Portfolio Manager Update | HESPER FUND - Global Solutions

HESPER FUND – Global Solutions (*)

State: 31/07/25

Key points at a glance

• The US finally signed several important trade deals to avoid the worst-case scenario of a global trade war.
• The US dollar extended its rebound after the EU-US deal and still solid economic data.
• The Fed held rates steady, dampening hopes for a September rate cut. The softening labour market could however convince the Fed to ease policy further.
• The HESPER FUND – Global Solutions rose by 0.29% in July, as dollar weakness reversed and gold backtracked from highs. Year-to-date performance is at 1.01%.
• The HESPER FUND adjusted its portfolio less frequently in response to a clearer trade-related scenario.

Trump's Trade War Avoided

HESPER FUND – Global Solutions Macro scenario: Trump has turned global trade on its head with a protectionist twist

Despite the lack of details, the US trade deals with Japan, the EU, South Korea and a few other trading partners, as well as the extended truce with China, have reduced uncertainty and removed the worst-case scenario for the global economy from the table. However, import duties averaging over 15% are going to cause slower global growth.

Powell maintains a wait-and-see approach as the Fed defies Trump’s calls for a rate cut. The Fed chair however keeps his options open for September, promising little while ruling nothing out.

Monthly performance and current positioning

The HESPER FUND – Global Solutions (T-6 EUR) rose 0.29% in July, due to the reversal of the US dollar and sticky yields lowered the performance. Total assets fell slightly to 51.3 million EUR. Volatility over the past 250 days decreased slightly to 6.1%. The annualised return since inception remained at 3.15%.

This year Hesper had to adjust its positions in response to uncertain and rapidly evolving trade scenarios. As the situation becomes clearer, the need for rotation positioning has diminished. During the month, the fund raised the equity quota up to 48% and kept the duration rather stable around 4.5 years.

The performance in July (0.29%) was as follows: -0.21% for fixed income instruments, +0.74% for equities, +0.16% for commodities, -0.30% 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 have to adjust to this new reality. Uncertainty and protectionism are causing a significant shock to global demand. Although growth will slow, we don’t see the risk of an impending recession.

Amid a high level of uncertainty, the world order is shifting. This evolution, partly triggered by China`s economic and technological rivalry with the US, marks a transition from the post-World War II order in which a rules-based order was to a certain extent set and accepted.

Global trade raised the living standards of millions of people in Asia and around the globe. However, protectionism and trade barriers are reversing this trend. International investors, especially in Asian countries, have an increasing number of reasons to consider alternatives to US-based assets. These include a growing budget deficit, increasing political polarization, a high risk of a less independent Fed, and a major geopolitical and diplomatic shift away from the established post-war dynamics.

Trump’s attempts to tear up the economic playbook that underpinned US prosperity for generations are endangering the dollar’s status as the world’s primary reserve currency and denting US Treasuries as the main risk-free asset on which the entire financial system is based. A gradual shift from hoarding dollar assets to doubting US exceptionalism may already have begun.

As a result, we are shorting the US dollar and exploring options for what may be a long-term stealth trend. Due to the current still high level of policy uncertainty, we are maintaining low exposure across most asset classes and avoiding large, concentrated bets 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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