The Investment Letter - September 2026

Equity Market

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September proved to be a difficult month for equity markets, particularly in Europe (MSCI Europe NR -2.4%, MSCI USA NR -0.4%). The decline was almost widespread across the European market, where only two sectors managed to post gains over the month: Energy and Technology. The picture was similar in the United States, where only the sectors linked to the artificial intelligence theme (Technology and Communication Services) ended the month higher.

The decline in the indices could, however, have been more pronounced given a particularly adverse backdrop. The acceleration in the rise of long-term rates, inflation picking up again, French sovereign debt under pressure and central banks raising policy rates on both sides of the Atlantic gave investors ample reason for concern. In this respect, the relative resilience of the markets in such an environment deserves to be highlighted.

Such an environment argues for a more diversified and less cyclical active positioning, particularly in Europe, where our proprietary economic momentum indicator has continued to signal a countercyclical environment since the end of April.

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Fixed Income Market

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Global equity markets ended September on a softer note as a hawkish repricing of rates collided with higher oil prices. The Fed, ECB and BoJ leaned into a renewed tightening cycle, and the US Treasury sell-off dominated the month. 10-year and 30-year yields reached multi-decade highs, with the 10-year climbing above 5.2%. Crude oil finished above $90 as US-Iran tensions persisted.

Gold slipped as real yields rose, and the dollar strengthened against nearly all major currencies. The Nasdaq rose 3.2%, lifted by strong gains in Technology and Communication Services, while the broader S&P 500 slipped 0.5% driven by rate-sensitive and cyclical sectors that were the most affected.

Outside the US, Europe and most of Asia ended lower, with Taiwan and Korea the notable exceptions. Credit sold off during the month, with global high yield down 2.67% and investment grade down 2.16% during the month.

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Equity Funds:

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Chahine Equity Europe Acc posted a -2.0% return in September, vs. -2.4% for the MSCI Europe NR. The fund has gained +17.3% year-to-date, vs. +9.6% for its benchmark.

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Since the end of April, our economic momentum indicator has been signalling that European equities have entered a contracyclical phase, and the fund has applied an appropriate portfolio construction strategy that has fully protected its performance lead during the ups and downs of the past months. In September, the strong selection of stocks made a positive contribution, particularly in finance (AIB, NatWest), telecom (Elisa), IT (AT & S) and industry.

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Chahine Equity Europe remains overweight in consumer discretionary and telecoms. The fund is mainly underweight in materials, energy and healthcare.

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The UK and France are the most underweight countries (resp. -6.0% and-3.9% vs. MSCI Europe), and Italy the most overweight at +4.5%.

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Chahine Equity Continental Europe Acc ended September at -1.8%, vs. -2.6% for the MSCI Europe ex UK NR. The fund has gained +16.1% year-to-date, vs. +9.0% for its index.

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Our economic momentum indicator has been signalling since the end of April that European equities have entered a contracyclical phase, and the fund has followed an appropriate portfolio construction strategy that has fully preserved its performance lead during the ups and downs of the past months. In September, the strong stock selection contributed positively, especially in the finance (AIB, ING Groep, AIB), telecom (Elisa) and industry sectors.

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Chahine Equity Continental Europe remains mainly overweight in finance, consumer discretionary and telecoms, and underweight in industrials (defence) and IT.

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Italy is still the most overweight country (+4.5% vs. MSCI Europe), while Switzerland and France are the most underweight (resp. -4.8% and -4.5%).

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Chahine Equity Eurozone Acc posted a -2.8% return in September, vs. -1.9% for the MSCI EMU NR. The fund is up +15.1% year-to-date, ahead of its index at +10.8%.

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Following the shift of European equities into a contracyclical phase, as indicated by our economic momentum signal at the end of April, the fund has adopted an appropriate portfolio construction strategy. The fund’s positioning, overweight in real estate and underweight in technology, had a negative impact this month. The stock selection, particularly in the consumer discretionary, financial, and technology sectors, partially offset the underperformance caused by the fund’s positioning.

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The financial sector remains the fund's main overweight, ahead of real estate and consumer discretionary. The fund is still underweight in the IT, consumer staples, energy and materials sectors.

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With a 25.7% weight, France is now the fund’s largest country, ahead of Italy at 21.9%, the most overweight country. Germany remains the most underweight country.

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Chahine Equity Europe Smaller Companies Acc ended September down -2.2%, ahead of the MSCI Europe Small Cap NR at -2.6%. The fund is up +16.8% YTD, vs. +8.5% for its index.

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Following the shift of European stocks into a contracyclical phase, as indicated by our economic momentum signal at the end of April, the fund has adopted an adjusted portfolio construction strategy. The fund’s positioning was fairly neutral in September. The fund’s outperformance was largely driven by a sound stock selection, particularly in the industrial, telecommunications services, consumer discretionary, and energy and technology sectors.

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Since May, the “contracyclical” mode of the funds making its positioning more stable; it remains overweight in financials, industrials and consumer discretionary, and underweight in healthcare, energy, utilities and real estate.

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The United Kingdom remains the portfolio’s largest country exposure at 32.9%, followed by Sweden at 15.1% and Germany at 9.6%. United Kingdom is now the most overweight country, and Denmark the most underweight.

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Chahine Equity US Acc USD ended September at +2.8%, vs. -0.4% for the MSCI USA NR and -4.8% for the MSCI USA Small Cap NR. The YTD return of the fund is +39.5% vs. +12.3% for its index.

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In the United States, September saw momentum continue from the first half of the year, following the summer correction. The rebound in AI-related stocks after a more challenging summer period was the main driver of the month’s outperformance and more than offset the drag on performance from exposure to small- and mid-cap stocks.

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The rebalancing carried out in September was fairly diversified, primarily increasing positions in the technology and industrial sectors. On the outflow side, the holdings primarily consisted of stocks in the consumer discretionary, healthcare, and real estate sectors.

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The fund maintains a significant overweight position in financials, industrials, and technology. The most underweight sectors remain media, healthcare, and consumer staples.

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Bond Funds:

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Dynasty Global Convertibles Fund

The global convertible market had a negative month, with the Refinitiv Global Focus index returning -2.24%. Two forces drove the decline: the surge in bond yields, and valuation cheapening on specific pockets of the market. Regional dispersion was significant. Asia was the main drag while the US and Japan posted more modest losses. We see this valuation reset as constructive creating entry points in both the primary and secondary markets. Year-to-date, global convertibles performance is comparable to global equities and well ahead of corporate and sovereign bonds.

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The primary market remained exceptionally active. Global issuance reached $26.9bn in September, about 2.2 times the historical average for the month. The US led with nearly $14.0bn, followed by Asia with almost $9.0bn, a monthly record for the region. The third quarter of 2026 has become the strongest third quarter on record for primary issuance for the asset class. Year to date global issuance now stands at $203.8bn, an all-time high that already exceeds 2025's full-year record. Notable deals this month include the Chinese LLM developer Z.AI ($3bn), the biopharmaceutical company Halozyme ($1.5 bn), and the defense company Axon ($1bn).

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Our fund Dynasty Global Convertibles, Share Class B (EUR) returned -0.87% in September outperforming the global convertible market. The fund's moderate equity sensitivity and higher-quality credit profile helped limit the impact of the rate-driven sell-off and the cheapening across the asset class. Exposure to the power and AI infrastructure theme also supported returns, with our conviction Bloom Energy among the leading contributors to performance.

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During the month, we continued to adjust the portfolio with a clear guiding principle: in this environment we are broadening rather than increasing our AI exposure. We maintain our "full stack" view of the AI cycle, which covers materials, memory, power, data-center capacity, edge computing, and cybersecurity. Within that framework, we are redeploying capital toward the next beneficiaries of the cycle. We reinforced positions in Samsung, Palo Alto Networks and Datadog.  We funded these purchases by taking partial profits in Snowflake, Bloom Energy and Cloudflare after strong performance in their underlying equities. This allowed us to lock in gains, while maintaining a disciplined exposure to the data, power and edge-computing themes.

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At month-end, the fund's equity sensitivity stood at 36.3%, with an average interest rate sensitivity of 0.92, a credit sensitivity of 1.32 and an average portfolio rating of BBB+.