IMP Global Megatrend Umbrella Fund Commentary

In June, global equities continued their upward trajectory, buoyed by renewed progress in U.S.-China trade talks, a de-escalation of tensions in the Middle East, and dovish signals from Federal Reserve Chair Jerome Powell, which rekindled market expectations for interest rate cuts. The S&P 500 and Nasdaq Composite both reached all-time highs by month’s end, marking their best quarters since December and March 2023, respectively. As investors grew more confident and risk appetite expanded, even institutional investors stepped back into the market. With solid momentum, a relatively healthy economy, and corporate America taking the evolving trade policies in stride for now, equity markets closed the first half of the year on a strong note. The S&P 500, which experienced 19% decline in the year, fully recouped its losses, soaring from the brink of a bear market to new all-time highs. Despite this strong rebound, caution is still advised as a multitude of risks remain on the horizon, including impending tariff deal deadlines, persistent geopolitical tensions, and the potential resurgence of inflation. Technology stocks remained the dominant force in the rally, underscoring investor confidence in the sector’s long-term growth potential. Adding to the positive sentiment, market sensitivity to macroeconomic shocks dropped to the lowest level since March, as institutional trading desks maintain a tactically bullish stance. Meanwhile, the U.S. dollar index recorded its worst first-half performance since 1973, reflecting reduced demand for the greenback in the $7.5 trillion-per-day foreign exchange market, even during periods of volatility that would traditionally boost interest in the safe-haven currency. Against this backdrop, the IMP Global Megatrend Umbrella Fund extended its positive momentum in June, achieving a monthly return of 3.85%. This solid performance brought the fund’s year-to-date return to 4.15% as of June 30, 2025, net of fees. In this context, the fund’s continued resilience reflects its strategic positioning amid shifting global dynamics, underscoring its ability to navigate volatility while capturing opportunities aligned with identified long-term structural trends.

As we had anticipated, the notion of U.S. exceptionalism has proven far from obsolete. The U.S. equity market once again emerged as the primary engine of global growth, reaffirming its structural strengths in innovation, resilience, and earnings power. While European markets temporarily outperformed earlier this year, such periods have historically tended to be short-lived. We continue to maintain an overweight position in U.S. equities, particularly considering the highly anticipated tax and regulatory reforms that could provide an additional boost to investor sentiment. The underlying strength of American corporations, driven by early adoption of artificial intelligence, a deep culture of innovation, and operational agility, positions them exceptionally well to deliver better-than-expected earnings in the quarters ahead, even against a potentially uncertain macroeconomic environment. That said, the recent reversal in market leadership, following a decade in which U.S. equities decisively outperformed their developed market peers, has prompted us to identify new tactical opportunities in European markets. This shift is reflected in our evolving global geographical allocation, which now places greater emphasis on select European markets. In this sense, we believe that megatrend opportunities remain inherently global. The secular themes shaping the investment landscape transcend regional boundaries and are becoming more influential in driving sectoral performance rather than traditional distinctions. This reinforces our conviction in a thematically led approach, anchored by long-term growth forces that span across regions and asset classes. In this context, we view our global asset allocation strategy as a thoughtful rebalancing that emphasizes diversification while selectively allocating capital to high-conviction thematic opportunities. Our positioning is guided by the pursuit of the most attractive risk-adjusted returns, whether through U.S. technology leaders at the forefront of artificial intelligence integration, European smart infrastructure enablers benefiting from robust policy support, or emerging market firms capitalizing on shifting global economic power and evolving consumption patterns. As megatrends increasingly transcend regional boundaries, we believe that a more nuanced, theme-driven investment approach is essential for capturing sustainable value. This strategic flexibility allows us to remain agile amid a complex macroeconomic backdrop, while anchoring portfolio construction around enduring principles such as innovation, sustainability, and resilience, which we view as the fundamental pillars of future growth.

In June, we maintained a predominantly static asset allocation across the fund’s portfolio. However, regarding new positions, we remained aligned with our recently identified megatrend of smart infrastructure by initiating an investment in Prysmian S.p.A., a leading global manufacturer of power transmission cables. The entry point was particularly attractive, supported by the company’s solid fundamentals and strategic positioning. Prysmian is ideally placed to benefit from Europe’s ambitious infrastructure spending plans, which are increasingly focused on electrification and digitalization. According to Goldman Sachs, Europe’s power system will require approximately €2 trillion in investment over the next decade, driven by the energy transition, rising electrification demands, and the rapid expansion of data centers. Furthermore, Prysmian’s exposure to the U.S. market, bolstered by its recent acquisition of Encore, enhances its ability to capture cross-Atlantic demand, while its U.S.-based production footprint also reduces sensitivity to potential tariff risks. Moreover, initiatives in both Europe and the U.S. targeting infrastructure and clean energy initiatives, further reinforce the company’s long term growth prospects. In parallel, we increased our position in Itron, Inc., a recent addition and a key player in smart city infrastructure solutions. By digitizing data across energy, water, and gas networks, Itron enables efficiency and greater resilience. The company offers a compelling way to gain exposure to the smart infrastructure megatrend and the rapid adoption of AI powered technologies at the grid edge. On the divestment side, we executed a partial profit-taking in Galderma Group AG. The notable appreciation in the stock price has tempered the upside potential, particularly in the outlook for fillers and biostimulators, although the trend for neuromodulators remains robust.

As previously mentioned, the U.S. dollar has declined by 10.7 percent against a basket of global peers through June, marking its worst six-month performance since President Nixon dismantled the Bretton Woods gold standard. While we believe peak dollar bearishness may have passed, a more aggressive and deeper easing cycle by the Federal Reserve than currently expected could serve as an additional catalyst for further depreciation, particularly against the Swiss franc. The monetary policy divergence between the respective central banks has become increasingly pronounced. In June, the Swiss National Bank (SNB) cut interest rates to zero, while the Federal Reserve held rates steady. This divergence, combined with the safe-haven appeal of the franc, has driven the currency to its strongest level against the U.S. dollar since 2015. Although the pace of dollar weakness may moderate in the coming months, the broader de-dollarization trend remains underway, pointing to continued downside risk over time. In this context, the IMP Global Megatrend Umbrella Fund CHF hedged share class was launched, enabling both new and existing shareholders to access the fund with currency risk mitigated against further depreciation of the U.S. dollar. Designed to provide enhanced access for investors with a Swiss franc home bias, the CHF-hedged share class aims to attract a broad range of institutional and private investors seeking to manage currency risk and strengthen portfolio resilience amid rising foreign exchange volatility.

Looking forward, five transformative forces are set to shape the investment landscape in the second half of the year: the evolving trajectory of U.S. trade and fiscal policies, persistent geopolitical risks, a continued decline in global interest rates, ongoing weakness in the U.S. dollar, and powerful, long-term structural growth trends. These trends are profoundly shaped by groundbreaking technological disruptions in artificial intelligence, the evolving landscape of mobility and transportation, the realignment of global economic power, overarching transformative shifts in consumer behavior, remarkable advancements in human longevity, and the swift progression of smart infrastructure. While the road ahead is undoubtedly fraught with challenges, particularly in navigating the complex geopolitical landscape and ongoing tensions between the U.S. and China, we anticipate that market volatility will remain a persistent feature as these dynamics unfold. Additionally, global headwinds including mixed economic data and fiscal policy discrepancies, may further amplify short-term market fluctuations. Nonetheless, we remain resolute in our conviction that such volatility presents opportunities, not obstacles. For investors with the patience and foresight to look beyond short-term noise, these periods of dislocation can present compelling entry points for long-term, sustainable growth.

Thank you for your continued trust and support.

Stefan Wiederkehr & Karin Wiederkehr

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IMP Global Megatrend Umbrella Fund Commentary - 30 June 2025