In an environment marked by rising geopolitical tensions and volatility across European markets, our “Thematic Alpha” strategy has shown notable resilience, while preparing the ground for attractive investment opportunities.

Defensive exposures mitigating market volatility

Thanks to allocations in Utilities and Healthcare, the strategy remained resilient:

  • Utilities were very resilient in March due to their low volatility nature. The sector also benefits from AI related trends, notably the growing energy needs of data centers.
  • Healthcare, usually a safe haven in uncertain periods, was less resilient than expected. Some stocks that performed well early in the year lost momentum but started to recover in early April.

Long term themes under temporary pressure, but still promising

More cyclical exposures were affected in this context:

  • European SMID caps, penalized by their sensitivity to the economic cycle and revisions in rate and growth expectations, underperformed. Historically, however, their rebounds in past cycles have been strong and fast.
  • Themes linked to European sovereignty and the German stimulus plan were also impacted. The sovereignty theme performed broadly in line with the market, dragged by the underperformance of metals and mining stocks, which are more sensitive to energy costs and macro risks. The German stimulus theme was penalized by its composition (industrials, materials), which are highly sensitive to energy prices and economic outlook.

Luxury and European tech dipped slightly but began to rebound in early April as tensions eased.

Despite short term pressures, we maintain strong convictions in these segments, supported by solid structural trends: reindustrialisation, strategic autonomy, and the energy transition.

Keeping liquidity to capture entry points

A portion of the portfolio was intentionally kept in cash. This flexibility allows us to quickly invest in promising themes when valuations become attractive again.

We are currently assessing several compelling themes for upcoming allocations, including:

  • Nuclear energy, now central to Europe’s long term energy strategy.
  • The space economy, driven by fast technological and strategic acceleration (including the upcoming IPO of SpaceX).
  • The banking sector, which declined in March but, in our view, offers an interesting rebound potential.

If you would like to learn more about this opportunity, feel free to contact Renalco SA at (info@renalco.ch).