Bellevue Global Macro

The fund returned -2.41% in July. Over the same period, the MSCI World Index (EUR) declined 0.17%, while the Bloomberg Global Aggregate Index (EUR-hedged) fell 1.14%. The main detractors from performance were equities (-1.25%), government bonds (-1.07%) and non-government bonds (-0.09%).

Market sentiment in July remained largely driven by renewed geopolitical tensions and resurfacing doubts over the AI trade. Following the breakdown of the ceasefire agreement between the US and Iran, renewed military strikes pushed Brent crude oil prices temporarily above USD 100 per barrel, reigniting reflation concerns and weighing on government bonds. Equity markets experienced a pronounced sector rotation, with semiconductor stocks coming under significant pressure, while broader equity markets remained relatively resilient. European equities outperformed, supported by resilient economic data.

Against this backdrop, we modestly reduced the Fund's equity allocation to approximately 36%. Within equities, the sharp correction in semiconductor stocks was a drag on performance during the month, prompting us to adjust the portfolio to reflect the sector rotation, for example by closing our semiconductor exposure, maintaining our allocations to US healthcare and European industrials, and introducing an allocation to global consumer staples. On the credit side, we maintained the allocation broadly unchanged at approximately 38%. Credit outperformed broader markets, supported by our credit hedges and emerging market issuers. Within government bonds, we significantly shortened the portfolio duration from 5.82 years to 3.59 years, including by reducing our exposure to US ultra-long Treasury futures and increasing our allocation to short-dated German government bond futures. The latter reflects our view that markets had gone too far in pricing ECB interest rate hikes. We also reduced the fund's USD exposure from 40% to 20% towards month-end as the US dollar's recent upward momentum moderated.

We updated our scenarios on June 25, 2026 as follows:

Positive: AI buildout continues. The AI infrastructure investment cycle continues, supporting corporate capex and earnings. Lower geopolitical tensions and the reopening of the Strait of Hormuz reduce uncertainty on energy markets, while lower oil prices ease inflationary pressures. Europe gains momentum through infrastructure and defense spending, with Asia and Japan also benefiting. The synchronized macro backdrop supports equities, government bonds, and credit.

Base: Constructive but questioning markets. Markets continue to recover, supported by resilient economic fundamentals. However, investors remain cautious as questions persist over AI returns, the risk of an overheating US economy, inflation, and Europe’s ability to deliver structural reforms. Overall, the outlook remains positive for equities and slightly positive for government bonds and credit. However, these uncertainties keep volatility elevated. We remain flexible and ready to rotate quickly towards either the positive or negative scenario.

Negative: US overheating triggers a correction. Concerns over AI returns undermine stretched technology valuations as signs of an overheating US economy emerge. Despite easing tensions in the Middle East, renewed geopolitical risks remain possible. Markets begin to price weaker global growth, triggering an equity correction and wider credit spreads. Government bonds initially benefit from safe-haven demand as confidence in the new Fed Chair improves their hedging role.