As every month, you can read our investment report, in which we offer you a macroeconomic analysis of the market, a presentation of the performance of our funds and their results.
The month of May (MSCI Europe NR +4.7% in Euros, MSCI USA NR +6.4% in USD) extended the rebound initiated in the course of April following the Trump administration’s 90-day suspension of tariffs, enabling European indices to reach new record highs and US indices to approach them again. The rise seen in Europe has fundamentally normalized the local market in terms of valuations. This process of fundamental normalization is also visible if we take a more granular look at the European investment universe. The countries, sectors and market capitalisation segments that present the biggest discounts to their historical standards are also those that outperformed in May. This was the case for southern geographies (MSCI Spain NR +6.4%, MSCI Italy NR +8.3%), Financials (+MSCI Europe Finance +6.5%), Industrials (MSCI Europe Industrie +8.1%) and small and mid caps (MSCI Europe Small NR +7.1%).
Investors are now impatiently awaiting the outcome of these tariff negotiations, which are weighing heavily on US economic momentum, while Europe seems less affected at this stage. We continue to believe that this is only a transitional period. The new US administration is doing its utmost to force the Fed to cut rates, before adopting a more conciliatory stance on the subject of trade.
Digital Stars Europe Acc posted a +9.3% return in May, outperforming the MSCI Europe NR by +4.6%.
Small and mid caps, which are well represented in the fund, performed very well in May. The fund’s sector allocation was positively aligned with the market, with an overweight in industry and finance and underweight in healthcare and consumer staples. A number of stocks stood out, mainly in finance (BPER Banca, Erste Group Bank), defence (RENK Group, Rheinmetall, Kongsberg) and the rest of industry (International Consolidated Airlines, Konecranes). On the other hand, there were a few disappointing publications, such as those from freenet and Thyssenkrupp. The portfolio reviews carried out in May were diversified, mainly increasing our positions in the finance and utilities sectors. Among the exits were mainly companies from the consumer discretionary and healthcare sectors. Digital Stars Europe is still significantly overweight finance and industry, and underweight consumer staples and healthcare. The UK remains the fund’s top country weight with 21.7%, ahead of Germany at 14.6% and Italy (largest overweight) at 13.8%. With a 7.0% weight, France remains the largest country underweight.
Digital Stars Continental Europe Acc ended May at +8.4%, vs. +4.7% for the MSCI Europe ex UK NR.
The rebound in small and mid caps continued to support the fund in May. The fund’s good sector and geographical allocation contributed positively in relative terms, with an overweight in industry and finance, and an underweight in healthcare and consumer staples. Defence-related stocks contributed strongly, such as RENK Group, Theon, Rheinmetall, Hensoldt, Kongsberg and Indra Sistemas. Individually, some financial stocks stood out (BPER Banca, Swissquote). On the other hand, there were a few disappointing publications, such as those from freenet and Thyssenkrupp. The portfolio reviews carried out in May were diversified, mainly increasing positions in finance and utilities. Among the exits were mainly stocks in the consumer discretionary and healthcare sectors. Digital Stars Continental Europe is overweight in finance and industry, as well as in real estate. The fund is underweight in consumer staples, healthcare, as well as in consumer discretionary and IT. Germany becomes the fund’s largest country at 17.0%, ahead of Italy (first overweight) at 16.2%, and Sweden at 13.5%. With a 11.0% weight, France remains the largest country underweight.
Digital Stars Eurozone Acc posted a +9.6% return in May, beating the MSCI EMU NR by +4.0%.
In May, the fund benefited from its overweight position in the financial sector, particularly banks, its underweight position in the consumer staples sector, its all-caps profile, and positive earnings announcements. The portfolio reviews carried out in May were diversified, increasing the positions in the finance sectors in particular. Among the exits were mainly industrials. 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 becomes the fund’s largest weighting at 22.3%, followed by Germany at 20.6% and France at 18.2%. Italy is the most overweight country and France the most underweight.
Digital Stars Europe Smaller Companies Acc ended May at +8.1%, outperforming by +1.0% the MSCI Europe Small Cap NR (+7.1%).
The fund’s good performance in May is due to a good sector allocation and positive earnings announcements for the stocks in the portfolio. The fund benefited from its overweight in banks and defence stocks, and an underweight in real estate. The rebalancing carried out in May were diversified, mainly increasing positions in industrial and IT stocks. Among the outflows were mainly stocks from the finance, healthcare and communication services sectors. The portfolio is now mainly overweight industry and finance, and underweight real estate. Germany becomes the largest country weight at 17.5%, ahead of the United Kingdom (the most underweight country) at 13.9%, and Sweden at 11.5%.
Digital Stars US Equities Acc USD ended May up +6.5%, vs. +6.4% for the MSCI USA NR and +5.8% for the MSCI USA Small Cap NR.
The fund ended May in line with the MSCI USA, despite its all-cap profile. This resilience was mainly due to good earnings announcements in sectors such as consumer discretionary (Carvana, Urban Outfitters), healthcare (Nutex Health, Veeva Systems) and industry (Nextracker, Sterling Infrastructure). The rebalancing carried out in May was fairly diversified, with the inclusion of IT and healthcare stocks, and the divestment of consumer discretionary and industry stocks. The fund is heavily overweight in financials, and overweight in healthcare. The most underweight sectors remain IT and media.
