The investment letter- April 2026

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Equity market:

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The months come and go, and they don’t always follow the same pattern. After a painful March for equity investors, April brought a smile back to their faces (MSCI Europe NR +5.2%, MSCI USA NR +10.5%).

A fragile ceasefire in the Middle East conflict and strong quarterly earnings reports were enough to ease fears, at least temporarily.

Even as relief prevails, uncertainty remains near its peak. Europe, whose vulnerability to rising energy prices is evident, faces the threat of a less favourable cyclical environment. This is revealed by our cycle model, which signals a shift toward a countercyclical environment for the first time since March 2023. In the United States, the cycle remains supportive, but valuations appear high compared to historical standards, especially as long-term rates remain at elevated levels.

In this context, it would not be surprising to see the indices enter a less directional phase in the coming months.

At the end of April, our economic momentum indicator signalled that the equity market was entering a contracyclical phase, which is likely to be less favourable for the most cyclical assets, particularly small-cap stocks. Our European equity portfolios have therefore moved away from their previously applied equal-weighting approach associated with pro-cyclical regimes, shifting to a portfolio construction aimed at minimising tracking error. This shift is already partially reflected in the end-of-April allocations of the funds concerned, but will be fully implemented during May.

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Fixed income market:

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April proved to be a historic month for global risk assets. The Iranian ceasefire, reached in the first week of the month, acted as a powerful catalyst, triggering sharp short-covering and a broad-based equity rally. The S&P 500 surged +10.4%, and the MSCI World +8.63%. The highlight of the month was the Philadelphia Semiconductor Index logged a record 18-consecutive-day winning streak to end up 38.4% during the month. Technology and communication services were the standout sectors, propelled by exceptional AI-driven earnings from Intel, Alphabet, and Amazon. Inflation data provided further support, with March CPI and PPI printing below expectations, while Q1 GDP came in at +2.0%, underpinned by solid business investment and consumer spending. The FOMC held rates unchanged; the UST curve was broadly stable with slightly higher yields in the 2y–5y sector. Oil remained elevated near $100/barrel, but its correlation with equities broke down materially, and the energy sector was the sole decliner on the month. Credit performed well, with Global IG returning +0.71% and Global HY +2.06% in EUR.

Global convertible bonds just posted one of their strongest monthly gains ever, driven primarily by markets in Asia and the US.  

The top single-name contributors were AI-linked names including SK Hynix, Western Digital, and Lumentum. New convertible bond issuance totalled $11.6bn for the month, seasonally light but still robust, dominated by CoreWeave's landmark $4bn deal, bringing year-to-date global supply to $65.4bn, nearly 2.5x last year's pace and on track for a record annualised run rate close to $200bn.

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Fonds Chahine :

Chahine Equity Europe Acc posted a +9.0% return in April, vs. +5.2% for the MSCI Europe NR. The fund has gained +10.8% year-to-date, vs. +4.2% for its benchmark.

The rebound in cyclical equities in April boosted the fund, driven in particular by stocks in the IT (2CRSI, AT&S) and industry (Huber + Suhner, HOCHTIEF) sectors. The fund’s significant exposure to small and mid-cap stocks also made a positive contribution. At the end of the month, our economic momentum indicator signalled the start of a contracyclical phase, which is likely to be less favourable for the most cyclical assets, particularly small-cap stocks. We anticipate a tracking error for the fund of between 2% and 3% and a significant reduction in exposure to small and mid-caps.

The standard rebalancing carried out in April involved buying energy and selling financials. However, the contracyclical shift at the end of the month has begun to take hold and is already visible on end-of-month positions.

Chahine Equity Europe is now overweight IT and consumer discretionary, and remains significantly underweight healthcare and consumer staples.

The UK remains the fund's top country weight with 20.4%, ahead of Germany at 11.2% and Italy at 10.1% (largest country overweight). Switzerland and France are the two most underweight countries.

Chahine Equity Continental Europe Acc ended April at +7.9%, ahead of for the MSCI Europe ex UK NR at +5.8%. The fund has gained +9.2%, vs. +3.3% for its index.

The rebound in cyclical equities in April boosted the fund, driven in particular by stocks in the industry (Huber + Suhner, Cenergy) and IT (AT&S, STMicroelectronics, Elmos Semiconductor) sectors. The fund’s significant exposure to small and mid-cap stocks also made a positive contribution. At the end of the month, our economic momentum indicator signalled the start of a contracyclical phase, which is likely to be less favourable for the most cyclical assets, particularly small-cap stocks. We anticipate a tracking error for the fund of between 2% and 3% and a significant reduction in exposure to small and mid-caps.

The standard rebalancing carried out in April involved buying energy and selling finance and consumer discretionary stocks. However, the contracyclical shift at the end of the month has begun to take hold and is already visible on end-of-month positions.

Chahine Equity Continental Europe is mainly overweight in energy and consumer discretionary. The fund remains significantly underweight in healthcare and consumer staples.

Germany remains the fund’s largest country with a 14.9% weight, ahead of France at 11.3% and Switzerland at 10.9%. Austria is the most overweight country, and France and Switzerland the two most underweight.

Chahine Equity Eurozone Acc posted a +12.4% return in April, vs. +6.3% for the MSCI EMU NR. The fund is up +10.2% year-to-date, slightly ahead of its index at +3.7%.

In April, the fund benefited from its strong sector allocation, with an overweight position in technology and finance and an underweight position in energy. This was complemented by strong stock selection, particularly within the IT sector (AT&S, Nokia, etc.).

The portfolio reviews carried out in April strengthened positions in the IT sector, and reduced those in the finance sector, particularly banks. The shift towards a contracyclical weighting has begun but is not yet reflected in the fund’s asset allocation.

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

Italy remains the fund's largest weighting at 17.2%, followed by Spain at 15.8% and Germany at 14.5%. Italy is the most overweight country, and Germany the most underweight.

Chahine Equity Europe Smaller Companies Acc ended April down +9.1%, vs. +7.4% for the MSCI Europe Small Cap NR. The fund is up +10.5% YTD, vs. +4.5% for its index.

In April, the fund benefited from its overweight position in the IT sector and its sound stock selection in the industry (Huber + Suhner, Cenergy Holdings, Azelis Group, etc.) and materials (Salzgitter, Aurubis, etc.) sectors.

In April, the usual reviews increased positions in energy and finance, and reduced those in consumer discretionary.  However, the shift to a contracyclical market regime at the end of the month, although incomplete, is already having a more significant impact, strengthening finance at the expense of IT and materials.

The portfolio is now overweight in finance and IT, and underweight in healthcare and real estate.

The United Kingdom (the most underweighted country) remains the portfolio's main exposure at 23.8%, ahead of Sweden at 12.2% and Switzerland at 11.0%.

Chahine Equity US Acc USD ended April at +23.7%, vs. +10.5% for the MSCI USA NR and +9.5% for the MSCI USA Small Cap NR. The YTD return of the fund is +32.7% vs. +5.4% for its index.

In the United States even more so than in Europe, the IT sector set the tone this April. The sector posted a +17.4% return this month. The fund naturally benefited from its overweight position in this sector. However, it also benefited from an excellent selection of IT  stocks, particularly in hardware and semiconductors. Other sectors also contributed, to a lesser extent, to the fund’s outperformance this month: finance, healthcare and industry.

The portfolio review carried out in April was quite diversified. It has increased the IT, real estate and utilities sectors, and has reduced the consumer discretionary and healthcare sectors.

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

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