Financial markets were relatively calm in August despite a busy macroeconomic, political, and geopolitical news cycle. Equity indices posted roughly the same gains in August as in July (MSCI Europe NR +1.1%, MSCI USA NR +1.9%). During this welcome summer break, equity indices extended the gains seen in the first half of the year, rising by around 2% in Europe and 4% in the US. The acceleration of events related to the war in Ukraine is fuelling hopes for a resolution to the conflict in the coming months. On the monetary front, the Jackson Hole symposium, which traditionally brings together the major central bankers at the end of August, gave Jerome Powell the opportunity to pave the way for a new cycle of rate cuts by the Fed starting in September, as economic momentum slows and inflation stabilizes in the US. Only the troubled political situation in France dampened the dynamic of European indices at the end of the month, without however dampening their momentum, which remains buoyant at this stage.
Digital Stars Europe Acc posted a -1.2% return in August, vs. +1.1% for the MSCI Europe NR. Since the start of the year, the fund has outperformed its index by +4.8%.
After a good month of July, driven in relative terms by small and mid caps and by a good sector allocation, the fund had a mixed August, particularly in the industrial sector, and ended the two summer months slightly behind the market. Earnings publications, usually favourable to the strategy, brought good news for the fund throughout the summer, particularly in the finance, energy and materials sectors. The portfolio reviews carried out in August were diversified, mainly increasing our positions in the industry and finance sectors. Among the exits were mainly companies from the materials and utilities sectors. Digital Stars Europe is significantly overweight finance, as well as industry, and underweight healthcare and consumer staples. The UK remains the fund’s top country weight with 19.6%, ahead of Germany at 14.8%, France at 11.7% and Italy (largest overweight) at 11.0%. With a 9.1% weight, Switzerland becomes the largest country underweight.
Digital Stars Continental Europe Acc ended August at -1.2%, vs. +1.1% for the MSCI Europe ex UK NR. Since the start of the year, the fund has outperformed its index by +10.2%.
After an excellent month of July, buoyed by small and mid caps and good sector allocation in relative terms, the fund had a mixed August, particularly in the industrial sector, and ended the two summer months in line with the market. Earnings publications, which usually favourable to the strategy, impacted the fund positively throughout the summer, particularly in the financial, energy and consumer discretionary sectors. The portfolio reviews carried out in August were diversified, mainly increasing positions in the industry, as well as in the finance sectors. Among the exits were mainly stocks in the utilities, materials and consumer discretionary sectors. Digital Stars Continental Europe is overweight in finance, as well as in real estate and industry. The fund is underweight in healthcare and consumer staples. Germany represents the fund’s largest country weight at 17.6%, ahead of France at 15.9%. Norway (6.3%) and Italy (11.4%) are the most overweight countries, and the Netherlands (2.6%) the most underweight.
Digital Stars Eurozone Acc posted a +0.6% return in August, beating by +0.2%the MSCI EMU NR (+0.4%). Since the start of the year, the fund has outperformed its index by +3.6%.
The fund’s favourable sector positioning, particularly the overweight of consumer discretionary and underweight of industry, enabled it to perform well in August despite the underperformance of small and mid caps, which are overrepresented in the fund. The fund was also supported by strong individual performances following the publications of results (Banco BPM, Fresenius SE & Co, etc.). The portfolio reviews carried out in August were diversified, mainly increasing the positions in the industry and utilities sectors. Among the exits were mainly consumer discretionary, real estate and materials stocks. The financial sector remains the fund’s main overweight, ahead of real estate and consumer discretionary. The fund is underweight in the industry, consumer staples and IT sectors. Italy remains the fund’s largest weighting at 23.9%, followed by France at 21.1% and Germany at 16.4%. Italy is the most overweight country and France the second most underweight.
Digital Stars Europe Smaller Companies Acc ended August at -1.4%, vs. -0.7% for the MSCI Europe Small Cap NR. Year-to-date, the fund has outperformed its index by +7.4%.
After a strong performance in July, the fund’s overweight in growth stocks held it back in August. The reversal in defence stocks amid discussions about the war in Ukraine also contributed negatively to the fund’s performance. However, the fund benefited from positive earnings announcements. The portfolio reviews carried out in August were diversified, mainly increasing positions in industry and IT stocks. Among the outflows were mainly stocks from the healthcare and consumer staples sectors. The portfolio is mainly overweight finance, IT and industry, and underweight real estate. Germany becomes the largest country weight at 16.9%, ahead of the United Kingdom (the most underweight country) at 15.5%, and Switzerland at 14.1%.
Digital Stars US Equities Acc USD ended August at +1.5%, vs. +1.9% for the MSCI USA NR and +5.3% for the MSCI USA Small Cap NR. Since the beginning of the year, the fund is -4.3% behind its index.
In August, the fund benefited from its all-cap positioning and favourable sector allocation, with its overweight in the healthcare sector and underweight in technology. Mixed earnings announcements, particularly for technology stocks with high P/E ratios, offset these effects. The rebalancing carried out in August was fairly diversified, with the inclusion of healthcare, finance and materials, and the divestment of real estate, media, consumer staples and consumer discretionary stocks. The fund is significantly overweight in financials and industrials. The most underweight sectors remain IT and media.
