Dear customer,
We reach the halfway point of 2025 after a turbulent half year of major changes, anticipating a broad geopolitical realignment amid war and political polarisation among many countries.
With that said, the fixed income (FI) and equity (Equity) financial markets also played a major role. Despite these unsettling developments, the first half of the year closed in positive territory.
However, some data should be noted which may have significant implications for the future.
A. The weak dollar
The US currency has depreciated against the euro by -12.03% as of 30 June (Chart 1). This development is indicative of a relative loss of confidence of major global investors (central banks, sovereign wealth funds, pension funds) in the future direction of the US in its multiple role as leader of the Western world:
- Guarantor of global security (isolationism).
- U-turn in its trade policy (protectionism).
- Inclination towards "democratic authoritarianism".
Some investors have begun a process of diversification into other currencies and assets. This does not imply a radical change in the short term, but it is indicative of a loss of confidence in the current US administration.
B. Gold prices soar
Contrary to the widespread belief that gold is an asset that protects against inflation, in reality it is only a preferred asset when uncertainty is at its highest and money needs to be "parked". I say "park" because, as is well known, gold generates neither interest nor dividends.
The disorder caused by the Trump administration's orientation and its authoritarian drift explains the acceleration of gold purchases, thus resulting in that its weight in world reserves now surpasses that of the euro (Chart 2).
Gold is the investment of the "agnostic" and those who see no clear direction in the international financial system.
C. Is now the time for Europe?
Our trips to Latin America have confirmed a sincere interest in investing in European equities to reduce their traditional dependence on the US market. This trend is reflected in the performance of the US and European stock market indices (Chart 3).
But for this trend to take hold, European economies need to accelerate their growth, and for this to happen, consumption and investment must increase. This is the backdrop to the well-known Draghi and Letta reports, which are the "bibles" of European revival.
But for this to happen, Europeans need to change their behavioural patterns from savers to investors (Chart 4). The conservatism of European citizens prevents the mobilisation of resources for innovation and growth.
D. Value and price
The indices of the most important stock exchanges have returned to January levels and some have even surpassed them. This raises the old question: are shares expensive? The technical answer is always the same: it depends on the future trajectory of expected profits. What is clear is that current levels of PER multiples are demanding and in many cases excessive. But not all of them.
Chart 5 shows how during this half year the indices of European small/mid caps have finally reduced their huge undervaluation. Our EDM Pointer SA SIL Class A fund (10.40% YTD, as at 26/06/2025) and to a large extent EDM International - Investment/Spanish Equity Class L€ (17.75% YTD, as at 27/06/2025) have finally been vindicated.
E. Fixed income in EDM portfolios
After the years of great moderation, characterised by very low inflation and negative real interest rates, interest rates or, to be more precise, fixed income yields have returned to normal.
This explains why, in the discretionary managed portfolios, the weight of fixed income has returned to historically normal levels (Chart 6).
Quality fixed income in portfolios pursues a dual objective. On the one hand, to generate the income necessary to finance the regular cash withdrawals of many of our customers. And, on the other hand, to rebalance portfolios in times of stock market stress.
Once again, I would like to take this opportunity to thank you for your confidence in me and to wish you a pleasant summer.
Yours sincerely,
Carlos Llamas
Chief Executive Officer
LEGAL NOTICE
1) The preceding information is provided for promotional and information purposes only. It is not, and is not to be taken as, investment or legal advice; is not intended to take the place of necessary investment advice; and is neither an offer to sell nor solicitation of an offer to buy.
2) All the views and forecasts expressed are based on what are believed to be reliable sources. Nevertheless, EDM Gestión, SAU, SGIIC cannot guarantee their accuracy or completeness and takes no liability for any direct or indirect losses ensuing from using the information provided here.
3) This information includes data on past performance of the products discussed. EDM Gestión, SAU, SGIIC calls attention to the fact that past performance is not a reliable indicator of future performance.
4) Investors should be aware that the products included in this document may not be suitable for their specific investment objectives, financial or asset position or risk profile. They should therefore make their own decisions in the light of these circumstances and seek such specialist tax, legal, financial, regulatory, accounting or other advice as they may require.
5) It is hereby noted that the instruments covered by this information are subject to possible effects due to various common causes, such as:
- Market disruptions due to unforeseeable circumstances.
- Liquidity and other risks that alter the performance of the investment.
6) This documentation may contain data based on currencies other than those used by the recipients of the documentation. Therefore, the possibility of any upward or downward change in the value of the currency and its impact on the results of the proposed products or instruments must be considered.
7) For each of the Funds of EDM Gestión, SAU, SGIIC, a full prospectus, the document containing the key investor information, periodic reports and the latest audited annual report are available to the public and can be requested free of charge at the registered office of the Management Company or on the website www.edm.es.
8) EDM Gestión, S.A.U. SGIIC is a Spanish public limited company registered on the Spanish Securities Market Commission's Special Register of Collective Investment Scheme Management Companies under number 49 and at the Commercial Registry of Madrid in volume 36739, page 52, sheet M-658326 and tax identification number: A-58,217,175. Its activities include discretionary portfolio management and representing, managing, and administering funds and investment companies incorporated and located in Spain.
DISCLAIMERS
EDM International-Inversion/Spanish Equity is a sub-fund of EDM International SICAV authorised in Luxembourg and regulated by the Commission de Surveillance du Secteur Financier (CSSF) (registration number 851). The Management Company is Waystone Management Company (Lux) S.A. subject to the supervision of CSSF. The sub-fund is actively managed and marketed in Spain by EDM Gestión S.A.U., S.G.I.I.C. (CNMV registration no. 49). This is a sub-fund under Art. 8 SFDR. It is a fund with a risk profile of 5 on a scale of 1 to 7. Over the last five financial years, the L class has achieved the following annual return: 2020: -10.18%; 2021: 14.52%; 2022: -13.19%; 2023: 17.28%; 2024: 3.72%.
EDM Pointer SA SIL is a hedge fund authorised and regulated by the Spanish Securities Market Commission (CNMV, initials in Spanish) (registration no. 26) and actively managed by EDM Gestión S.A.U., S.G.I.I.I.C. (CNMV registration no. 49). It is a fund with a risk profile of 4 on a scale of 1 to 7. Since its launch on 26/11/2021 and until 31/12/2024, Class A has achieved the following annual performance: 2022: -7.96%; 2023: 13.16%; 2024: 0.24%.
