Portfolio Manager Update | HESPER FUND - Global Solutions

HESPER FUND – Global Solutions (*)

State: 01/09/25

Key points at a glance

• Powell’s speech at Jackson Hole highlighted increasing risks for the labour market, prompting market optimism about an upcoming interest rate cut.
• Trump’s attacks on the independence of the Fed pose a serious risk for the credibility of US monetary policy.
• France’s fiscal problems are a concerning sign for the eurozone.
• The HESPER FUND – Global Solutions rose by 1.09% in August as US stocks reached new highs, yields stabilised and the Norwegian krone (NOK) appreciated. Year-to-date performance is at 2.11%.
• The HESPER FUND adjusted its portfolio only slightly in response to the improved visibility of the trade-related scenario.

Trump's Trade War Avoided

HESPER FUND – Global Solutions Macro scenario: Powell opened the door to a rate cut in September

Fed’s chair Jerome Powell opened the door to a rate cut in September, and traders were fast to bet on multiple reductions over the next few months, even though inflation remains sticky.

In unprecedented moves, Trump first fired the head of the BLS because the job creation data was considered too low, and then a Federal Reserve governor who was accused of mortgage fraud.

France’s premier Bayrou’s surprise decision to hold a confidence vote on 8 September has pushed France back to the brink of political paralysis, risking financial and economic upheaval.

Monthly performance and current positioning

The HESPER FUND – Global Solutions (T-6 EUR) rose 1.09% on FX gains and higher US stock indices. Total assets rose slightly to 51.4 million EUR. Volatility over the past 250 days decreased to 5.5%. The annualised return since inception rose to 3.29%.

As the macro situation becomes less uncertain, the need for rotation positioning has diminished. During the month, the fund reduced the equity quota up to 43%, increased the duration slightly up to 4.9 years and took profits on NOK exposure, reducing it to 5%.

The performance in August (1.09%) was as follows: 0.35% for fixed-income instruments; 0.36% for equities; 0.23% for commodities; 0.26% for currencies and -0.11% for fees and expenses

Outlook: The US economy will reveal its true self in the next two months

The aggressive shift in US economic, political and geopolitical policy will significantly impact the global outlook for 2025 and beyond. Companies and countries worldwide will need to adapt to this new reality. US protectionism is causing a significant shock to global demand. Strategic interdependence is rewiring the global economy. The US-China trade relationship can no longer be driven solely by cost and efficiency. Although growth will slow, we do not see an impending recession as likely. Resilient growth and inflation related to tariffs in the US may even disrupt the current rate-cut party.

There are many worrying signs regarding the state of US democracy. Trump’s authoritarian tendencies are evident in many areas. Dazzled by the prospect of Fed rate cuts, equity markets are showing excessive complacency about Trump’s erratic behaviour. It is surprising how calm the markets remain while Donald Trump defies the independence of the Fed and other federal agencies. We remain on alert in case doubts about US exceptionalism would increase further.

As a result, we keep a small, short US dollar exposure of 15%, almost 10% of gold and avoid longer US Treasuries maturities. Due to the high level of ongoing policy uncertainty, we are maintaining low exposure across most asset classes and avoiding large, concentrated investments for the time being.

*HESPER FUND - Global Solutions is currently only authorised for distribution in Germany, Luxembourg, Belgium, Italy, France, Austria and Switzerland.

** It excludes an arbitrage in the forward market between the US dollar and the Hong Kong dollar. This transaction artificially elevates the overall exposure to the dollar to 89%, where it would otherwise be 0%.

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