Performance 2025
First quarter 2025
The first quarter of 2025 ended with a decline of –17.17% for Class A for the quarter.
This challenging start to the year, marked by extreme volatility across global markets, underscores the need for the adjustments implemented over the past few months.
As mentioned in our previous letter, we introduced new market filters at the beginning of January. These filters were triggered during the first weeks of the ongoing major correction, which continues to affect equity markets—particularly in the United States. Virtually no financial asset has been spared.
Designed to detect statistical anomalies in market dynamics, these filters mechanically reduced our exposure. While this relative absence from the markets temporarily weighs on our performance, it primarily serves to protect capital during prolonged market dislocations and to create new opportunities when conditions normalize. This period of watchfulness has also allowed us to explore other avenues, notably the use of LTR-type algorithms for portfolio construction and the research of specific strategies on the VIX futures contract, whose fluctuations are expected to intensify in the coming quarters.
United-States
We will refrain from overinterpreting or dramatizing recent economic events. Contrary to some alarmist analyses, the Trump administration appears to be following a coherent roadmap: reducing the United States’ financing costs amid a massive refinancing effort (nearly USD 7 trillion to be refinanced in 2025).
In January, the yield on 10-year U.S. Treasuries reached 4.89%. By the end of March, it had fallen below 4%, returning to levels last seen in October 2024. This decline is not insignificant: it partly reflects the administration’s efforts to deflate equity markets in order to encourage a rebalancing toward bonds—thus increasing demand for U.S. debt and lowering yields.
With this goal of reducing rates, the Trump administration is pressuring the Federal Reserve for swift intervention. Repeated public statements calling for lower interest rates are creating mounting political pressure on the Fed, which might respond earlier than anticipated if the market correction persists. Such a rate cut would further ease long-term yields.
Meanwhile, the U.S. continues to grapple with twin deficits—fiscal and trade. To address the latter, the administration is pursuing bilateral trade deals. Some countries have already offered targeted free trade agreements, while China has signaled its readiness for a long-term standoff.
European Union
The European Union remains entangled in a series of structural challenges that are weakening its economic momentum. Four key factors illustrate this situation:
- The German economic model—based on cheap energy imports (especially Russian gas) and large-scale industrial exports—is now under strain.
- Europe can no longer rely on the U.S. military guarantee, prompting some countries to rethink their defense strategies.
- Growth remains sluggish, with virtually no productivity gains and concerning demographic prospects.
- An aging population increases the savings stock but weighs on production and consumption dynamics.
Germany’s announcement of a massive rearmament plan (€900 billion over 10 years) marks a historic shift, breaking two taboos: fiscal restraint and military power. Despite its size, this effort should be absorbed without difficulty thanks to Germany’s substantial domestic savings surplus.
By contrast, France lacks both the fiscal room and market credibility to launch a similar initiative. This discrepancy could lead to rising French yields, as investors turn back to more readily available German bonds at the expense of French debt.
Finally, Europe remains divided on how to respond to the rise in U.S. tariffs. While some leaders advocate negotiation, others are considering retaliatory measures targeting American tech giants (GAFAM), raising fears of a trade escalation.
China
China is continuing its strategy of economic adjustment amid significant uncertainty. The government has leaned heavily on state-owned enterprises, which have benefited from massive liquidity injections by the People’s Bank of China.
These measures helped partially stabilize activity in Q1, although growth came in slightly below that of Q4 2024. The real estate sector remains the Achilles’ heel of the Chinese economy, with sales at historic lows and increasingly inventive efforts to stimulate demand—sometimes humorously relayed in the local press.
Externally, Beijing responded firmly to the latest U.S. protectionist measures. Following an increase in U.S. tariffs on Chinese goods, China imposed 125% tariffs on selected categories of imports. This commercial standoff could have longer-lasting effects on global trade in the coming quarters.
Second quarter 2025
The second quarter results for 2025 ended with a performance of 1.72% return for Class A for the quarter.
This modest rebound occurred in a context of apparent market stability but should not obscure the economic warfare climate initiated by the Trump administration against all of its trading partners.
Since February, we have voluntarily suspended the majority of our trading activity. This decision, motivated by a desire to preserve capital in a deeply unstable market environment, has been used to recalibrate our approach.
What follows outlines the key technical aspects of this overhaul:
Sampling — a cornerstone of statistical time series analysis — conventionally assumes, both for practical and traditional reasons, that some data points (the samples) are special and deserve attention that cannot (or should not) be extended to others. However, this assumption corresponds neither to a physical reality nor to our operational experience. After substantial theoretical and developmental work, we have devised a new way of analyzing time series by treating each data point as the origin of a backward-extending sample. This paradigm shift significantly increases the number of usable samples and thereby improves the statistical stability of our analyses.
We have also innovated in generalizing the walk-forward optimization (WFO) methodology by designing an approach that removes the need to predefine the size of the out-of-sample segment. This breakthrough allowed us to replace traditional statistical validation tests — such as the White Reality Check — with a proprietary framework that is both more robust and more aligned with current market conditions.
Ultimately, our objective is to return to the markets with strategies that are not only effective but also significantly more stable when conditions become favorable again.
This deep restructuring effort takes place against a backdrop of profound macroeconomic shifts, where trade tensions and geopolitical realignments are reshaping global market dynamics. It is in this context that we now present our analysis of the latest economic developments in the United States, Europe, and China.
United-States
The Trump administration continues to pursue its aggressive economic agenda, centered on a massive increase in trade barriers. Since the beginning of the year, tariffs on Chinese goods have surged to nearly 35%, up from 11% in January, with targeted hikes now affecting a broad range of sectors, including automotive, electronics, pharmaceuticals, and metals. While the official goal remains U.S. reindustrialization and the reshoring of supply chains, the immediate impact has been a negative shock to global trade.
Global trade growth is slowing sharply: from 2.9% in 2024, it is expected to fall to just 1.1% in 2025 according to the IMF — or even contract slightly, based on the WTO’s latest forecasts. This slowdown is weighing on global demand, especially in the United States, where trade volumes are expected to decline by more than 10% this year. While Asian and Latin American economies (excluding Mexico) face varying levels of exposure, the direct and indirect effects of U.S. trade policy are spreading across all open economies. In the short term, the risk of a lasting decoupling between the U.S. and some of its major partners is becoming increasingly real.
European Union
Europe is facing the collateral damage of the U.S.–China trade war. Central and Eastern European countries, heavily export-oriented — particularly in the automotive sector — are directly affected by rising U.S. tariffs, but even more so by the slowdown in German exports. Their dependence on Germany’s industrial engine makes economies like Slovakia, the Czech Republic, and Hungary particularly vulnerable.
In the longer term, however, Europe could benefit from the reconfiguration of global value chains. China is actively seeking to invest in regions offering political stability, robust logistics infrastructure, and strategic proximity to end markets. Central Europe — with its skilled workforce, competitive tax regimes, and access to the EU single market — has seen a surge in Chinese investment in recent years, led by Hungary.
In response to rising Chinese competition within the European market, the European Commission introduced an import monitoring mechanism in April, in agreement with Beijing. This cautious cooperation aims to avoid a wave of European protectionism while tightening oversight over sensitive trade flows.
China
China is facing a sharp rise in U.S. tariffs and an expected 20% drop in exports to the United States. In response, it has accelerated its geographic diversification strategy. Since spring, Chinese exporters have begun redirecting trade flows toward alternative markets — sometimes via third countries — to circumvent tariff barriers. This dynamic has increased competitive pressure on domestic and regional markets, particularly in Southeast Asia.
At the same time, Beijing is continuing its industrial upgrading strategy. While some countries suffer from intensified competition, others benefit indirectly from rising Chinese exports of intermediate goods, supporting their own industrial development. China is also working to strengthen ties with regions less exposed to U.S. tensions. Latin America, with its abundant natural resources, is attracting growing Chinese investment, particularly in agriculture and mining.
However, access to the Chinese market remains limited for European and Asian economies that export manufactured goods. Beijing’s drive for industrial self-sufficiency continues to constrain import opportunities, despite stated efforts to stimulate private consumption.
Third quarter 2025
The third quarter of 2025 closed with a +4.80% performance for Class A, confirming the recovery that began in the spring. This improvement comes in a global environment undergoing transition: the United States has entered a monetary easing cycle in response to a weakening labor market, Europe is regaining moderate momentum supported by recovering demand and credit stabilization, while China is striving to sustain growth amid deflationary pressures and industrial restructuring.
Driven by expectations of sustained monetary easing, markets are evolving in an environment where regional dynamics are becoming increasingly distinct. The U.S., European, and Chinese economies now follow diverging paths, reflecting different monetary, fiscal, and structural priorities. These divergences shape the global balance of financial markets and the allocation of capital worldwide. Below is our analysis of the main macroeconomic developments across these three major regions.
United-States
The U.S. economy is now showing clear signs of slowing after the rebound of 2024. GDP growth is expected to reach around 1.7% in 2025, restrained by rising uncertainty linked to the Trump administration’s trade and immigration policies. Consumer confidence has weakened, while private investment has normalized following an early-year surge driven by volatile import and inventory flows.
The labor market is softening markedly: monthly job creation has fallen to around 70,000, less than half the level a year ago, and the unemployment rate has reached 4.3%. This moderation, reinforced by a decline in the working population, is helping to ease wage pressures. At the same time, inflation has edged up to 2.9% in August, reflecting higher tariffs, particularly on manufactured goods.
Confronted with the dual challenge of weaker employment and tariff-induced inflation, the Federal Reserve has adopted a “risk management” approach. The policy rate has been cut to 4.00–4.25%, marking the beginning of an easing cycle that could continue until mid-2026. However, a federal deficit of –5.5% of GDP and public debt approaching 100% of GDP highlight the structural fragility of the U.S. fiscal framework, limiting the room for maneuver in the event of a deeper slowdown.
European Union
Economic activity in the euro area shows signs of gradual improvement, driven by the services sector and a moderate recovery in investment. GDP is expected to grow by 1.3% in 2025, slightly above the 2024 pace. PMI indicators have strengthened, with the composite index reaching 51.2 in September, its highest level in over a year, while household confidence has improved thanks to stronger durable goods purchasing intentions. The trade agreement concluded with the United States at the end of July temporarily eased tensions, although uncertainty remains high, particularly regarding Germany’s fiscal trajectory and Europe’s rearmament plans.
The labor market remains resilient, with an unemployment rate of 6.3%, the lowest on record, and wage growth slowing toward 3% year-on-year. This robustness supports consumption despite lingering industrial weakness. Surveys highlight an ongoing rebalancing: manufacturing production is stabilizing, while services continue to drive growth, especially in tourism and intra-European logistics.
Inflation remains contained at around 2.2% in September, close to the ECB’s target, allowing the central bank to maintain its monetary status quo following the rate cuts implemented in the first half of the year. The rebound in lending to businesses and households, supported by lower investment loan rates, suggests a more favorable financial environment. Although Europe’s recovery remains fragile and uneven, it now appears more firmly anchored, sustained by credit normalization and a robust labor market.
China
After a stronger-than-expected first half, Chinese growth has been slowing gradually since the summer. GDP is expected to rise by around 5% in 2025, in line with the official target, but with weakening industrial activity and softening domestic demand. Exports have proven more resilient than anticipated despite higher U.S. tariffs, supported by diversification toward emerging markets. Nonetheless, the manufacturing sector remains in contraction territory, with the official PMI at 49.8 in September, signaling subdued business confidence.
Household consumption, a key growth driver, is also losing momentum: retail sales grew by only 3.7% year-on-year over the summer, while the ongoing real estate crisis continues to weigh on confidence and urban employment. Youth unemployment has surpassed 18%, a post-pandemic high. In response, the authorities have maintained a cautious policy mix combining targeted fiscal relief, consumer-goods support programs, and limited credit interventions. Monetary policy remains measured, and transmission to the real economy remains incomplete.
The central challenge remains the fight against deflation and industrial overcapacity, at the core of the new so-called “anti-involution” campaign. Beijing is seeking to rationalize overinvested sectors—particularly green technologies and electric vehicles—while preserving employment. Although this strategy weighs on short-term production, it reflects a longer-term objective of consolidation and industrial upgrading. On the environmental front, China remains the world’s largest investor in renewable energy, positioning itself to potentially reach its CO₂-emission peak before 2030.
Fourth quarter 2025
The fourth quarter of 2025 closed with a performance of +6.23% for the Class, extending the recovery that began in the spring.
This performance unfolded against a backdrop of a global macroeconomic environment undergoing gradual normalisation, marked by increasingly differentiated regional dynamics. In the United States, growth remains close to potential but is driven by heterogeneous engines, amid a cooling labour market and monetary easing. In Europe, activity is showing signs of gradual strengthening, supported by a recovery in investment and the restart of the German economy, while inflation remains contained. In China, export resilience continues to support activity, but the persistent weakness in domestic demand and ongoing structural adjustments highlight imbalances in the growth model.
It is within this contrasted environment, where the economic trajectories of major regions are clearly diverging, that financial markets have evolved, and within which we present below our detailed macroeconomic analysis by geographic area.
United-States
The US economy ended 2025 growing at a pace close to its potential, despite pronounced heterogeneity in its growth drivers. Following activity disrupted by temporary factors—import volatility earlier in the year and a partial federal government shutdown in the fourth quarter—growth is expected to stabilise around 1.9% on an annual average, a rate likely to persist into 2026. This apparent resilience nonetheless masks a deeply asymmetric dynamic, characterised by so-called K-shaped growth: investment linked to technology and artificial intelligence supports activity, while the rest of the economy remains under pressure.
Investment is indeed the primary source of this divergence. Spending related to AI (data infrastructure, IT equipment, software and R&D) accounted for a disproportionate share of growth, even though its weight in GDP remains limited. This trend has been amplified by soaring equity valuations among major technology companies, generating a wealth effect that has supported consumption among higher-income households. Conversely, investment outside the technology sector has declined, and household sentiment remains depressed at historically low levels, reflecting persistent inflationary pressures and employment concerns for a large share of the population. Moreover, the highly import-intensive nature of AI-related investment limits its direct impact on domestic growth and contributes to a widening trade deficit in technology goods.
In the labour market, the slowdown is now visible on both the demand and supply sides. Job creation has slowed markedly, while the labour force is contracting due to restrictive immigration policies, keeping the unemployment rate around 4.4%, close to full employment, but weighing on potential growth. In this context, inflation remains durably above target, driven by tariffs, with a peak expected at 3.3% by mid-2026. The Federal Reserve continued its monetary easing cycle in 2025, bringing cumulative rate cuts to 75 basis points, and one final cut is expected in March 2026 before policy stabilises at a slightly accommodative level. On the fiscal front, despite a modest narrowing of the deficit compared with 2024, imbalances remain significant and continue to exert upward pressure on long-term yields, in an environment where trade uncertainty, although receding, remains elevated.
European Union
The European economy ended 2025 on a path of gradual stabilisation, following a period of uneven growth across countries. The euro area is expected to post growth of around 1.4% in 2025, with an acceleration to 1.6% in 2026, driven primarily by investment and the restart of the German economy. Unlike in 2024, this improvement relies less on exceptional factors and is increasingly supported by the core economies of the region, in a context where trade tensions with the United States have eased, although Chinese competition continues to weigh on European industry.
Germany stands out as the main driver of this new phase in the European cycle. After two years of contraction, the German economy stabilised in 2025 and is entering a new growth cycle, supported by a marked increase in public spending, particularly in infrastructure and defence. This shift in model aims to reduce the country’s historical dependence on exports and to strengthen domestic demand. The recovery is expected to gradually extend to the private sector, supported by lower interest rates, fiscal incentives for investment, and an anticipated improvement in household purchasing power, even though structural constraints remain, notably in the labour market and productivity.
In France, growth strengthened from the second half of 2025 onwards, driven by the recovery in aerospace production, a rebound in corporate investment, and the resilience of services and public consumption. Inflation remains particularly subdued, around 1%, supporting a modest recovery in household consumption despite political uncertainty and a fiscal consolidation largely based on revenue measures. At the euro-area level, inflation is expected to remain below the 2% target in 2026, allowing the ECB to maintain a prolonged monetary status quo. In this context, gradual credit normalisation and labour-market resilience are supporting a European recovery that remains fragile and uneven, but increasingly anchored in domestic demand.
China
After a strong start to the year, Chinese growth continued to slow gradually throughout 2025. Real GDP growth decelerated from 5.4% year-on-year in the first quarter to 4.8% in the third quarter, reaching around 5% for the year as a whole, with a further slowdown expected in 2026. This trajectory has been driven primarily by the strength of exports, which helped absorb the shock from US tariffs through a rapid reorientation towards other markets. By contrast, domestic demand remains structurally weak, reflecting persistently subdued consumption and a slowdown in manufacturing investment.
The contrast between external momentum and domestic demand remains pronounced. Industrial activity has been supported by manufactured goods exports, but productive investment growth slowed sharply in 2025, weighed down by uncertainty over external demand and weak domestic consumption. In services, the momentum seen in the first half of the year faded over the summer, while retail sales decelerated again. The ongoing property sector crisis continues to weigh heavily on household confidence, with behaviour remaining focused on deleveraging despite monetary easing. High youth unemployment and modest income growth continue to constrain any sustained recovery in private demand, notwithstanding targeted public support measures.
In response to these imbalances, authorities have adjusted their priorities by launching a so-called “anti-involution” campaign, aimed at reducing overcapacity and destructive competition in several industrial sectors. While this strategy seeks to alleviate deflationary pressures and restore corporate profitability, it weighs on activity and investment in the short term. Externally, China nonetheless remains in a position of notable strength, with a record trade surplus and successful geographic diversification of exports. Although public finances have deteriorated in recent years, the central government retains fiscal and financial room for manoeuvre, notably to support local governments. In an environment where export momentum may gradually fade, strengthening household incomes and domestic demand has now become a central challenge for the sustainability of China’s growth model.
