Portefeuillebeheerder update | HESPER FUND - Global Solutions

HESPER FUND – Global Solutions (*)

State: 30/04/25

Key points at a glance

• In a risky attempt to rebalance global trade, Donald Trump has sparked a trade war by imposing high “reciprocal” tariffs on the rest of the world.
• Trump’s trade mayhem and China’s retaliation have raised concerns about global growth.
• Markets discovered that the real Trump trade was “sell America”.
• The HESPER FUND – Global Solutions fell 0.99% in April as volatility hit the markets. Year to date performance is negative at -0.86%.
• The HESPER FUND went short on the dollar to -8.5% and closed short exposure on the US equity markets
  
  

Tariff angst roils markets

HESPER FUND – Global Solutions Macro scenario: welcome to the new world disorder

World stocks continued to plunge on the back of the larger than expected US tariff announcement and China’s retaliation. The runaway from US assets got even worse when Trump renewed an attack on Powell and the independence of the Fed, which finally backed down.

The growth outlook was downgraded by most experts, governments and international institutions due to the impact of the tariffs. The US dollar’s plunge in an uncertain environment is a sign of a loss of confidence in the US leadership for a currency that was once perceived as a safe haven and a key feature of US exceptionalism.

The Trump administration is feeling the heat as trade tariffs are likely to hurt the US more than its trading partners. With markets plunging and demonstrations in the streets, Trump is in desperate need of good news and is trying to de-escalate with China and accelerate the progress on trade negotiations with other partners.

Monthly performance and current positioning

The HESPER FUND – Global Solutions (T-6 EUR) fell by 0.99% in April as stocks rebounded from their lows and volatility increased. Total assets declined to 51.4 million EUR. Volatility over the past 250 days rose to 6.1%. The annualised return since inception slowed to 2.96%.

Sceptical about the results of US economic policies, we gradually reduced our exposure to US assets before Liberation Day. In March we eliminated the dollar exposure and in April we went further and turned the position to 8.5% short.

We progressively increased the short US equity exposure to -11%, but recently closed the short position as Trump softened his position on trade and backtracked on his idea to fire J. Powell. We keep a long exposure on gold and the short exposure to the US dollar as we believe the chaotic and ill-conceived policy decisions will continue to dent the credibility of the US administration.

Performance in April (-1.03%) was as follows: +0.15% fixed income instruments, -0.80% equities, +0.37% commodities, -0.61% currencies and -0.10% fees and expenses.

Outlook: the end game of US tariffs is still cloudy

The aggressive economic and geopolitical policy shift in the US will have a significant impact on the global outlook of 2025 and beyond. For the US, higher inflation and slower growth are the short-term fallout. De-escalation is underway, but the tariff end game is still unclear as trade negotiations drag on. For the rest of the world, in addition to anaemic growth, deflationary pressures, as far as they do not retaliate, might leave room for easing further monetary policy.

As a result, global activity is slowing and is seriously challenged by policy uncertainty, trade conflicts and geopolitical confrontations. Monetary easing and expansionary fiscal policies will continue to provide some support to economic expansion, but downside risks have increased significantly.

Trump has torn up the economic playbook that has underpinned US prosperity for generations, endangering the dollar as the world’s primary reserve currency and denting US Treasuries as the main risk-free asset on which all the entire financial system is based.

In recent weeks, however, President Donald Trump’s desire to overhaul trade relations, hobble the economy with tariffs and reduce international dependence on the dollar has made both domestic and international investors wary. However, the sudden shift in narrative makes betting against Trump’s economic policies difficult and risky, as Trump is playing with marked cards. 

*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%.