Monthly report July 2026 of the zCapital Swiss Small & Mid Cap Fund (class A)
The fund decreased by 0.4% in July (SPI Extra -0.5%). We took advantage of the significantly lower prices of Dottikon ES and Huber+Suhner shares to make additional purchases. Conversely, we reduced our holdings in Inficon, Belimo, SIG Group and Straumann.
The AI rally took a sharp turn in July. There was a clear trend of profit-taking among stocks in the semiconductor industry. The renewed increase in investment plans for AI infrastructure, such as those announced by Alphabet, were met with growing scepticism. Defensive stock markets, such as that of Switzerland, held up relatively well. While the ceasefire between the US and Iran collapsed and the oil price rose sharply for a short time, US inflation data were lower than expected. The US Federal Reserve left its benchmark interest rates unchanged. The earnings season for the first six months of the year is in full swing.
The geopolitical environment has deteriorated again. The rise in energy prices and associated inflation risks has led to an increase in the yield on US Treasury bonds. The bond market is signalling, that investors want better compensation for long-term inflation risks. This puts pressure on the Fed to tighten monetary policy. History shows that a sustained rise in long-term interest rates can eventually become problematic for stock markets, especially in environments characterised by excessive speculation and high valuations.
