In the ever-evolving financial landscape, stability and risk management are essential for investors seeking long-term growth. Framont Global Opportunity Fund, which adopted a new strategy on November 1, 2023, is designed to provide consistent returns while mitigating adverse market effects.
Since implementing this strategy, we have encountered significant market events, notably in late July to early August 2024 and between December 2024 and February 2025. These periods tested our approach, and we are confident that we are on the right path to achieving our objectives.
Performance and Risk Management
Since the strategy shift, Framont Global Opportunity Fund has delivered a total performance of 6.33%, which had peaked near 9% by the end of January 2025. While this may not seem extraordinary, it is important to view these results within the framework of our risk-adjusted return strategy.
In August 2024, equity markets experienced a sharp decline, with the Nikkei index dropping by 15% and Western indices by 7% in a matter of hours. That very decline produced a high in the Vix equal or even higher of march 2020, namely the Covid crash. However these losses were quickly recovered.
As we write this article, the S&P 500 index has a year-to-date performance of -2%, while the MSCI World index remains flat for the same period.
An essential measure of risk for us is volatility. Equity indices typically exhibit annualized volatility around 18%, whereas our fund maintains a significantly lower risk profile, at approximately one-third of that level. By prioritizing lower volatility, we accept a more measured return potential in exchange for greater returns stability and thus risk management.
Portfolio Allocation and Strategy
The fund’s current allocation reflects our conviction in key sectors, including materials, energy (including uranium), technology, and the Chinese markets. Our principal holdings listed from biggest to smallest include:
- Thyssen Krupp
- US Steel
- Snowflake
- JD.com (China)
- Peabody Energy
- Chevron
This allocation is structured to generate medium-term returns while managing risks associated with global trade tensions. Notably, we have limited or none exposure to the consumer discretionary sector due to potential tariff risks.
Economic Outlook and Market Expectations
The month of March saw a market correction which we had anticipated. Indices and stocks have transitioned from an overbought to an oversold state, with extreme fear dominating the sentiment. Historically, such conditions present attractive entry points into equities. Consequently, we expect a broad-based market rebound in the coming weeks or months, extending through the summer.
However, geopolitical uncertainties, including tariffs and global economic shifts, requires vigilance. Our portfolio is structured to capitalize on growth opportunities while allowing flexibility for swift adjustments in response to changing conditions. The correction observed in March aligns with our expectations, reinforcing our strategic approach.
A Balanced Approach to Investing
Given current market volatility, we firmly believe that a more conservative fund with lower volatility is preferable to chasing outright maximum performance. The ability to cushion adverse movements is critical in preserving capital and ensuring sustainable returns.
We remain committed to optimizing Framont Global Opportunity Fund’s performance while mitigating risks. Investors can stay updated with our latest strategies and insights by visiting Global Opportunities Fund.
We appreciate the opportunity to share our perspective and welcome ongoing discussions to provide further insights into our investment approach.