields rose sharply, by around 24 basis points, reflecting the expectation of a delay in Federal Reserve interest rate cuts. Although the European Central Bank and the US Federal Reserve both held policy rates steady, markets continued to price in cuts (with the Fed expected to act in September), adding to yield curve volatility. Meanwhile, major US equity indices reached new all-time highs, driven by robust earnings from the technology and AI sectors, as well as renewed investor confidence following adjustments to trade policy. The US dollar experienced significant volatility in July. After starting the month weakly amid softer inflation and dovish Fed remarks. The dollar rebounded midway through the month as stronger economic data and cautious language from the Fed reduced expectations for imminent rate cuts. By 30 July, the dollar index had rebounded to around 103.6 from an earlier four-month low, but it remained down by around 8–11% year to date on a trade-weighted basis. Major currency pairs remained within their established ranges, while the yen experienced periods of strength as the Bank of Japan suggested potential changes to its policies. July was a dramatic month for copper. Prices on New York’s COMEX soared in early July, rising by over 13% at one point, after President Trump unexpectedly floated the idea of a 50% tariff on copper imports, which far surpassed market expectations. In a stunning reversal, however, refined copper was abruptly exempted from the tariff until at least January 2027, causing the premium to evaporate and leaving US warehouses with stocks at a 21-year high.
Investment strategy
Despite the announcement of new trade agreements, particularly with Japan, which will see a 15% tariff imposed on all products imported into the United States, followed by the European Union with an identical rate, fears of a global economic slowdown remain central. The erratic announcements regarding the final level of customs duties have caused more uncertainty, which is a key factor for markets and investment, than can be seen in the published data to date. However, the latest job creation figures, particularly the revised estimates for recent months, serve as a stark reminder that difficulties may lie ahead for the US economy. The latest inflation figures have also been reassuring, but the concrete effect of the tariffs remains to be seen. Against the backdrop of a potential economic slowdown and stable inflation of around 3%, the Fed has chosen to maintain the status quo. J Powell's inflexible stance has further damaged his already poor relationship with Donald Trump. The US President is demanding a rate cut to ease the burden of growing US debt — a position also held by David Warsh, who is tipped as a potential replacement for Powell as head of the US central bank. Despite these uncertainties, the markets are optimistic, with signs of euphoria in some cases. This does not yet call into question our risk-on positioning. However, we remain alert to a potential reversal in market dynamics and sentiment, which could indicate the need for greater caution.
Replacing Powell Would Not Guarantee Lower Short-Term Rates
Portfolio Activity/ News
Throughout July, we largely maintained our risk-on stance. As a reminder, this was characterised by a preference for credit over government bonds in the fixed-income segment and a resolutely growth-oriented approach to equities. This approach served us well while the credit market remained buoyant. However, we continued to diversify the bond portion by introducing positions in bonds issued by financial companies, such as banks and insurance companies. This allowed us to capture the excess yield resulting from the subordination of the securities. We reiterate our cautious stance on long-term government bonds (10+ years). In this segment of the bond market, we are maintaining a position with an average maturity of between five and ten years. The average interest sensitivity of our bond portfolio is approximately 4.5 years. We maintain a favourable bias towards technology-related sectors, especially those that benefit from artificial intelligence, in all regions. In terms of the geographical distribution of our equity holdings, we have increased our exposure to US equities slightly, while maintaining significant exposure to European and emerging market equities. Despite the uncertainty caused by trade tensions, the latter have achieved impressive growth since the beginning of the year. Within our alternative investment portfolio, while recent performance has been mixed following a strong first half of the year, we maintain a high level of conviction in our strategic exposure to key alternative investment trends and strategies.
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Outlook | 2H 2025
Executive summary
The first half of 2025 was marked by significant market volatility, driven by heightened policy uncertainty and geopolitical tensions. The fear index reached its third-highest level on record! During this period, European and emerging market (EM) equity markets significantly outperformed US equities, especially when priced in local currencies. Meanwhile, long-term bond yields increased due to concerns about fiscal deficits, particularly in the US.
Elevated uncertainty and trade barriers are expected to hinder growth significantly, while inflation is forecast to moderate slowly on a global scale. Central banks are likely to remain cautious, suggesting that rate cuts are unlikely to resume before September.
Key risks include an escalation of conflict in the Middle East, despite the current calm following the US Air Force's bombing of Iranian nuclear infrastructure. Other risks include renewed inflationary pressures due to disrupted oil supplies, for example via the closure of the Strait of Hormuz, and tariff escalations, which could trigger recessions in major economies.
Economic Outlook
Global growth will remain below pre-pandemic averages of around 2.3% to 2.9%
Growth moderation is broad-based, with notable slowdowns in the US and China
Elevated and persistent trade barriers and tariffs are a significant drag on global growth
Inflation is expected to continue moderating globally, albeit at a slower pace
Central banks are expected to maintain a cautious stance
The U.S. Federal Reserve may hold rates steady through much of 2025
Spending to support the economy will lead to rising fiscal deficits and debt levels
Key Risks
Divergent and rapidly changing monetary and fiscal policies may tighten financial conditions and destabilise markets.
Conflicts and sanctions could disrupt trade, energy supplies and investment flows.
Rising public debt and fiscal imbalances may limit policy flexibility and increase sovereign risk premiums.
Renewed inflationary pressures could derail plans for monetary easing, prolong tightening cycles and increase borrowing costs.
Further tariff increases or re-escalation could trigger recessions in major economies and worsen global growth.
Investment Convictions
Modest overweight in credit, especially in the high-yield and investment-grade sectors.
Focus on intermediate sovereign bonds as the yield curve is expected to remain upward-sloping due to fiscal deficits and risk premia ('sweet spot').
Gold remains a hedge against inflation surprises and, more importantly, geopolitical risks.
Mid-caps still present opportunities for valuation expansion and earnings growth, making them an attractive addition to large-cap allocations.
Large-cap US stocks, particularly in the technology and growth sectors, are benefiting from AI and innovation and should therefore be favoured within the equity allocation.
Currency tailwinds and relative valuation discounts against the US dollar support emerging market equities. A modest overweight position is warranted.
In Europe, fiscal stimulus in defence and infrastructure may offset some of the headwinds caused by trade disruptions.
Table of contents
- OUTLOOK 2H 2025 : EXECUTIVE SUMMARY
- 1H 2025 REVIEW : KEY HIGHLIGHTS
- OUTLOOK 2H 2025
- INVESTMENT CONVICTIONS
- ALLOCATION VIEWS