Alma Advent Global Convertible Fund

Market Review and Outlook

Global equity markets declined this month with the MSCI ACWI Equity Index returning -9.10% (USD-Hedged). In the U.S., a perfect storm of geopolitical risks, surging energy prices, and inflation concerns weighed heavily on markets. The primary catalyst was the escalating conflict in the Middle East, which triggered a major supply disruption in the Strait of Hormuz, restricting oil transit and pushing global crude prices to their highest levels since 2022. Elevated energy costs heightened fears of persistent inflation and reinforced expectations for a higher-for-longer interest rate environment. Against this backdrop, the Federal Reserve maintained its policy rate and signalled a more cautious approach to future easing. These headwinds placed pressure on equity valuations and prompted a broad risk-off rotation. Despite these challenges, the market rallied towards the end of the month as optimism grew over a resolution to the conflict in the Middle East. The rebound was further supported by strong forecasted corporate earnings, artificial intelligence (AI) investment and continued equity broadening beyond mega-cap technology firms. Overseas, European markets fared a little worse than their US counterparts during the month, as they are more reliant on Middle Eastern energy imports, with the STOXX Europe 600 returning -6.02%. Emerging market equities declined during the month driven by elevated oil prices from the conflict in the Middle East, strengthening of the US Dollar and potential stagflation concerns. Japanese equities suffered their worst monthly performance since the 2008 global financial crisis, triggered by a surge in oil prices, which hit Japan particularly hard as a major net oil importer heavily reliant on Middle East supplies, a weakening Yen and a more hawkish monetary policy. Global bond market yields increased.

Fund

In March, the fund lagged the index return. The Americas outperformed on a relative basis, with other global regions lagging the index. This was largely due to increasing commodity prices, which had a significant impact on EMEA and Asia. On a sector basis, Materials and Transportation were the best performing. Most other sectors lagged, given the market backdrop, with Industrials and Technology weighing on relative performance.

There was $16.6 billion of global convertible issuance in March and $55.9 billion of issuance year-to-date, more than twice the amount of last year’s record-setting pace. This wave of convertible issuance is expected to continue as strong refinancing needs, AI-driven capex spending and supportive market conditions should help maintain momentum.

During the month, we participated in several new issuances across Asian and American companies focused on various infrastructure segments. The fund exited certain positions where appreciation potential was more limited, concentrated in Technology, and in particular software, in favor of other issues in the sector.