The Investment Letter - June 2026

Equity Market

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In May, the indices continued the rally that was initiated in April(MSCI Europe NR +3.2%, MSCI USA NR +5.2%). At this stage, nothing seems to becurbing the rise in equity markets. Reassured by renewed optimism over theoutcome of the conflict in the Middle East, investors welcomed strong publicationsresults amid the quarterly earnings season, particularly in the United States,where new all-time highs were reached. However, the macroeconomic environmentcontinues to raise many questions, if not concerns. The lack of geopolitical visibilityand the persistence of high energy prices since late February threaten thegrowth cycle, even as central banks prepare to raise key interest rates, allagainst a backdrop where valuations have risen above historical norms.

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Fixed Income Market

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Global equity markets ended June cautiously, marked by a sharp rotation out of mega-cap technology. During the month, S&P 500 fell 1.1%, the MSCI World Index slipped 0.2%, and the Magnificent 7 posted their worst month relative to the S&P 500 since 2022.  The landmark event of the month was the record-breaking SpaceX IPO, which finished its debut month up 27%. The Federal Reserve, under new Chairman Kevin Warsh, delivered a hawkish first meeting leaving rates unchanged, but forward guidance removed and the dot plot now pointing to hikes in 2026, resulting on a higher dollar, and the flattening of the Treasury curve. Global credit proved resilient despite the hawkish shift, with global high yield returning +0.5% and global investment grade +0.3%, (in EUR) supported by tight spreads. The US–Iran interim peace deal pushed oil back to pre-war levels, weighing on energy, while industrials, healthcare and financials outperformed.

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Equity Funds:

Chahine Equity Europe Acc posted a +2.1% return in June, vs. +3.0% for the MSCI Europe NR. The fund has gained +18.5% year-to-date, vs. +10.7% for its benchmark.

Following the shift in European equities into a contracyclical regime, the portfolio construction strategy currently in place has helped to preserve around 3% in return during the month of June alone. The new portfolio construction has indeed shielded the portfolio from the significant underperformance of small and mid-caps over the period. Strong performances from stocks in the healthcare (argenX), consumer discretionary (Salvatore Ferragamo, Ferrari, Pandora) and finance (NatWest, Assicurazioni Generali, BPER) sectors made a positive contribution in relative terms, in contrast to the telecommunication and industry sectors.

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The fund’s asset allocation is now expected to stabilise, following the switch to a contracyclical strategy at the start of May. Chahine Equity Europe is overweight in consumer discretionary and telecoms. The fund is mainly underweight in industry and consumer staples.

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The UK remains the fund's top country weight with 18.9%, ahead of Italy at 12.1% (largest country overweight). Germany and Switzerland are the two most underweight countries.

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Chahine Equity Continental Europe Acc ended June at +2.1%, vs. +3.5% for the MSCI Europe ex UK NR. The fund has gained +17.3% year-to-date, vs. +11.2% for its index.

With European equities shifting into a contracyclical regime, the portfolio construction strategy currently in place has enabled the portfolio to preserve more than 3% in performance in June alone. The new portfolio construction has indeed shielded the portfolio from the significant underperformance of small and mid-cap stocks over the period. Strong performances from stocks in the healthcare (argenX, Merck), consumer discretionary (Pandora, Ferrari) and financials (Banca Generali, Assicurazioni Generali, BPER) sectors made a positive contribution in relative terms, in contrast to the industrials, IT and telecoms sectors.

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Following the contracyclical regime shift in early May, the fund’s allocation is now expected to stabilise. Chahine Equity Continental Europe is now mainly overweight in consumer discretionary and underweight in industrials.

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France becomes the fund’s largest country with a 14.9% weight, ahead of Switzerland at 14.6% and Italy at 12.3%. Italy is the most overweight country, and Germany the most underweight.

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Chahine Equity Eurozone Acc posted a +3.8% return in June, vs. +4.2% for the MSCI EMU NR. The fund is up +20.6% year-to-date, ahead of its index at +12.5%.

In June, the fund benefited from its good sector allocation, with an overweight position in finance and an underweight position in energy and commodities. However, the overweight position in small- and mid-cap stocks – significantly reduced by the fund’s shift to a contracyclical regime last month – weighed on performance, resulting in a slight underperformance for the month.

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The continued repositioning towards a contracyclical strategy has influenced the fund’s asset allocation this month, reducing exposure to technology and utilities, and primarily increasing positions in the financial sector.

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The finance sector becomes the fund's main overweight, ahead of real estate and consumer discretionary. The fund remains underweight in the consumer staples, industry, utilities, energy and materials sectors.

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Italy remains the fund's largest weighting at 24.6%, followed by France at 21.5% and the Netherlands at 13.2%. Italy is the most overweight country, and Germany the most underweight.

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Chahine Equity Europe Smaller Companies Acc ended June down -1.2%, ahead of the MSCI Europe Small Cap NR at -3.0%. The fund is up +15.1% YTD, vs. +5.4% for its index.

In June, the fund benefited from its strong positioning, with an overweight exposure to the financial sector and an underweight exposure to materials. Furthermore, stock selection also made a positive contribution, particularly in the financial sector (Banca Generali, BAWAG Group, etc.) and the industrial sector (Tesmec, Keller Group, Nordex, etc.).

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Since May, the fund has been operating under a contracyclical strategy, making its positioning more stable. The fund remains significantly overweight in finance, as well as in IT, and is underweight in healthcare and real estate.

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The United Kingdom remains the portfolio's main exposure at 31.1%, ahead of Sweden at 16.8% and Switzerland at 8.4%. Sweden is now the most overweight country, and Spain the most underweight.

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Chahine Equity US Acc USD ended June at +8.5%, vs. -0.9% for the MSCI USA NR and +5.3% for the MSCI USA Small Cap NR. The YTD return of the fund is +56.1% vs. +9.9% for its index.

In the United States, it was once again the IT sector, driven by AI-related stocks, that led the markets during June, especially among the small and mid caps. The fund therefore naturally benefited from its overweight position in this sector, but also from its overweight positions in the financial and industrial sectors, and from its underweight position in the communications services sector.

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The portfolio review carried out in June was fairly diversified. It increased exposure to the industry, finance and IT sectors, and reduced the exposure to the healthcare sector.

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The fund remains significantly overweight in IT and finance, as well as in industry. The most underweighted sectors remain media, consumer discretionary, consumer staples and healthcare.

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Bond Funds:

Dynasty Global Convertibles Fund

The rally in global convertibles cooled, with the Refinitiv Global Index returning -1.12% during the month, as investors tempered AI expectations and priced in higher-for-longer rates. Regional dispersion was wide, with AI-heavy regions such as Asia ex-Japan and the US lagging, while Europe and Japan outperformed. Convertibles, nonetheless, remain the leading asset class year to date ahead of global equities and credit.

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The defining event of the month was the primary market. Global issuance reached a record $45 bn, far above the previous monthly record of $30.6bn, led by the US. Alphabet brought the largest mandatory convertible bond deal in history, a $19.3bn mandatory convertible bond to help fund its AI ambitions. Other sizeable deals this month came from Super Micro, Ciena, Lenovo, and Robinhood. Europe had also its strongest month so far, with $5.3bn in new issuance led by STMicroelectronics, Schneider Electric and Vonovia. Year-to-date issuance stands at $138 bn, on pace to exceed the record of $200bn for the full year.

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The Dynasty Global Convertibles Fund -Share Class B (EUR) returned -1.77% in June. The negative performance was mainly driven by our exposure to the materials and the defense sector, which bore the brunt of the late-month repricing, partially offset by our holdings in the memory and semiconductor sectors. During the month, we initiated a position in Palo Alto Networks, increasing our exposure to the cybersecurity theme through a resilient, recurring-revenue fundamentals story. We also initiated a position in AST SpaceMobile, as the success of the SpaceX IPO has re-rated the satellite communications ecosystem. Finally, we added to our exposure on JX Advanced Materials, gaining exposure to the semiconductor materials supply chain while diversifying into Japan, one of the best-performing convertible regions this year.

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On the sell side, we took partial profits in Western Digital after an exceptional rally in the underlying equity, and in Schneider Electric, trimming into strength as the company returned to the primary market with a new €850mn convertible. At month-end, the fund's equity sensitivity stood at 39.3%, with an average interest rate sensitivity of 1.12 and an average portfolio rating of BBB, reflecting a balanced profile portfolio with equity participation and downside protection that remain central to our investment philosophy.