Tycho CapeView European Long Short Fund

Overview

Tycho CapeView European Long Short Fund seeks to deliver consistent, risk-adjusted returns by taking long and short positions in European equities. The fund combines fundamental, bottom-up stock selection with disciplined portfolio construction and active risk management to generate positive alpha, while maintaining low net market exposure.

Strategy & Manager

Performance

Commentary

Investment Manager’s Commentary – September 2026

The Tycho CapeView European Long Short Fund returned -1.30% (Class F USD, net) in September compared with a decline of -2.4% for the STOXX 600. Hostilities in the Middle East continue to simmer, with the risk of further escalation, while the transition at the Fed is creating uncertainty around the future path of interest rates. In Europe, sovereign debt concerns have also resurfaced ahead of the annual budget process and elections next year. Against this backdrop of geopolitical uncertainty and rising bond yields, it is perhaps unsurprising that European equity markets struggled during the month.

Despite the weaker market, our largest positive contributor was the long position in ASML, which recovered losses from the ‘Situational Awareness’ rout in July as the share price began to once again reflect the potential for earnings upgrades in the coming year.

On the short side, a position in a private equity firm generated positive return. There was no corporate news flow during the month, but long-term yields rose sharply in the US, UK and Continental Europe which highlights how much more challenging it will be for private equity firms to exit their investments. Further, it is interesting to note that about 10% of the shares owned by current and former management executives came out of lock up during the month, potentially creating an additional source of selling pressure.

On the losing side, a long in an online broker, FlatexDEGIRO, traded down after major changes in the supervisory board which sparked concerns of a change in strategy. This has since been very much refuted, and insiders have begun buying stock. Trustpilot fell on numbers after “only” reiterating previous guidance which had already been raised.

Our fundamental outlook has not changed. Despite all the headlines, high oil prices and higher than expected interest rates, there have been very few surprises from talking to the companies that we follow. Those companies that we see as robustly managed and well invested and where market structures are seeing capacity withdrawal are giving us no reason not to believe that their earnings power is increasing. Whilst on the other hand our short book is, if anything, even more attractive. AI disruption continues apace, debt costs continue to rise, and the operating environment remains volatile. All of these things should make fragile businesses even riskier.

The macro however is finely poised. We are wary of the quantum of leverage in the system and how things can unfold if yields keep rising at this pace. Equally, given that many businesses are still doing well despite the short-term headwinds, the market could be a coiled spring to the upside if some kind of calm returns to energy and bond markets. Our strategy therefore for now is to keep net at the lower end of the range but to selectively increase gross exposure ahead of the upcoming earnings season. This allows us to capitalise on attractive stock-specific opportunities while retaining the flexibility to respond as the macroeconomic picture evolves.

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