Alma Advent Global Convertible Fund

Market Review and Outlook

Global equity markets came under pressure in June. In the US, investor sentiment softened as renewed scrutiny of elevated artificial intelligence (AI)-related valuations intensified. Concerns surrounding monetization timelines, sustainability of corporate demand, and the sheer scale of infrastructure spending triggered a notable pullback in mega-cap technology stocks. The sell-off was amplified by a stronger-than-expected May employment report and the Consumer Price Index (CPI) reaching a three-year high, driven primarily by an energy supply shock stemming from the ongoing US-Iran conflict. These developments reinforced concerns that a resilient labor market and persistent inflation would keep monetary policy restrictive for longer. The combination of AI-related repricing, higher-for-longer interest rate expectations, and lower commodity prices fueled a rotation into small- and mid-cap defensive and cyclical value stocks, which exhibited relative strength. As risk sentiment improved toward month-end, several of the mega-cap technology stocks recovered a portion of their earlier losses, helping to moderate the month’s decline. European markets advanced in June, propelled by easing geopolitical risk premiums and lower commodity prices. Emerging market equities declined, led by a sharp sell-off in semiconductors and AI-related names. Japanese stocks continued their hot streak, driven by technology stocks, a historic 40-year low for the Japanese yen, and supportive domestic policies. Global bond markets decreased during the month. Global convertibles decreased during the month.

Fund

In June, the fund outperformed the index, driven primarily by strong performance from AI-related holdings and continued investor demand for companies positioned to benefit from the growing adoption of artificial intelligence. Relative performance was positive across all regions, with EMEA making the largest contribution. This was driven in part by the fund’s overweight exposure to Technology investments in the region, where selected holdings delivered particularly strong returns. On a sector basis, Technology and Energy were the strongest contributors to relative performance, reflecting favourable market dynamics and effective positioning within these areas. Utilities and Financials lagged slightly on a relative basis, although their impact on overall performance was limited.

There was $45.1 billion in global convertible issuance in June, making it the strongest month in over a decade. That brings the year-to-date volume to $141.7 billion and puts 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 multiple new issuances, globally across a variety of sectors and mostly from American companies in the Technology sector. We exited certain positions where appreciation potential was more limited, with a concentration in Healthcare and the Americas region.