As every month, you can read our investment report, in which we offer you a macroeconomic analysis of the market, a presentation of the performance of our funds and their results.

You can also watch our video update on the Digital Funds range.

Equity markets declined in March (MSCI Europe NR -4.0%, MSCI USA NR -5.9%) and ended the quarter in dispersed order (MSCI Europe NR +5.9%, MSCI USA NR -4.6%). European indices, whose valuations at the end of February had exceeded the historical average for the first time in 3 years and the invasion of Ukraine, logically “retraced” part of the spectacular rally observed since the second half of December in a troubled international political context. In the United States, the decline continues as economic statistics deteriorate significantly, unlike in Europe. Fundamental stock market normalization therefore remains at the heart of the current market dialectic. Geographically, the overvaluation of the United States is gradually receding, while Europe is now trading at fair value. Stylistically, the Value segment continues its fine run and is also gradually reducing the valuation discount still observable at this stage. The only thing missing is for small and mid caps to confirm their revival after a good month of March in relative terms in Europe.

Digital Stars Europe Acc posted a -4.2% return in March, in line with the MSCI Europe NR at -4.0%.

The fund’s sector and geographical positioning remained once again well oriented over the month, offsetting the underperformance of mid caps. Among the top contributors were financials (Talanx, Banca Mediolanum) and defence stocks (Kongsberg, Rheinmetall, MilDef). Among the worst performers were British stocks (ICA, Burberry, Trustpilot). The portfolio reviews carried out in March were diversified, mainly increasing our positions in the finance and IT sectors. Among the exits were mainly companies from the consumer staples and healthcare sectors. Digital Stars Europe is still significantly overweight finance and industry, and underweight consumer staples and healthcare. The UK saw its weight reduced to 21.8%, but it remains the fund’s top weight, ahead of Italy (biggest overweight) at 18.1% and Germany at 11.1%. With a 5.8% weight, France remains the largest country underweight.

Digital Stars Continental Europe Acc ended March at -1.5%, vs. -4.3% for the MSCI Europe ex UK NR.

The fund’s sector and geographical allocation was once again favourable in March, offsetting the underperformance of mid caps. It was primarily the individual contributions of some of our stocks that made the difference, particularly in finance (Talanx, Banca Mediolanum) and defence (Kongsberg, MilDef), as well as the absence of certain large caps from the index. The portfolio reviews carried out in March were diversified, mainly increasing positions in finance, consumer discretionary and materials. Among the exits were mainly stocks in the consumer staples and real estate sectors. Digital Stars Continental Europe is overweight in finance, industry and real estate, and underweight in consumer staples, healthcare and IT. Italy (first overweight) is still the fund’s top weight at 20.6%, ahead of Sweden at 15.7% and Germany at 13.1%. With a 8.4% weight, France remains the largest country underweight.

Digital Stars Eurozone Acc posted a -2.2% return in March, ahead of the MSCI EMU NR at -3.1%.

In March, the fund benefited from its overweight position in the financial sector, its underweight position in semi-conductors, its small-cap profile and a number of positive earnings reports (Puuilo, SPIE, Talanx, etc.). The portfolio reviews carried out in March were marked by a significant increase in the finance sector. Among the exits were mainly real estate, industry, media and consumer discretionary stocks. The consumer discretionary sector remains the fund’s main overweight, ahead of finance and real estate. The fund is underweight in consumer staples, materials, energy and industry. Italy becomes the fund’s largest weighting at 23.1%, followed by France at 22.0% and by Germany at 19.8%. Italy remains the most overweight country, and France the second most underweight ahead of the Netherlands.

Digital Stars Europe Smaller Companies Acc ended March at -1.2%, outperforming by +2.0% the MSCI Europe Small Cap NR (-3.2%).

The fund’s good performance in March was mainly due to good earnings announcements from portfolio holdings such as Friedrich Vorwerk Group and Theon International. Portfolio reviews in March diversified, increasing mainly positions in materials, as well as in consumer discretionary, finance and industry. Among the exits were mainly media, consumer staples, energy and IT stocks. The portfolio is now mainly overweight in finance and industry, and underweight in real estate and IT. The UK (most underweight country) remains the portfolio’s largest weighting at 16.8%, ahead of Italy (largest overweight) at 14.6% and Sweden at 14.3%.

Digital Stars US Equities Acc USD ended March down -7.4%, vs. -5.9% for the MSCI USA NR and -6.4% for the MSCI USA Small Cap NR.

Despite the fund’s good sector positioning, with an overweight in financials and industrials and an underweight in technology, the all-cap exposure and the correction in some technology stocks that had outperformed strongly in recent months led to an underperformance in March. The portfolio review carried out in March was fairly diversified, with the integration of finance, consumer discretionary and healthcare stocks, and the exit of companies from the IT and industry sectors. The fund is heavily overweight in finance, as well as in industry and consumer discretionary. The most underweight sectors remain IT and the media.

As every month, you can read our investment report, in which we offer you a macroeconomic analysis of the market, a presentation of the performance of our funds and their results.

You can also watch our video update on the Digital Funds range.

Equity indices in Europe have climbed as much since the start of the year as they did last year. The stock market rally that began in September 2022, shortly after the invasion of Ukraine, is extending, and the gain on European indices has been close to +50% for just over 2 years. We are now entering the 3^rd phase of this bull market cycle. The first phase (September 2022 > October 2023) was one of relaxation: the global economy was proving far more resilient than anticipated, despite inflation at the time running into two digits. The second phase (October 2023 > December 2024) was the positive consequence of rapidly falling inflation and the imminence of an accommodating monetary pivot by central banks. The third phase, which has taken root since the beginning of the year, is that of the fundamental normalization of the various market segments. This is now the reality for the major European indices, which have just reached their historical average valuation levels. In terms of stylistic compartments, only the “Value” segment is currently at a discount to its historical valuation standards, and its outperformance since the start of the year, which continues a trend in place since November 2020 and the discovery of vaccines, is gradually normalizing the situation. By way of illustration, the Banking sector, which accounts for a significant proportion of “Value”, is still the European sector at the biggest discount to its historical average, apart from the Energy sector (current P/E of STOXX Europe Bank 8.5x vs. a 10.4x average since 2000), despite the sector’s strong performance in 2024 (+26% excluding dividends) and since the start of the year (+23.5%).

After a good January, US indices fell back in February (MSCI USA NR -1.6%, MSCI USA Small NR -5.0%), and are now posting fairly neutral year-to-date performances (MSCI USA NR +1.4%, MSCI USA Small NR -1.5%), and for once, well below European indices (MSCI Europe NR +10.3% year-to-date).

The first steps taken by the Trump administration seem to have thrown a spanner in the works, and this has weighed on the “growth” segment of the stock market, as well as on the small and mid-cap segment. The “growth” sectors communication services (-6.6% in February), consumer discretionary (-9.0%) and IT (-1.7%) weighed heavily, while the value-oriented sectors energy (+3.7%), utilities (+1.5%) and finance (+0.6%) performed well.

Despite some good quarterly releases, investors seem to be turning away from the expensive and highly concentrated major US indices at the start of the year. However, we continue to identify pockets of inefficiency within the US market, which could benefit our active investment approach. By way of illustration, while the MSCI USA is overvalued by 35% by historical standards (PER 21.7x vs. average since 2005 of 16.1x), the small and mid-cap segment is discounted by -3.6% (PER MSCI USA Small 18.6x vs. historical average of 19.3x).

Digital Stars Europe Acc posted a +1.6% increase in February, vs. +3.6% for the MSCI Europe NR.

The fund’s sector and geographical positioning remained favourable over the month. However, the fund’s all-cap allocation weighed in relative terms, as even though small and mid caps (currently overweight) have risen by +4.6% since the start of the year, they still lagged the large-cap segment significantly over the month. The portfolio reviews carried out in February were diversified, mainly increasing our positions in the consumer discretionary (luxury goods) and finance sectors. Among the exits were mainly companies from the industry and communication services (media and telecom) sectors. Digital Stars Europe is still significantly overweight finance (financial services) and industry, and underweight healthcare, consumer staples and IT. The UK remains the fund’s top weight at 25.9%, ahead of Italy (biggest overweight) at 16.2% and Switzerland at 10.3%. With a 4.9% weight, France remains the largest country underweight.

Digital Stars Continental Europe Acc ended February at +2.7%, vs. +3.7% for the MSCI Europe ex UK NR.

The fund’s sector and geographical allocation worked in its favour in February, but the current overweighting of small and mid caps weighed down in relative terms, as even though they have risen by 6.7% since the beginning of the year, they lagged behind the largest caps over the month. The portfolio reviews carried out in February were diversified, mainly increasing positions in finance, consumer discretionary (luxury goods) and materials. Among the exits were mainly stocks in the industry, healthcare and communication services sectors. Digital Stars Continental Europe is overweight in finance, real estate and industry, and underweight in IT, consumer staples and healthcare. Italy (first overweight) is still the fund’s top weight at 19.9%, ahead of Sweden progressing at 14.9% and Switzerland at 13.2%. With a 7.6% weight, France remains the largest country underweight.

Digital Stars Eurozone Acc achieved +0.4% in February, vs. +3.5% for the MSCI EMU NR.

The fund’s sector positioning proved to be well oriented over the month. However, the fund’s all-cap allocation, which currently overweighs small and mid caps, had a negative impact in relative terms, as even though small and mid caps rose by almost 2.9% over the month, they still lagged the large-cap segment. The portfolio reviews carried out in February were diversified, increasing positions in the consumer discretionary and media sectors. Among the outflows were mainly financial and healthcare stocks. The consumer discretionary sector remains the fund’s main overweight, ahead of real estate and finance. The fund is underweight in consumer staples, IT, materials and energy. Germany becomes the fund’s largest weighting at 22.2%, followed by Italy at 21.8% and France at 20.0%. Italy remains the most overweight country, and France the most underweight.

Digital Stars Europe Smaller Companies Acc ended February at +0.9%, ahead of the MSCI Europe Small Cap NR at +0.6%.

The fund’s good performance in relative terms stems mainly from the strong performance of stocks in industry (MilDef Group, Koninklijke Heijmans) and finance (BPER Banca, Banca Popolare di Sondrio). Portfolio reviews in February were marked by increased positions in consumer discretionary, finance and IT. Among the outflows were mainly consumer staples and industry stocks. The portfolio is now mainly overweight in finance, healthcare and industry, and underweight in real estate and IT. The UK remains the portfolio’s largest weighting at 20.4%, ahead of Sweden at 15.9% and Italy at 14.0%.

Digital Stars US Equities Acc USD ended February down -4.2%, vs. -1.6 for the MSCI USA NR and -5.0% for the MSCI USA Small Cap NR.

On the US market, February was not favourable for small caps. Despite a good sector positioning (overweight financials and real estate, and underweight media), the fund suffered from its all-cap exposure and from a correction in some technology stocks that had strongly outperformed in recent months. The rebalancing carried out in February was fairly diversified, with the integration of finance and industry stocks, and the exit of companies from the media and IT sectors. The fund is heavily overweight in finance and industry. The most underweight sectors remain the media and IT.