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In this market environment, the Fund posted a positive absolute performance, outperforming its reference indicator over the month.
Regarding rates, our steepening strategies on the European yield curve, as well as our short positions in French debt and our inflation strategies contributed positively to performance.
In credit, the portfolio benefited from its carry strategies, with a particularly strong positive contribution from our financial sector bonds.
Finally, the portfolio continues to benefit from our exposure to money market instruments and our selection of collateralized loan obligations (CLOs).
In a context where the market no longer anticipates rate cuts, while risks to growth persist, we are maintaining a portfolio duration of around 2.3, focused on maturities of less than five years.
On the one hand, we maintain a significant allocation to credit, mainly invested in short-term, highly rated corporate bonds, offering an attractive source of return and a reduced beta relative to market volatility.
We keep a cautious stance on European rates, favoring curve-steepening strategies while maintaining a short position on the long end, notably in French debt where political and fiscal risks remain particularly concerning. We also maintain our exposure to inflation break-even strategies in the United States, as we believe the Fed is losing credibility while fiscal policy remains excessively loose.
We are also maintaining credit market protection (iTraxx Xover), as markets are trading at tight levels amid economic and trade uncertainty.
Finally, we keep part of the portfolio in money market instruments, which help control the overall volatility of the portfolio while providing a cash reserve to be redeployed in case of a market event.
Bonds | 79.7 % |
Money Market | 17.1 % |
Cash, Cash Equivalents and Derivatives Operations | 3.2 % |
For over 35 years, we have maintained our active and conviction-driven approach, while being able to adapt to different market configurations. This is what we want to continue offering to investors.
Market environment
US data sent mixed signals with July nonfarm payrolls disappointed with just +73k jobs, alongside downward revisions of -258k for May and June. Meanwhile, inflation data surprised on the upside, with core CPI rising to +3.1% YoY and PPI accelerating to +0.9% in July. Nevertheless, Q2 GDP was revised higher to +3.3%, supported by stronger personal consumption.
Despite sticky inflation, Powell’s dovish tone at Jackson Hole emphasized rising labor market risks and reinforced expectations of a September rate cut. However, President Trump’s attempt to remove Governor Lisa Cook, raised concerns about Fed independence and contributed to steeper yield curves.
In Europe, signs of stabilization appeared as August flash PMIs showed modest growth. Germany’s manufacturing rebound led the way and eurozone data confirmed expansion and inflation held near 2%.
In France, the announcement of a confidence vote and the risk of a government collapse if no agreement is reached on the austerity plan proposed for the 2026 fiscal year, weighed on markets and pushing the OAT/Bund spread to 79 bps, its highest since 2024.
In August, yield curves steepened on both sides of the Atlantic. In the US, the move was pronounced, with the 2Y falling by -34 bps versus -14 bps for the 10Y, as markets priced in rate cuts. In Germany, the shift was modest, with the 2Y down -2 bps and the 10Y up +3 bps.