Vector 2025 Semi-Annual Review

09 Jul 2025

Dear investors

The first half of 2025 was marked by heightened volatility, triggered by the announcement of broad-based U.S. tariffs on April 2nd. Equity markets experienced a rapid sell-off, with double-digit losses in just over a week. However, sentiment recovered strongly following the implementation of a 90-day tariff moratorium, progress toward a trade agreement with China, and a solid corporate earnings season. Geopolitical tensions in the Middle East, including the escalation involving Iran, had only a limited and short-lived impact on markets, as investor confidence proved resilient.

U.S. large-cap technology stocks—especially those linked to artificial intelligence and cloud infrastructure—rebounded strongly in the second quarter. This recovery drove strong gains for Growth and Momentum strategies, while Value, small-cap, and interest rate-sensitive sectors lagged. At the same time, the weakening U.S. dollar weighed on USD-denominated equities, making the United States - for the first time in many years - one of the weakest-performing regions globally from a European investor’s perspective.

After a strong first quarter, European equities underperformed in the second quarter on a local currency basis. Still, their overall performance remained positive, aided by euro strength and investor rotation into markets perceived as more stable, with rule of law and institutional integrity.

Emerging Asia recorded modest gains in the first half of the year, supported by a rebound as trade tensions eased.

Our flagship fund, Vector Navigator, posted a modest loss in the first half of the year but still outperformed the global equity index —which saw a steeper decline—by a solid margin. This outperformance was broad-based, with no particular concentration in any specific sector or factor. We significantly outpaced the benchmark during the market downturn driven by trade tensions; however, some of these gains were offset in the second quarter due to our underweight position in mega-cap growth stocks, which rebounded sharply and were only partially reflected in the portfolio. Meanwhile, the more defensive Vector Flexible gained around half a percentage point during the first semester, benefiting from its hedge against the global equity index during the market volatility.

Looking ahead, we remain cautious amid ongoing geopolitical risks and policy uncertainty. The portfolio continues to focus on high-quality companies with strong balance sheets, durable earnings, and exposure to long-term structural growth themes.

Best regards,

Werner, Thierry & Nils