The management letter - October 2025

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Equity market:

September was marked by intense political, geopolitical, and monetary news: the censorship of the French government, heightened tensions in Ukraine, hopes for a peace agreement in the Middle East, and the first interest rate cut by the US Federal Reserve since last December. However, this turbulent environment did not dampen the upward trajectory of equity indices (MSCI Europe NR +1.6%, MSCI USA NR +3.6%) nor the sustainability of current trends. In Europe, banks rose +4.5% over the month and the “defense” component of the industry sector rose +10.7%, continuing their magnificent run. In the United States, the two best-performing sectors since the beginning of the year (IT and Communication Services) took the top two spots in the sector rankings of the month (IT +7.4%, Communication Services +5.6%).

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Convertible market:

Global equities achieved fresh highs in October 2025, overcoming several macro risksincluding renewed US-China trade tensions, US credit concerns, and elevated cross-asset volatility. The month’s rally was underpinned by resilient Q3 corporate earningsand continued accommodative fi nancial conditions, alongside intensifying investorenthusiasm for artifi cial intelligence. In terms of sectors, technology and utilitiesdominated gains, supported by AI infrastructure demand. Fund fl ows revealed resilientUS equity infl ows, increased buying interest in Europe, and a notable surge in Japanesestocks after a political leadership shift, while foreign appetite for Chinese equities fadedthis month. Bonds and gold posted modest gains, oil was volatile but closed lower, andbitcoin ended the month as the biggest underperformer. October ultimately highlightedthe current preferred risk-on themes, artifi cial intelligence and selected Asian exposure. European Convertibles saw two new issues during the month, a EUR 500Mexchangeable from Salzgitter into Aurubis shares, marking the return of an old issuer tothe asset class, and a small issue from DocMorris that will be used to fund the buybackof its 2026 existing convertible bond.

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Digital Stars funds:

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Digital Stars Europe Acc posted a +2.2% return in September, vs. +1.6% for the MSCI Europe NR. Since the start of the year, the fund has outperformed its index by +5.5%.

In September, small and mid caps, well represented in the fund, underperformed the rest of the market. However, the fund's favourable sector allocation enabled it to outperform the index, thanks in particular to its underweighting of healthcare and consumer staples. Among the best contributors for the month were defence (Theon, RENK) and finance stocks (BPM, BPER), as well as metal companies (Pan African Resources, Fresnillo and thyssenkrupp) and Kering. The portfolio reviews carried out in September were diversified, mainly increasing our positions in the healthcare, industry and energy sectors. Among the exits were mainly companies from the communication services and finance sectors. Digital Stars Europe is significantly overweight finance, as well as industry, and underweight consumer staples and healthcare. The UK remains the fund's top country weight with 19.4%, ahead of Germany at 13.8%, France at 11.3% (largest country underweight) and Italy at 10.6% (largest overweight).

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Digital Stars Continental Europe Acc ended September at +1.6%, vs. +1.8% for the MSCI Europe ex UK NR. Since the start of the year, the fund has outperformed its index by +10.2%.

In September, small and mid caps, well represented in the fund, underperformed the rest of the market. However, the fund's favourable sector allocation (underweight healthcare and consumer staples) enabled it to remain in line with the index, despite underperformance in industrials and semiconductors. Among the best performers of the month were defence (Theon, RENK, Avio) and finance (BPM, Société Générale), as well as stocks such as Kering in luxury goods and thyssenkrupp in metals. The portfolio reviews carried out in September were diversified, mainly increasing positions in the industry, energy as well as in the healthcare sectors. Among the exits were mainly stocks in the communication services, materials and consumer staples sectors. Digital Stars Continental Europe is overweight in finance, as well as in industry and real estate. The fund is underweight in consumer staples and healthcare. Germany represents the fund’s largest country weight at 17.9%, ahead of Switzerland at 16.1%. Italy (11.1%) is the most overweight country, and the Netherlands (2.8%) and France (14.6%) are the two most underweight countries.

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Digital Stars Eurozone Acc posted a +1.7% return in August, vs. +2.8% for the MSCI EMU NR. Since the start of the year, the fund has outperformed its index by +2.4%.

September was less favourable for small and mid caps in the Eurozone: they underperformed the MSCI EMU NR by -2.3%. The fund's all-cap positioning contributed to its underperformance. Underweighting in semiconductors, particularly ASML (+30%), also contributed negatively to September's performance. Good stock selection in various sectors (ASML, Kering, OVH Groupe, etc.) enabled the fund to partially offset these effects. The portfolio reviews carried out in September were diversified, mainly increasing the positions in the consumer discretionary, industry and real estate sectors. Among the exits were mainly telecommunications and media stocks. The consumer discretionary sector becomes the fund's main overweight, ahead of real estate and finance. The fund is underweight in the IT, consumer staples, industry and healthcare sectors. France becomes the fund's largest weighting at 23.3%, followed by Italy at 21.2% and Spain at 14.7%. Italy is the most overweight country and Germany the most underweight.

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Digital Stars Europe Smaller Companies Acc ended September up +1.0%, vs. +0.4% for the MSCI Europe Small Cap NR. Year-to-date, the fund has outperformed its index by +8.1%.

During September, the fund benefited from its overweight position in the defence sector and from a good selection of stocks in various sectors: Avio SpA (+50%), Fresnillo PLC (+31%), 2CRSI (+37%). The portfolio reviews carried out in September were diversified, mainly increasing positions in energy and IT stocks. Among the outflows were mainly stocks from the finance sector. The portfolio is mainly overweight industry and IT, and underweight real estate and healthcare. Germany (most overweight country) remains the largest country weight at 17.5%, ahead of the United Kingdom (the most underweight country) at 16.5%, and Switzerland at 14.6%.

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Digital Stars US Equities Acc USD ended September at +3.4%, vs. +3.6% for the MSCI USA NR and +1.8% for the MSCI USA Small Cap NR. Since the beginning of the year, the fund is -4.7% behind its index.

In September, the largest US market caps stood out, particularly in the technology sector (NVIDIA, Microsoft, Apple, etc.). The fund suffered from its ‘all-cap’ positioning and its underweighting in technology. These effects were offset by a good selection of stocks in the technology (Western Digital Corporation, Lam Research, etc.), industrial (Comfort Systems USA, Howmet Aerospace, etc.) and healthcare (BrightSpring Health Services, Veeva Systems, etc.) sectors. The rebalancing carried out in September was fairly diversified, with the inclusion of consumer discretionary, IT and materials stocks, and the divestment of finance stocks. The fund is significantly overweight in finance, as well as is industry and healthcare. The most underweight sectors remain IT and media.

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