Alma Advent Global Convertible Fund

Market Review and Outlook

Global equity markets extended their market rally for a sixth consecutive month. Despite the government shutdown, markets were bolstered by a strong start to U.S. third quarter corporate earnings season, where approximately 80% of companies have beaten revenue estimates as demand for AI-related technologies strengthened. Additionally, a second 25 basis point rate cut by the Federal Reserve (“Fed”), aiming to support a softening labor market, and a relatively healthy overall economic backdrop further contributed to positive investor sentiment. Overseas, European markets also rose in October, benefitting from growth in third quarter Eurozone GDP and moderating inflation as the STOXX Europe 600 Index reached a record high. While US-China trade talks resumed sparking elevated volatility, emerging market equities outperformed developed markets during the month, benefitting from strong local markets such as Brazil and India. Global bond markets captured modest gains during the month.

Fund

On a net basis, the fund outperformed the index return during the month. The fund benefited from relative outperformance led by the Technology sector where the portfolio’s overweight and strong security selection in issuers participating in the artificial intelligence (AI) infrastructure buildout caused the most positive attribution. In addition, the portfolio’s underweight in Consumer Discretionary also helped as some segments struggled with waning U.S. consumer demand and continued sluggish sales of certain new technologies such as electric vehicles. The Financials and Industrials sectors detracted most from relative performance as our selection within these sectors were headwinds. Regional performance was mixed on a relative basis, with the Americas and Asia ex-Japan regions contributors to performance, driven by some of the same AI and consumer factors that benefited sector outperformance.

In terms of supply, $11.7 billion of global convertible issuance came to market in October, bringing year-to-date convertible issuance to $137.8 billion. This represents a 40% increase from the strong pace of issuance in 2024. Issuance continues to be propelled by strong investor appetite, particularly with developments in AI and flexible financing amid favorable market conditions.

During the month, we participated in several new issuances in what continues to be an extremely strong new offering environment. We sourced opportunities in multiple sectors with most coming from the Technology sector. The fund exited certain positions where appreciation potential had become more muted and were less attractive than new issuances, most commonly in the real estate segment. The Fund remains overweight in the EMEA and Asia ex-Japan regions given more potential equity-related upside in regions with lower valuations benefiting from fiscal catalysts and friendly monetary policies.