Monthly Report June 2025

Market Development in the First Half of 2025

After a strong start to 2025, equity markets worldwide experienced a significant correction from the end of February to mid-April, triggered by the trade conflict and the tariffs imposed by the United States. Since the impact of this conflict on global economic growth remained relatively limited, the markets recovered between mid-April and the end of June. So the first half of 2025 resulted in pleasing returns in Europe: the SPI gained 6.9% and the DAX rose by 20.1%. Because the USD depreciated by more than 12% against the CHF, EUR and many other currencies in the first half of the year, returns on US equities and global indices were accordingly lower in CHF and EUR than in USD: the MSCI World Index posted a total return (price gains plus dividends) of 9.5% in USD and -4.2% in CHF; the US S&P 500 returned 6.2% in USD and -7.1% in CHF; and the MSCI Emerging Markets Index posted 15.5% in USD and 1.1% in CHF. After mid- and small-cap Swiss equities underperformed large-cap stocks from 2022 to 2024, they finally achieved better returns again: the SPI Extra index of mid and small caps closed with a total return of 10.5%, which is 4.6% higher than the SMI. Bond markets moved mostly sideways, gold benefited from uncertainty and gained 25.9% in USD and 10.1% in CHF.

The Trade Conflict – The Dominant Theme

The influence of the trade conflict on financial markets was very significant, while the impact of the wars in the Middle East and Ukraine was less so. Although there is now more clarity around the trade conflict than in early April, many uncertainties remain: What further tariffs will the US impose? How significant will the impact of the trade conflict be on corporate earnings and economic data?

Fund and Mandate Performance

The half-year results of Swiss Mid & Small Cap Equity (F) and Swiss Equity Dividend Yield (F) are very encouraging, as both strategies achieved double-digit returns and outperformed their benchmarks by more than 3%. The two other Format equity strategies, Swiss Equity (F) and Swiss Flex (F), slightly underperformed the Swiss Performance Index. The results of all Format funds and mandates are listed in the usual format at the end of this report. Among individual holdings in our Swiss equity portfolios, five stocks achieved a total return of more than 40%: AMS Osram (79.1%), Zehnder (51.6%), Medmix (44.2%), as well as the newly added stocks of R&S Group (57.7% since purchase) and Sensirion (46.2% since purchase). None of the portfolio companies recorded a total return below -25%.

Outlook

As mentioned above, the coming weeks may bring further clarity regarding the course of the trade conflict and the actual impact on corporate earnings and economic data. Current market prices already reflect expectations about the outcome of the trade dispute as well as Q2 economic and earnings figures. Depending on whether these results turn out better or worse than current expectations, the market reaction will be positive or negative.

Best regards
Matthias Hug and Markus Lackner

‍