Key points at a glance
- The Supreme Court ruling exacerbated the uncertainty in markets that were already unstable due to fears of AI disruption and US-Iran tensions. The Court offered no guidance on potential tariff refunds.
- The US has deployed its largest air force presence in the Middle East since the invasion of Iraq in 2003. Trump unveiled his so-called Board of Peace, wielding a golden gavel and threatening Iran.
- A valuation rotation is underway, favouring non-US equities and emerging markets, as well as US mid-cap stocks.
- Amid yen weakness and concerns that the BOJ is falling behind the curve on inflation, Japanese authorities have failed to agree on a path for interest rate hikes.
- The global economy remains resilient, underpinned by fiscal and monetary support, despite trade uncertainty and the weakening of the rules-based international order.
- The HESPER FUND – Global Solutions (T-6 EUR) increased by 34% in February, reaching new highs as gold and metals recovered from an early-month correction. Year to date, the fund has increased by 5.2%.
- The HESPER FUND adjusted its portfolio in order to navigate geopolitical risk and dollar weakness.
HESPER FUND – Global Solutions Macro scenario: Stocks hovered around record highs while metals extended a powerful rally amid heightened geopolitical tensions
In a 6–3 ruling, the Supreme Court held that the President had exceeded his authority by imposing duties without explicit authorisation from congress. The administration then swiftly invoked alternative legal powers to reinstate a 10% global tariff.
Amidst acute policy uncertainty at the White House, the US dollar is gradually losing its status as a cornerstone of the global financial system.
The outlook for Japanese yields remains uncertain. While the government is pushing for a loose monetary policy by nominating of two reflationists to the BOJ board later this year, Governor Ueda has indicated that any tightening will be very gradual.
Monthly performance and current positioning
The HESPER FUND – Global Solutions (T-6 EUR) increased by 1.34%, driven by rebounds in European equities, commodities, and gold. Total assets declined by 2.7% to 52.5 million EUR due to redemptions. Annualised volatility over the past 250 days increased to 6.7%, and the annualised return since the fund`s launch reached 4.4%.
Despite facing numerous challenges, the global economy has proven to be remarkably resilient. We remain vigilant on policy and geopolitical developments. During the month, the fund increased its overall duration to 7.5 years by reducing its short exposure to JGB futures, as Japanese policymakers expressed uncertainty regarding the path of interest rate hikes. The fund also reduced overall risk by cutting equity exposure to 46% and gold exposure to 8%.
Outlook: is excess fiscal stimulus scaring bondholders?
The sharp pivot in US economic, political and geopolitical policy will continue to have a significant impact on the global outlook in 2026. Although the European Central Bank was slow to respond, it is now seizing the opportunity to increase the appeal of holding euros by extending access to euro funding for central banks worldwide. This facility is available in times of stress and supports the global role of the single currency.
In Trump’s world, unpredictable policy is the norm, so we frequently adapt the portfolio to capitalise on the consequences of his decisions. With the global economy dependent on government debt, the combination of rearmament spending, demographic ageing, technological disruption and populist politics is fuelling a risky trend. We therefore avoid making large, concentrated investments, while benefiting from the tailwind of a weaker US dollar in the resilient global economy.
We have continued to diversify our equity exposure by investing in select sectors, countries and emerging markets, while reducing our exposure to large-cap US indices. In FX, we maintain a cautious short position on the USD. In an era of resource imperialism, the price of metals and commodities is driven as much by geopolitical intervention as by supply and demand. Given widespread fiscal stimulus, the HESPER FUND – Global Solutions remains modestly cautious on government bonds, though these should provide cross-hedging protection in the event of an unexpected sharp downturn.
