The equity correction gathered pace in March, mostly led by US equities and some of the US tech mega-caps. US equities ended the month at their YTD bottom, approx. 10% below their mid-February peak. In March, uncertainty surrounding the Trump administration’s trade policy, coupled with an economic slowdown in the U.S., triggered one of the fastest unwinds in investor positioning in U.S. equities in recent decades. The narratives of U.S. exceptionalism and Trump’s progrowth agenda, which dominated investment outlooks last December, have come under significant pressure. As a result, the heavy concentration in U.S. tech megacaps unwound sharply within weeks, completely erasing stock gains accumulated since Q4 2024. Looking ahead, investor focus will shift to U.S. corporate earnings, with Q1 2025 reports on the horizon. Analysts' forecasts remain optimistic, suggesting that the previously excessive U.S. equity valuations seen at the end of 2024 have now moderated. This adjustment could provide some support for a technical rally in early Q2. Additionally, most technical indicators suggest that U.S. equity markets are now broadly oversold, which should help limit downside risk in the short term. However, any period of stabilization or technical rebound is unlikely to be sustained for long, as economic risks remain skewed to the downside. Headwinds from Trump’s trade policies persist, while a challenging inflationary
environment limits the Federal Reserve’s ability to implement preemptive monetary easing. Meanwhile, cheaper valuations and fiscal expansion continue to offer more support for equities in China and Europe. However, a prolonged decoupling from U.S. equities seems unlikely, particularly in the event of a renewed selloff driven by rising U.S. recession fears. The recent outperformance of European equities may have peaked alongside the flow of supportive policy news.

The Fund was up +0.1% (A, USD) in March, slightly lagging its annual objective. The continuation of the US and Japanese equity market sell-off throughout March triggered further temporary losses in the income notes, which have offset part of the total income collected during the month. However, the few reinvestments that were made early in the month captured strong yields as a result of the higher volatility regime. As of 31/03, the Fund’s running yield was at +10.0% p.a. (USD, gross) with +13.9% downside protection of the income notes allocation and 4.7-month average maturity.