Monthly Report July 2025

Market Development in July 2025

International equity markets reached new record highs in July. The German DAX rose by 0.7% in EUR, and the American S&P 500 gained 2.2% in USD; the MSCI World Index and the MSCI Emerging Markets Index increased by 1.3% and 2.0% in USD, respectively. The Swiss equity market (SPI) moved sideways with -0.1%, mainly due to the weak performance of Nestlé. The index of mid and small-cap Swiss companies (SPI Extra) performed better, with a gain of 2.4%.

The US Federal Reserve again made no changes to its policy rate, and Fed Chair Jerome Powell tempered expectations of a potential rate cut in the fall. He emphasized the need to first assess incoming data on inflation and the labor market before deciding on any monetary policy easing.

Tariff Deal for the EU, but (Not Yet) for Switzerland

Towards the end of the month, after tough negotiations, the EU managed to avert the threatened 30% tariffs but had to accept that the US will impose a 15% tariff on the majority of imports from Europe. In return, the EU agreed to purchase $750 billion worth of liquefied natural gas and to invest an additional $600 billion in the US. Switzerland, however, was unable to turn its previously constructive talks with US negotiators into a deal. President Trump imposed a 39% tariff on Swiss exports, set to take effect on August 7. This rate is even higher than the 31% previously threatened in April, placing Swiss exporters at a significant disadvantage compared to their European competitors. The Federal Council has decided to present the US with an even more attractive offer in hopes of securing a “deal” with substantially lower tariffs. If the new US tariffs remain in place, their impact on the companies in Format portfolios would be minimal. Many of our companies with significant US sales either produce locally in the US or operate production sites in the Eurozone or other regions with lower tariff rates. As a result, they are not at a significant disadvantage compared to their competitors. However, for the Swiss economy, the new tariffs represent a serious burden. Some companies produce exclusively in Switzerland; due to the tariffs and the strong Swiss franc, their export prices will rise, causing some of them to lose business to foreign competitors. In addition, there is likely to be a further shift in production abroad to circumvent the higher tariffs, which harms Switzerland as a business location.

Fund and Mandate Performance

All Format investments posted gains in July and outperformed their respective benchmarks. The only exception was Global Bonds (F), which recorded a small loss of -0.2%, still 0.4% above its benchmark. Thanks to mostly strong half-year operational results from portfolio companies, our equity portfolios performed particularly well, each gaining more than 4%. The best-performing strategy was Swiss Equity Dividend Yield (F) with a +6.2% return (SPI: -0.1%). Year-to-date performance of the funds and mandates can be accessed via the link below.
The following portfolio companies recorded particularly strong gains in July:
Accelleron (+33.2%), Temenos (+28.9%), R&S Group (+28.9%), Swissquote (+21.2%), Bachem (+19.4%), Belimo (+18.0%) und Interroll (+15.5%).

Outlook

Although the Swiss stock market has reacted calmly to the new US tariffs so far, the focus in the coming days will be on the outcome of further negotiations with the US. It will also be important to observe whether the newly imposed tariffs and additional measures by the new US administration are already impacting the US labor market and inflation trends. Therefore, we must continue to expect a certain degree of volatility in the markets in the coming months.

Best regards
Matthias Hug and Markus Lackner

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