Fund Update : R-co Conviction Equity Value Euro — January 2026

The final month of 2025 was marked by the widely anticipated Fed rate cut, persistent concerns over AI-related valuations, and renewed hopes for a resolution of the Russia-Ukraine conflict. In this context, the MSCI World stagnated at +0.1%, the S&P 500 declined by -0.5%, and the Eurozone outperformed with a gain of +2.5%¹.

Geopolitical optimism on the Old Continent triggered a pro-cyclical movement that particularly favored banking stocks (+8.2%)¹ and commodities (+4.1%). However, the retail sector (+15.2%)¹ led the way, supported by Inditex’s strong earnings release and upbeat outlook (+16.8% for the month). Real estate (-2.1%) suffered from a still-resilient rate environment, while Healthcare (-2.6%) ended at the bottom of the rankings due to its defensive nature and the sharp drop in EssilorLuxottica (-12.6%)².  

From a style perspective, December once again favored Value, which rose by +3.7%, while Growth³  gained only +1.0%¹. This brought Value’s outperformance over Growth to more than 23 points since the start of the year. The valuation premium of Growth versus Value continued to decline from 78% to 74%¹ during the month, following the normalization trend that began in October 2022. We remain optimistic about the continuation of this normalization given i) the high-rate environment expected to persist, and ii) the revitalization of the European economy, which should benefit financial and industrial sectors.  

The R-co Conviction Equity Value Euro fund benefited from this style bias (+3.7%)⁴, outperforming its benchmark (Euro Stoxx) by 120 basis points for the month. This outperformance was mainly driven by stock selection, with Société Générale and Forvia continuing their strong performance (+14.7% for the month and +161.6% for the year for Société Générale; +12.6% for the month and +56.9% for the year for Forvia), as well as the rebound of STMicroElectronics (+13.8%) and the solid performance of Alstom (+11.7%)¹.  

During the month, we introduced Banco Monte Paschi into our portfolio. The stock appears attractive due to potential balance sheet optimization and synergies from its tie-up with Mediobanca. Moreover, the environment remains highly favorable for Eurozone banks, with a healthy macroeconomic backdrop, persistently high rates, and a steeper yield curve. Given the valuation level, which remains attractive at 10.3x PE⁵ despite its re-rating, the banking bet remains the portfolio’s main conviction. We also made partial adjustments to trim positions that had recently outperformed (EDPR, Alstom) and reinforced certain convictions on temporary weaknesses (Technip Energies, Saint-Gobain).  

The Eurozone offers an attractive diversification opportunity within equity markets. It benefits from a much lower concentration level than the U.S., still very reasonable valuations, and natural protection against a potential dollar weakening. Investments linked to infrastructure projects in Germany and European rearmament should enable the region in 2026 to move from a resilient macroeconomic environment to a revitalization phase, creating a virtuous cycle for the entire area. Our portfolio is structured to capitalize on these favorable factors and support this revitalization phase.