Alma Advent Global Convertible Fund

Market Review and Outlook

Global equity markets decreased modestly during the month of July. In the U.S., markets experienced notable volatility as accelerating corporate earnings were weighed against a challenging macroeconomic environment. Geopolitical tensions remained a key source of uncertainty, as renewed tensions in the Middle East elevated concerns over energy supply disruptions, pushing oil and broader commodity prices higher and reigniting inflationary pressures and the spectre of tighter monetary policy. Against this backdrop, robust second-quarter corporate earnings helped, but risk premiums rose in some convertible-heavy industries as investors rotated away from semiconductors and other artificial intelligence (AI)-related stocks, favoring areas in the market with more attractive valuations and durable earnings prospects. European markets advanced in July, as accelerating corporate earnings, a rotation away from technology stocks and a steepening yield curve helped lift the STOXX Europe 600. Emerging market equities fell, led by a sharp selloff in Asian technology and semiconductor stocks. Japanese stocks underperformed in July, as a broad selloff in semiconductor and AI-related stocks, elevated valuations, and rising rate expectations weighed on the market. Global bond markets decreased during the month. Global convertibles, declined -1.29% during the month.

Fund

In July, the fund lagged the index return. Most regions, except Japan, lagged on a relative basis, with the Americas and EMEA the largest drag, driven by weakness in Technology-related holdings. On a sector basis, Telecommunications and Transportation were the best performing. The Technology and Industrials sectors lagged in relative performance as AI-related suppliers came under pressure.

There was $6.2 billion in global convertible issuance in July, bringing the year-to-date volume to $147.8 billion and putting issuance on pace to set a new annual record. This wave of convertible issuance is expected to continue as refinancing needs, AI-driven capex spending, elevated M&A activity, and supportive market conditions help maintain issuance momentum.

During the month, we participated in several new issuances, with a pick-up in the number of deals from Japan and China, particularly in the Industrials and Technology sectors. We exited certain positions where appreciation potential was more limited, with the largest concentration of sales in Technology.