Paul Lee
Chief Executive Officer & Chief Investment Officer
Portfolio Manager, Paragon Alpha I
General Partner, Paragon Ventures I
General Partner, Global Real Estate Alternative & Tactical (GREAT) Fund
At the start of 2025, we shared our view that this year could be a positive one for markets, particularly for investors focused on quality. We emphasized our commitment to identifying good, strong, and profitable businesses with defensible moats, and reiterated our return target of high single to low double digits.
As we now enter the second half of the year, we are pleased to report that Paragon Alpha I has delivered a net return of 10.23% Year-to-Date (YTD), putting us firmly on track to meet our performance commitment to investors. This outcome reflects our disciplined investment process and the resilience of our portfolio companies amid a complex macroeconomic backdrop.
The first half of 2025 has seen a gradual normalization in inflation expectations, a more measured pace of monetary policy adjustments, and a return of investor focus to fundamentals. While geopolitical and policy risks remain, we believe the second half of the year presents a sustainable environment for active managers with a long-term lens.
We continue to see compelling opportunities in businesses that demonstrate pricing power, capital efficiency, and strategic clarity. Our approach remains conviction-led and valuation-disciplined, with a focus on compounding capital through cycles.
With a strong start behind us and a constructive setup ahead, we remain confident in our ability to deliver on our return objectives and continue creating long-term value for our investors.
To recap, click here to access the video on overall market outlook for 2025.
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Carinn Neo
Managing Director & Senior Portfolio Manager
Paragon Income I
We began 2025 with a cautious stance on bonds, anticipating that tariff-related inflationary pressures and a potentially slow pace of U.S. Federal Reserve rate cuts could heighten market volatility. Leveraging Paragon Income Fund’s differentiated asset allocation flexibility, we reduced bond exposure to mitigate interest rate risk while maintaining a high current yield. This active approach proved effective, delivering a strong first-half return of 3.91% as of 30 June 2025.
As we move into the second half of the year, markets remain acutely sensitive to the impact of U.S. tariffs on global growth and inflation. Reports of the potential replacement of U.S. Fed Chair Jerome Powell has further stirred volatility in bond yields. In the months ahead, the timing and scale of U.S. Fed rate cuts will likely be critical drivers for financial markets.
Looking forward, we are cautiously optimistic that the Fed may implement two rate cuts in the second half of 2025, as it appears to be “behind the curve” relative to other G7 central banks. With U.S. interest rates still at elevated levels, we continue to favour high-quality bonds and dividend-yielding equities for their attractive total return potential.
To recap, click here to access the video on market outlook relating to fixed income for 2025.
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Sean Quek
Managing Director & Senior Portfolio Manager
Paragon SAGE Fund
At the outset of 2025, we anticipated that markets are less conducive in 2025 compared to 2024, given higher growth expectations and more demanding valuations. Also, we expected a broadening of the market to continue delivering further upside.
These expectations were validated. The first half of 2025 saw considerable volatility in capital markets. Global equities reached a new peak in February but subsequently retreated as the market rotated out of heavily weighted mega-cap stocks, signalling the unwinding of the U.S. exceptionalism trade. The second quarter began with further market declines following President Trump’s unexpectedly aggressive Liberation Day tariffs. However, a swift recovery ensued after the U.S. administration paused these “reciprocal” tariffs in response to market unrest. Supported by stronger-than-expected economic data and corporate earnings, investor confidence surged, driving global equities to new highs by end June 2025.
Although select mega-cap stocks continued to drive overall index performance, the broadening of market benefited regions outside the U.S., with key European and Asian markets outperforming in the first half of 2025 as investors diversified their portfolios.
Reflecting these dynamics, Paragon SAGE achieved a 6.5% return in the first half of 2025.
Following the recent rally, global equity valuations have climbed back to the elevated levels seen in February, accompanied by growing investor complacency. Nonetheless, uncertainties surrounding trade policies continue to cloud the outlook for growth and inflation, suggesting a complex path ahead. Despite these challenges, we continue to identify pockets of opportunity, and SAGE remains committed to compounding sustainable returns by investing in above-average companies at below-average valuations through our repeatable investment strategy and processes.
To recap, click here to access the video on market outlook relating to global equities for 2025.
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Note: For “Accredited Investors” and/or “Institutional Investors” only as defined in the Securities and Futures Act (Cap. 289)