Dear investor,

We have had a strong month so far and continue to receive increasingly upbeat signals on risk-taking—especially in U.S. risk assets—via our nowcasting models, as inflation declines. Meanwhile, the “trade reopening” has supported improvements in global order books and trade flows.

At the same time, liquidity is also improving, supported by a weaker USD, ongoing deficit spending, and private bank credit creation. Altogether, this points to what is typically characterized as an early-stage re-inflationary environment—marked by strong trend returns in both inputs (such as commodities) and higher-risk equities.

Europe, on the other hand, is suffering from a post-tariff hangover and now ranks as the weakest region in our models, a reversal from Q1 when it was by far the strongest.

Accordingly, we are running higher risk in our portfolio than we did this spring, and we continue to increase exposure, with allocations toward themes within inputs/commodities and equity risk. Additionally, we maintain a negative EUR bias, reflecting both the relative weakness in our European nowcasts and the rising energy costs seen in recent weeks.

Our base case is that the regime in Iran is out of strategic options. Even if Trump and the U.S. join the conflict by deploying “bunker-buster” strikes as requested by Israel, we struggle to see how Iran can truly escalate without embarking on a suicide mission. We have exposure to the energy space, which we positioned for ahead of the recent escalation, and it has been a strong contributor to returns.

We are up 3.55% year-to-date and nearly 55bps month-to-date at the time of writing. We aim to close June with a strong trend return and continue to view a 10–15% return for the year as a feasible target, particularly as we increase the portfolio’s risk profile.

All the best,

Andreas Steno Larsen (CIO)