Effective date: 31/08/2026August started off rather well, with hopes for the restoration of traffic in the Strait of Hormuz. The rest of the month was more turbulent, with renewed tensions between Iran and the United States, new tariffs between the United States and Canada in particular, and intensified Russian bombings in Ukraine while the front appears to be stalled. From a macroeconomic perspective, activity remains well oriented in the United States, even though economic surprises are deteriorating, while Europe is in a more uncertain dynamic.
In response to this situation, the markets focused on the end of earnings releases and the outlook provided by companies, which remain positive and show strong growth.
Ultimately, equity markets reached new highs in August. The gold, "Momo," and technology sectors outperformed, while "Value" stocks, Treasury bonds, and fixed income securities underperformed.
However, concerns about "fiscal dominance," the credibility of the Fed, and the sharp rise in issuances led to an increase in interest rates, which weighed on equities from mid-month onwards. These concerns will persist as the level of government debt remains high and significant electoral deadlines are ahead of us (mid-terms, French presidential elections, elections in Italy).
In terms of sector performance, Materials driven by gold miners, Tech boosted by large caps, Energy by rising oil prices, and Health where Medtech is rebounding on low valuations, posted the best gains. Conversely, more defensive sectors affected by rising rates underperformed, including Utilities, Real Estate, Telecoms, and Consumer Staples.
During the month, the fund outperformed its benchmark index. The overweight in the Tech sector, although favorable from a trend perspective given the absolute gains recorded by this sector, was penalized by positions whose performance was below that of the sector benchmark—particularly Samsung Electronics, whose stock declined despite results exceeding forecasts, as investors were skeptical about the viability of the AI hardware market. The overweight in the industrial sector worsened the decline, with both allocation and selection effects proving negative. In Consumer, TJX ended sharply lower as a more promotional environment put pressure on prices. On the positive side, concentrated positions in ServiceNow, Publicis Groupe, and Merck & Co. each generated significant gains related to stock selection, supported by strong financial results, upward revisions of forecasts, and pipeline-related catalysts. The underweight in the financial sector, the only sector with a combined positive allocation and stock picking attribution, served as a marginal buffer, with good contributions from Mizuho, S&P Global, and Commerzbank.
In terms of movements, we took profits on Merck Inc after its strong post-quarterly results rally, and on Palo Alto in cybersecurity. We also began to reduce our exposure to French stocks exposed to France (Orange, BNP, Société Générale). Finally, we increased our positions in Eaton, Siemens Energy, Infineon, and AMD.
The evolution of the markets in the coming months will obviously depend on the movement of interest rates and the perception of risk associated with the debt levels of the world’s major economies, but also on upcoming electoral deadlines and the political noise that will surround them. At the microeconomic level, the question of the profitability of investments associated with artificial intelligence remains unresolved, as the upcoming increase in depreciation will continue to weigh on free cash flow. Finally, within industrial sectors, the uneven performances this summer raise questions about the valuation multiples that investors are willing to grant the benefit of the doubt to companies for which visibility remains excellent but whose earnings growth is no longer accelerating.