April was characterized by a level of volatility not seen since the start of the health crisis in February 2020, as evidenced by the Fear Index (Vix), which broke 50 points at the beginning of the period. The particularly high tariffs announced by the US President on "Liberation Day" plunged the world's stock markets into uncertainty, sounding the dreaded "grey swan" whistle. Risks to economic growth and inflation, a weakening dollar, the likelihood of stagflation - all the ingredients were in place for a correction of over -10% in the world's main equity indices. The 90-day truce announced a week later triggered a major rebound in the markets, which finally erased their decline, ending the month with an almost stable performance in local currency. From an economic point of view, although this context has led to a downward revision of expected growth this year to around +2.5%, the various data published in Europe and the United States (lower inflation, still solid job market, leading economic indicators still in the growth zone) do not reflect the future effects of this environment. Similarly, the first-quarter earnings season has been a good one, despite reduced visibility. It will take time for financial markets to see and value the effects of this price war. Finally, the dollar was the big loser of the month, with a correction close to -4.5% against the world's main currencies.
Against this backdrop, the fund posted a monthly performance of -3.19%, compared with -4.09% for its Euro Stoxx NT benchmark, giving a positive relative performance of 90.
Over the month, the main relative outperformances of the stocks in the portfolio (versus Euro Stoxx) were : Iberdrola (+22 bps, active weight +3.3%), Palo Alto (+20 bps, active weight +4.6%), Vertiv (+17 bps, active weight +1.3%), Air Liquide (+11 bps, active weight +3.5%) and Bharti Airtel (+10 bps, active weight +3.4%). Conversely, the worst relative performers were : Thermo Fischer (-71 bps, active weight +3.7%), Enphase Energy (-64 bps, active weight +1.8%), Zoetis (-31 bps, active weight +3.3%), Nextera Energy (-31 bps, active weight +3.0%) and Danaher (-29 bps, active weight +4.0%).
Among the main movements, our exposure to Microsoft, Palo Alto and Waste Management was increased, while Daiichi Sankyo, CSL, Deere Novo Nordisk and Iberdola were reduced.
At month-end, the portfolio comprised 37 stocks. Overall, the fund's top 10 holdings account for almost 41.5% of net assets, with the top 5 comprising the following stocks: Palo Alto (>5%), TSMC (>5%), Xylem (>4%), Danaher (>4%) and Synopsys (>4%).
During this period of high volatility, the fund performed relatively well, both during the correction and in the rebound phase following the de-escalation of the trade war. Our relatively cautious allocation to the United States (58% in the portfolio vs. 64% in the MSCI AC World), due to the positioning of the technology stocks (30% of the fund) outside the stocks most affected by the Magnificent 7 (Apple, Amazon, Meta), combined with our diversification position in India (6% of the portfolio), offered an interesting balance in these different market cycles. While caution was the order of the day, with downward revisions to expected earnings growth, the current publication period is going rather well in view of the business environment, particularly in the AI segment. Nevertheless, we note 3 points of vigilance: currency effects (particularly the dollar), the effects of stockpiling ahead of potential price increases, which may temporarily accelerate business volumes, and the lack of visibility on the annual outlook. In all likelihood, second-quarter publications will be a better indicator of business trends and profitability.