IMP Global Megatrend Umbrella Fund Commentary

In July, equity markets continued to show resilience, maintaining their upward momentum despite several challenges beneath the surface. Both the S&P 500 and Nasdaq Composite experienced notable gains, supported by growing confidence in the strength of the U.S. economy, technological advancements, and improving global economic conditions. Even cyclical stocks, which are often more sensitive to economic growth, outperformed their defensive counterparts, reinforcing the market’s broad-based strength. Speculative assets such as Bitcoin and meme stocks also surged, underscoring the persistent risk-on sentiment among retail investors. As risk appetite strengthened, cash holdings on the sidelines fell to their lowest levels in 25 years. Amid this constructive market environment, the IMP Global Megatrend Umbrella Fund sustained its upward trajectory, achieving a monthly return of 1.52% in July. This solid performance lifted the fund’s year-to-date return to 5.74% as of July 31, 2025, net of fees. The fund’s continued strength underscores the effectiveness of its strategic positioning, anchored in long-term structural trends and guided by a forward-looking investment philosophy. By navigating volatility with discipline and seizing opportunities across transformative global themes, the fund remains well-placed to deliver enduring value in an increasingly dynamic market landscape.

Beneath this surface-level optimism, however, the underlying composition of the rally reveals a more nuanced picture. While equity valuations remain elevated, sentiment continues to be buoyed by expectations of sustained economic growth. Nevertheless, caution is warranted, as the reintroduction of broad-based U.S. tariffs and persistent global trade tensions could weigh on investor confidence. Adding to the uncertainty are leadership changes at the Federal Reserve and the prospect of shifts in monetary policy. Amid these challenges, major technology companies remain at the forefront of market performance, bolstered by substantial investments in artificial intelligence and cloud infrastructure. Global spending on AI is projected to increase by 67% in 2025, underscoring its role as a powerful engine of long-term structural growth. This wave of investment is driving innovation across industries, as AI becomes increasingly integrated into core enterprise functions. Accordingly, companies at the forefront of this transformation are uniquely positioned to secure durable competitive advantages, reinforcing their leadership as digitalization enters its next phase.

In parallel, U.S. corporate earnings have continued to demonstrate resilience, even as new headwinds emerge. Second-quarter results indicate that strong performance, particularly among companies with exposure to artificial intelligence, is helping to offset broader macroeconomic pressures. Risk assets appear caught in a tug of war: on one side, solid earnings driven by AI; on the other, tariffs that threaten to restrain growth and rekindle inflationary pressures. Early signs suggest that the costs of tariffs are being shared between consumers and companies, but the full impact remains uncertain. In our view, corporate strength, particularly within the technology sector, can help cushion the blow and reinforces our overweight positioning in both U.S. equities and the AI theme. That said, we remain granular in our analysis, carefully monitoring company-specific exposure to evolving trade dynamics. This targeted approach continues to form our broader investment strategy. We maintain a pro-risk, overweight stance on U.S. equities, whilst simultaneously expanding our global weighting aligned with forces such as Technology/Technological Advancements, Changing Consumer Behavior/Demographics, Healthcare/Longevity Revolution, Shift in Economic Power, Mobility/Transportation, and Smart Infrastructure/Smart City. We believe U.S. market ‘exceptionalism’ remains intact, supported by sustained productivity growth across business sectors, particularly driven by advances in AI and automation. While adoption of these technologies currently stands at around 7%, their diffusion across industries is still in its early stages and accelerating steadily, offering a long runway for disruption and value creation. In addition, urbanization and demographic shifts continue to underpin demand in infrastructure, technology, healthcare and transformative energy management, areas that align closely with our thematic focus on smart infrastructure and longevity.

In addition to these themes, our outlook on the U.S. dollar also shapes our broader market perspective. We weigh cyclical factors such as tariffs against structural considerations including valuations, fiscal policy, capital flows, and policy uncertainty, all of which point toward further dollar weakness. Mounting pressure on the Federal Reserve to cut rates may reinforce this trend. Although some short-term indicators suggest the potential for a modest rebound, we expect broader macroeconomic dynamics to drive continued dollar depreciation over the medium term. This has already been evident in the Swiss franc, where the USD/CHF has declined more than 11% year to date and remains near multi-year lows, underscoring the franc’s safe-haven appeal. In turn, the weakening dollar environment could provide additional support to U.S. equities, particularly sectors with strong international exposure, thereby reinforcing our pro-risk stance.

In light of these developments, we adopted a proactive approach in July. We increased allocations to existing positions within the smart infrastructure theme and related sectors, while also initiating a new position in the healthcare and longevity space. At the same time, we selectively realized profits and exited holdings that had either delivered strong performance or no longer aligned with our strategic outlook. Within the smart infrastructure megatrend, we gradually added to positions in Prysmian S.p.A., Schneider Electric SE, Itron, Inc., and Nebius Group NV. These companies fit our investment philosophy, as they are well positioned to benefit from accelerating trends in electrification and digitalization, which are critical enablers of both the infrastructure backbone required for rapidly expanding AI capacity and ongoing urban development. The growing energy demands of AI, together with the global imperative for more intelligent, connected, and sustainable infrastructure, strengthen our conviction in this theme.

Turning to healthcare and longevity, our newest position reflects both tactical opportunity and long-term conviction in this core megatrend. We initiated a stake in Novo Nordisk A/S following a recent profit warning that triggered what we view as an overblown sell-off, creating a compelling entry point. The market’s reaction, driven by short-term concerns around the company’s weight loss drugs, overlooks Novo Nordisk’s leadership in obesity and chronic disease treatments, areas we believe have the potential to become among the largest therapeutic markets in history. Our investment thesis includes an upside scenario where the company delivers results at the top end of its current FY2025 guidance. Additionally, with the incoming in-house CEO prioritizing operational efficiency and execution, we see further potential for margin improvement, value-accretive acquisitions, and sustained strategic momentum. In parallel, to manage portfolio risk, we also realized profits on our position in NVIDIA Corp. This decision was not due to diminished conviction in the company’s exceptional prospects but aimed at limiting overexposure following its continued stellar performance, as NVIDIA already constitutes the largest position in the portfolio. Finally, we fully exited our position in MongoDB, Inc., following a continued pattern of underwhelming performance amid disappointing results.

Looking ahead, we remain constructive on the outlook for equities, particularly those aligned with our megatrend-based investment approach. With interest rate cuts potentially beginning as early as September, markets may gain an incremental tailwind. At the same time, we expect volatility to remain a defining feature of the investment landscape as investors navigate shifting macroeconomic signals, geopolitical uncertainty, and evolving structural dynamics. We believe the market is entering a new phase, shaped by the interplay of cyclical forces, long-term secular trends, and accelerating innovation. In this environment, selective positioning and forward-looking risk management are critical to delivering consistent alpha. As we approach the final months of 2025, we remain committed to navigating uncertainties with rigor while capturing opportunities across transformative global themes. The IMP Global Megatrend Umbrella Fund is strategically positioned to benefit from the long-duration growth potential embedded in our identified megatrends. By maintaining a focused thematic lens, underpinned by deep research and long-term conviction, we are confident in our ability to deliver sustainable, risk-adjusted returns for our investors across market cycles and through periods of disruption and change.

Thank you for your continued trust and support.

Stefan Wiederkehr & Karin Wiederkehr

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IMP Global Megatrend Umbrella Fund Commentary - 31 July 2025