The positive inflation figures published in July on both sides of the Atlantic, the fall in inflation expectations and the encouraging start of quarterly publications helped the indices to gain ground over the month (MSCI Europe NR +1.2%, MSCI USA NR +1.2%). The Fed’s accommodative stance is now assured for September, while the ECB already set this virtuous process in motion in June by cutting its key rates by 25 basis points. In this environment dominated by monetary news, it was logically small and mid caps that stood out in July, especially as these stocks are significantly discounted both in absolute terms and relatively to their historical standards. The MSCI Europe Small NR rose by +4.3% and the MSCI USA Small NR by +7.7% over the month.
Digital Stars Europe Acc posted a monthly performance of +3.6%, outperforming by +2.4% the MSCI Europe NR (+1.2%). The fund is up +15.6% YTD, beating its index by +5.3%. The fund was supported by the small and mid caps rally, but also by its exposure to industrials (Kongsberg, Konecranes, Munters Group), its underweighting of consumer discretionary and the good performance of its financial stocks (BPER, BCP, NatWest). However, the fund was slightly penalised by its underexposure to defensive stocks.
The portfolio reviews carried out in July were diversified, increasing mainly our positions in the finance sector, as well as in utilities and industry. Among the exits were mainly consumer discretionary stocks, as well as energy, IT and healthcare stocks.
Digital Stars Europe is significantly overweight industry. The fund is underweight healthcare, consumer discretionary and consumer staples.
The UK becomes the fund’s largest weight at 17.3%, ahead of Italy (largest overweight) at 16.4% and Germany at 10.6%.
Digital Stars Continental Europe Acc ended July at +2.7%, outperforming by +2.1% the MSCI Europe ex UK NR (+0.6%). The fund is up +14.3% YTD, beating its index by +5.0%. The fund was supported by the small and mid caps rally, but also by its exposure to industrials (Kongsberg, Konecranes, Munters Group), its underweighting of consumer discretionary and the good performance of its financial stocks (BPER, BAWAG, Piraeus Financial Holdings). However, the underweight in defensive stocks and the positions in chemicals slightly penalised the fund.
The portfolio reviews carried out in July were diversified, increasing mainly our positions in finance, as well as in chemicals and media. Among the exits were mainly IT and consumer discretionary stocks.
Digital Stars Continental Europe is overweight in industry, as well as in real estate. The fund is underweight healthcare and consumer staples.
Italy (largest overweight) is still the fund’s top weight at 18.5%, ahead of Germany at 13.2% and Sweden at 10.1%.
Digital Stars Eurozone Acc posted a monthly performance of +2.3%, outperforming by +1.9% the MSCI EMU NR (+0.4%). The fund is up +15.4% YTD, beating its index by +6.6%. The fund was supported by the small and mid caps rally, but was slightly penalised by its underweight position in defensive stocks. The good performance of our semiconductor stocks (notably SÜSS MicroTec at +2.3% vs. -11.6% for ASML), as well as good earnings announcements (Konecranes, ATOSS Software, etc.) enabled the fund to outperform its index.
The portfolio reviews carried out in July saw the integration of stocks in the finance, industry and healthcare sectors. On the outgoing side, the media and semiconductor sectors.
Real estate becomes the largest sector overweight, ahead of consumer discretionary and media. The fund is underweight in consumer staples, utilities, energy and healthcare.
France remains the largest country weight at 19.7%, followed by Italy at 18.5% and Germany at 18.4%. Italy remains the fund’s most overweight country, and France the most underweight.
Digital Stars Europe Smaller Companies Acc ended up at +3.9% in July, vs. +4.3% for the MSCI Europe Small Cap NR. The fund is up +15.7% YTD, beating its index by +6.3%. The fund benefited from the small and mid caps rally, but suffered from its underweight position in the UK, partially offset by positive earnings publications (Koninklijke Heijmans, Hoist Finance…).
The monthly portfolio reviews have strengthened our positions in the finance, healthcare and industry sectors. Sales occurred mainly in IT and consumer staples sectors. The weight of the UK was significantly increased.
The portfolio is now mainly overweight in industry, finance and healthcare, and underweight in IT, real estate and consumer discretionary.
The UK (largest underweight) remains the largest country weight at 22.1%, ahead of Sweden at 16.0% and Italy (most overweight country) at 12.2%.
Digital Stars US Equities Acc USD ended up at +6.9% in July, outperforming by +5.7% the MSCI USA NR, but behind the MSCI USA Small Cap NR (+7.7%). The fund is up +17.0% YTD, vs. +16.1% for its index and +9.6% for the MSCI USA Small Cap NR. July was a strong catch-up month for US small and mid caps. This rally benefited the fund, which was heavily underweight GAFAM. The overweight position in the financials sector, particularly in US regional banks, also contributed to the fund’s good performance.
The latest monthly portfolio review mainly increased the positions in the healthcare, IT and finance sectors, and reduced mainly those consumer discretionary, energy and materials sectors.
The portfolio is significantly overweight in consumer discretionary and industry, as well as in finance. The most underweight sectors are IT and media.
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