Alma Advent Global Convertible Fund

Market Review and Outlook

Global equity markets extended their market rally for a seventh consecutive month. Markets rallied mid-month as cooling inflation data and a dovish tilt from the U.S. Federal Reserve bolstered investor sentiment. However, this momentum stalled as concerns over stretched technology valuations resurfaced along with fears of tighter financing for artificial intelligence (AI) buildouts, moves exacerbated by thin holiday trading volumes and liquidity. Overseas, European markets also rose in December, propelled by robust banking sector performance, anticipated regional growth following Germany’s fiscal expansion, and investors rebalancing their portfolios into European equities to capture attractive value opportunities as the STOXX Europe 600 Index reached another record high, closing the month with a +2.82% return. Emerging Market equities rose during the month, driven by a falling U.S. dollar raising emerging market valuations, particularly in commodity-linked countries. Japanese equities posted modest gains, buoyed by robust foreign investment attracted by a stable economic outlook and pro-business corporate governance reform. Global convertibles returned -0.69% during the month (USD Hedged) with lower absolute returns concentrated in the Technology and Utility sectors.

Fund

On a net basis, the fund outperformed the index return during the month. The fund’s overweight in Asia/Pacific ex-Japan and Europe were beneficial as our security selection outperformed the index in those regions. Sector allocation was negative overall as the overweights in Industrials and Technology were in sectors that underperformed the benchmark in the month; outperformance overall was largely due to issuer-specific selection. In Technology, the fund benefitted from high memory chip demand for artificial intelligence (AI) applications, an area where there has been competition in next-generation memory architecture offerings. The fund had modest underperformance in the Americas, where some AI-related issuers pulled back amid financing concerns and the U.S. utility sector underperformed as U.S. interest rates rose.

There was $12 billion of global convertible issuance in December, bringing year-to-date convertible issuance to $178 billion, which represents a 35% increase from the strong pace of issuance in 2024.

During the month, we participated in several new issuances. We sourced opportunities in multiple sectors, with most coming from the Technology sector, particularly issuers traded in the United States. The fund exited certain positions where appreciation potential had become more muted due to appreciation. In recent months, the Technology sector allocations have increased, as a result of attractive asymmetric opportunities in the new issue market and areas of strong growth.