Monthly Review

EQUITY

(Equity Hedge, starting on 02.28.23; Equity Hedge Plus, starting on 11.19.25; and Total Return under the new mandate, starting on 07.01.24)

The Springs Equity Hedge FIC FIM (Long Short) returned +1.07% (vs. CDI of 1.09%), accumulating a year-to-date return of +4.86% (vs. CDI of 4.54%), and +49.54% since inception (vs. CDI of 46.78% over the same period). The fund has an annualized volatility of 4.03%.
Springs Equity Hedge PLUS FIF Cotas FIM (Leveraged Long Short) returned 1.12% (vs. CDI of 1.09%), accumulating a year-to-date return of +4.53% (vs. CDI of 4.54%), and +9.44% since inception (vs. CDI of 6.28% over the same period). The fund has an annualized volatility of 6.54%.

The Springs Total Return FIC FIM (Long Biased) returned -1.47% (vs. IPCA + IMAB Yield of 1.26%), accumulating a year-to-date return of +2.37% (vs. Benchmark of +5.12%), and +31.84% since the new mandate began (vs. IPCA + IMAB Yield of 24.81% over the same period). The fund has an annualized volatility, under the new mandate, of 13.42%.

Monthly Commentary

April was marked by a significant recovery in global markets, following the risk aversion observed in March. In the United States, solid corporate earnings and some relief in oil prices offset some geopolitical concerns, leading the S&P 500 to rise 10.4% for the month, its best monthly performance since 2020, while the Nasdaq advanced 15.3%, driven primarily by the technology and semiconductor sectors.

In emerging markets, the trend was also positive, with a resumption of flows into the asset class and a highlight on Latin America. The global environment once again favored risk assets, benefiting markets that were still trading at discounted valuations and had greater sensitivity to falling global interest rates.

In Brazil, the Ibovespa had a more sideways month, ending April with a slight decline of 0.08%, despite reaching new historical highs during the period. The dollar fell 4.38% for the month, closing April at R$4.95, reinforcing the relative attractiveness of Brazilian assets for foreign investors. Despite the index's more neutral performance, the Brazilian stock market continues to accumulate strong gains year-to-date, primarily supported by foreign inflows, the expectation of a continued interest rate cutting cycle, and still attractive valuations in historical terms.

In the short term, we understand that the main drivers of the Brazilian stock market remain the combination of foreign inflows, interest rate trajectory, and the evolution of the fiscal and electoral landscape. After the significant repricing observed since the beginning of the year, the environment now demands greater selectivity, especially in a still volatile external context.

Given this scenario, we continue with a diversified long-short portfolio, maintaining utilities as the primary gross exposure, but reducing the total gross exposure of the portfolio during April. Throughout the month, we reduced exposure to domestic consumption and financial institutions, increased allocation to commodities/metals, and maintained significant arbitrage and relative value structures. This composition aims to preserve flexibility, capture dispersion between assets, and maintain risk discipline, without relying on a significant increase in net exposure.

‍

Equity

‍(Long Short, starting on 02.28.23; and Total Return under the new mandate, starting on 07.01.24)

The Springs Equity Hedge FIC FIM (Long Short) returned +1.78% (vs. CDI of 1.05%), accumulating a year-to-date return of +19.10% (vs. CDI of 12.95%), and +39.87% since inception (vs. CDI of 38.71% over the same period). The fund has an annualized volatility of 4.03%.

The Springs Total Return FIC FIM (Long Biased) returned +4.35% (vs. IPCA + IMAB Yield of 0.70%), accumulating a year-to-date return of +26.77% (vs. IPCA + IMAB Yield of 11.42%), and +26.74% since the new mandate began (07.01.24) (vs. IPCA + IMAB Yield of 17.55% over the same period). The fund has an annualized volatility of 12.59% under the new mandate.

November was a month of consolidation in global markets, with the MSCI ACWI virtually flat (-0.1% in USD) and strong sectoral dispersion. In the US, the S&P 500 advanced 0.1% and the Nasdaq declined 1.6%, amid price corrections for technology companies and discussions about the pace of monetary easing. The 10-year yield closed near 4bps, while Fed statements led the market to price in a higher probability of interest rate cuts in December.
In emerging markets, the MSCI EM fell by approximately 2.5%, pressured by Asia. Meanwhile, in Latin America, Brazil broadly led the region, with the Ibovespa up +6.4% in BRL for the month (+32.3% year-to-date; +53.5% in USD). The advance was supported by strong corporate earnings and the compression of the interest rate curve. Cyclical domestic sectors, especially construction and retail, saw the largest gains.
‍
Brazilian inflation maintained a favorable trajectory: the November IPCA-15 rose 0.20% (4.5% over 12 months), reinforcing the perception of high real interest rates and anticipating bets on Selic rate cuts in 2026. The DI curve significantly narrowed, benefiting interest-rate-sensitive domestic assets. The real appreciated against the dollar during the period, moving to the R$ 5.33 range, tracking a weaker dollar globally.
‍
We understand the US monetary cycle, currently in an easing process, and the expected start of the Brazilian cycle (currently priced between January and March 2026), as the biggest drivers of the domestic market over the next 6 to 12 months. The fund's strategy remained focused on quality companies with strong cash generation and low leverage.

Equity Hedge

‍‍During the month, the fund returned 1.78%. From a sectoral perspective, the utilities, agribusiness, and healthcare sectors performed positively. On the other hand, the steel, mining, and civil construction sectors were the main detractors. The largest portfolio allocations are in the consumer, utilities, and technology sectors.

Total Return

‍‍During the month, the fund returned 4.35%. From a sectoral perspective, the agribusiness, utilities, and banking sectors performed positively. On the other hand, the civil construction sector was the main detractor. The largest portfolio allocations are in the banking, utilities, and consumer sectors.

Equity Hedge

‍October continued to show a positive trend for global assets. The S&P 500 posted a total return of 2.34%, while the Nasdaq returned 4.72%, reflecting a positive earnings season and expectations for continued monetary easing in the US. The yield on the 10-year US Treasury bond closed down 7 bps, ending the month at 4.08%. In emerging markets, positive performance was equally significant. The MSCI EM rose 4.19%, benefiting from continued capital inflows, a trend expected during periods of dollar weakening. The Ibovespa followed the global trend and closed the month at an all-time high, up 2.26%, supported by the steel and mining, banking, and capital goods sectors. We view the US monetary cycle, currently in an easing phase, and the anticipated start of the Brazilian cycle (currently priced between January and March 2026) as the main drivers for the domestic market over the next 6 to 12 months. Historically, periods of US interest rate cuts are accompanied by a weaker dollar and investment flows into higher-risk assets. In October, foreign equity flows were negative by R$1.4 billion, despite a reversal during the last week of the month when they turned positive by R$5.9 billion. For 2025, the cumulative flow stands at R$25.1 billion. During the month, the fund performed at 0.96%. From a sectoral perspective, the Banking, Infrastructure, and Utilities sectors performed positively. On the other hand, the Real Estate sector was the main detractor. The fund's strategy remained focused on quality companies with strong cash generation and low leverage, in addition to specific opportunities in unlisted names with appreciation potential. The largest portfolio allocations are in the Utilities, Consumer, and Banking sectors.

‍Total return

‍October continued to show a positive trend for global assets. The S&P 500 posted a total return of 2.34%, while the Nasdaq returned 4.72%, reflecting a positive earnings season and expectations for continued monetary easing in the US. The yield on the 10-year US Treasury bond closed down 7 bps, ending the month at 4.08%. In emerging markets, positive performance was equally significant. The MSCI EM rose 4.19%, benefiting from continued capital inflows, a trend expected during periods of dollar weakening. The Ibovespa followed the global trend and closed the month at an all-time high, up 2.26%, supported by the steel and mining, banking, and capital goods sectors. We view the US monetary cycle, currently in an easing phase, and the anticipated start of the Brazilian cycle (currently priced between January and March 2026) as the main drivers for the domestic market over the next 6 to 12 months. Historically, periods of US interest rate cuts are accompanied by a weaker dollar and investment flows into higher-risk assets. In October, foreign equity flows were negative by R$1.4 billion, despite a reversal during the last week of the month when they turned positive by R$5.9 billion. For 2025, the cumulative flow stands at R$25.1 billion. During the month, the fund performed at 1.49%. From a sectoral perspective, the Metals, Utilities, and Banking sectors performed positively. On the other hand, the Real Estate sector was the main detractor. The fund's strategy remained focused on quality companies with strong cash generation and low leverage, in addition to specific opportunities in unlisted names with appreciation potential. The largest portfolio allocations are in the Utilities, Consumer, and Banking sectors.

September was positive for global assets, especially for emerging markets. The start of a new monetary easing cycle in the US supported a greater global risk appetite, resulting in returns of 7.2% for the MSCI Emerging Markets and 6.5% for the MSCI Latam, in dollar terms. Developed markets continued their upward trend, reaching new historical highs. The S&P returned 3.6% and the Nasdaq 5.7%. In Brazil, the Ibovespa advanced 3.4% in Brazilian Reals (5.6% in US Dollars), also reaching historical highs. On the macroeconomic front, Copom maintained the Selic rate at 15%, while a more hawkish tone temporarily solidified expectations for the first rate cut in 2026 (the current curve pricing indicates sometime between January and March 2026). In the political sphere, the conviction of former President Jair Bolsonaro and diplomatic tensions with the US, following sanctions imposed on family members of a Supreme Court justice, introduced new elements of uncertainty, though without immediate impact on market direction.We view the US monetary cycle, currently in an easing phase (and the anticipated start of Brazil's cycle), as the primary drivers for the domestic market over the next 6 to 12 months. Historically, periods of US interest rate cuts are accompanied by a weaker dollar and investment flows into higher-risk assets. The increased global risk appetite was also reflected in foreign inflows to the stock market, totaling R$4.8 billion in September and R$26 billion in 2025.During the month, the main returns came from the financial, utilities, and infrastructure sectors. The primary performance detractors were food and beverages and commodities. A significant portion of the month's return stemmed from the investment in Klarna, which completed its IPO in the US. Investing in unlisted companies with strong appreciation potential is a key characteristic of Springs Capital's products, resulting from a structured investment process that constantly seeks unconventional ideas both within and outside Brazil.We continue to prioritize solid, low-leverage companies capable of navigating adverse scenarios, while also seeking micro-specific opportunities. Throughout September, we maintained our largest exposures in the financial, utilities, and consumer sectors.

August was a positive month for global markets, with the S&P and Nasdaq returning 2.03% and 1.65%, respectively. The month was also positive for emerging markets (MSCI EM +1.46%), and especially for Latin America (MSCI Latam +8.30%). In the US, weaker labor market data increased expectations of Fed interest rate cuts, with the probability of a 25 bps cut in September reaching ~90%. Jerome Powell's more dovish communication at Jackson Hole contributed to this movement; the dollar (DXY) depreciated 2.2% during the month, favoring emerging currencies and reinforcing risk appetite. In Latin America, markets followed the global trend, with Brazil standing out. The Ibovespa rose 6.3% in Brazilian Reals and 9.4% in US Dollars, recovering from July's correction. We believe the main contributors to the positive performance were a mix of increased global risk appetite, a positive earnings season in Brazil, and the potential start of a local monetary easing cycle in the coming months.As we've mentioned in previous months, we expect that the combination of the end of Brazil's monetary tightening cycle (and the potential start of an easing cycle approaching), coupled with the beginning of the easing cycle in the US, substantially increases the chances of a positive scenario for the Brazilian market over the next 6 to 12 months.We continue to believe in the importance of maintaining a portfolio concentrated in quality companies with low leverage and resilience to the macroeconomic environment. During the month, we continued our strategy of gradually increasing exposure to domestic cyclical sectors with solid fundamentals, without compromising on quality criteria. We remain attentive to opportunities in specific micro stories.

During July, global markets performed well; the MSCI World posted a total return of 1.31%, while the S&P and Nasdaq had total returns of 2.24% and 3.73%, respectively, both reaching historical highs during the month. Despite volatility in the news flow, progress on trade agreements between the US and Europe and the prospect of ongoing negotiations with China were key drivers. In emerging markets, the MSCI EM posted a total return of 2.01%, largely driven by performance in Asia (China +4.84%; Taiwan +5.58%; South Korea +3.91%), while Latin America (MSCI Latam) saw a negative return of 4.42%, impacted by Brazil -6.85% (in dollars) and Chile -4.92%. The increased risk aversion towards Brazilian assets, stemming from the US announcement of 50% tariffs on Brazilian exports and sanctions against Supreme Court ministers, occurred alongside the strong performance of American assets. During the month, the US 10-year Treasury yield rose by 14bps and the dollar (DXY) strengthened by 3.2%. As a result, the Brazilian 10-year bond yield increased by 55 bps (ending the month at 14.06%), and the real depreciated by 3%, closing the month at R$ 5.60. Finally, the Ibovespa closed at 133,000 points (-4.17%). In the last week of the month, Copom kept the Selic rate stable at 15%, ending the monetary tightening cycle and with the prospect of maintaining high interest rates for an extended period. Periods at the end of monetary tightening cycles tend to be positive for the stock market, as discussions shift from the potential peak interest rate of the cycle to when the rate-cutting period will begin (the curve currently prices in a start in January 2026). The combination of the end of the monetary tightening cycle in Brazil, coupled with the potential start of monetary easing in the US (potentially in the second half of 2025), increases the chances of a positive scenario for the Brazilian stock market over the next 6-12 months. We continue to believe in the importance of maintaining a portfolio concentrated in quality companies with low leverage and resilience to the macroeconomic environment. During the month, we increased exposure to the oil, steel and mining, infrastructure, and capital goods sectors. We continue to look for opportunities in specific micro-level stories.

June was positive for risk assets, with two main themes contributing positively: (i) market perception that the trade war between the US and China/rest of the world is easing, and that governments may be close to finalizing new tariff agreements; and (ii) instability in the Middle East may be trending towards improvement following US and Israeli attacks on nuclear facilities in Iran. In the stock market, the S&P and Nasdaq closed at historical highs with total returns of 5.08% and 6.64% for the month, respectively. Emerging markets also performed well, with the MSCI EM returning 6.12% and the MSCI Latin 6.13%. Locally, the Ibovespa in dollar terms had a total return of 6.47%, while the index in Brazilian Reals performed 1.33%. In the sovereign debt market, the 10-year US Treasury bond closed June with a yield of 4.24% (-17bps for the month), while the DXY (dollar vs. a basket of developed country currencies) continued to depreciate (-2.5% for the month and 10.9% year-to-date). Locally, the 10-year bond closed the month with a yield of 13.48%, with a 50 bps drop in the rate. In Brazil, Copom raised the Selic rate by 25 bps to 15% p.a. with the expectation of maintaining it for an extended period; the yield curve prices in the start of cuts in January 2026. Periods at the end of monetary tightening cycles tend to be positive for the stock market, as discussions shift from the potential peak interest rate of the cycle to when the cutting period will begin. The combination of the end of the monetary tightening cycle in Brazil coupled with the potential start of monetary easing in the US (potentially in the second half of 2025) increases the likelihood of a positive scenario for the Brazilian stock market over the next 6-12 months. We continue to believe in the importance of maintaining a portfolio concentrated in quality companies with low leverage and resilience to the macroeconomic environment. During the month, we reduced our relative exposure to low-income housing developers and increased our allocation to industrial sector stocks and banks. We remain attentive to opportunities in specific micro stories.

Global markets recovered in May, reversing the decline observed in April. The easing of trade tensions between the United States, China, and the European Union, with tariff reductions and the postponement of new protectionist measures, was the main catalyst. The total dollar return for the S&P 500 was 6.3% and for the Nasdaq, 9.6%, while in emerging markets (MSCI EM) it was 4.3% and 1.7% in Latin America (MSCI Latin). In the fixed income market, the Trump administration's proposal for a new, potentially expansionary fiscal package raised concerns about the U.S. fiscal trajectory and the consequent impact on Treasuries, with the 10-year yield opening 24 bps higher and ending the month at 4.40%. Recent volatility in the U.S. market, coupled with a potential shift in the dollar's appreciation trend, has benefited capital flows to emerging markets. In this context, foreign capital inflow to B3 for the year totaled R$22.1 billion (R$11.6 billion in May), which, in our opinion, has supported the performance of the Brazilian equity market (Ibovespa +13.9% year-to-date). In Brazil, the main macroeconomic themes of the month included: (i) Copom raised the Selic rate by 50bps to 14.75%; however, a more dovish tone led the market to price in the end of the monetary tightening cycle, a fact that triggered strong performance in domestic equities and played an important role in generating alpha for our funds; (ii) IPCA-15 came in below consensus (0.36% m/m vs. 0.44% consensus), contributing to the expectation of an end to the monetary tightening cycle; and (iii) the announcement of changes to the IOF tax, a topic still evolving and highlighting the current challenge of fiscal balance, particularly from the perspective of increased taxation. The 10-year bond yield closed down 5bps for the month, ending at 14.02% (once again, the month-end figure does not capture the intra-month volatility where the yield fluctuated between 13.85% and 14.20%). We continue to believe in the importance of maintaining a portfolio concentrated in quality companies with low leverage and resilience to the macroeconomic scenario. During the month, we continued to reduce our relative exposure to the utilities and low-income housing construction sectors and increased our allocation to domestic consumer companies. We remain attentive to opportunities in specific micro stories.

April saw significant volatility in global financial markets, driven by the United States' announcement of trade tariffs. "Liberation Day" introduced a universal 10% tariff, along with additional surcharges targeting countries with which the U.S. has a trade deficit — leading, in the most extreme case, to initial rates of 67% for China, which reached 145% in the latest update. The endgame remains uncertain, but higher tariffs and reduced investment visibility are expected to negatively impact global activity. The S&P 500 closed the month down 0.68%, after falling as much as 11.2% at April's lowest point, accumulating a 5.3% year-to-date decline. The Nasdaq rose 0.88% for the month, after dropping 11.7% during the period of heightened risk aversion, but still shows a negative return of 10.3% for 2025. In contrast, gold appreciated by 5.8% during the month, benefiting from increased risk aversion and stagflation fears. The initial proposals from the Trump administration, focusing on the twin deficits, significantly impacted the debt market and the dollar. The DXY index fell 4.6% in April, accumulating an 8.01% year-to-date depreciation. Meanwhile, 10-year Treasury yields ended the month virtually stable at 4.17% (a 4 bps drop), although they fluctuated between 4% and 4.5% throughout the period — a volatility not captured by month-end data. The dollar's depreciation and the easing of long-term rates favored capital flows into emerging markets. In Brazil, the Ibovespa advanced 3.7% in April (4.4% in USD), closing the month at 135,000 points and accumulating a 12.3% year-to-date gain. The real appreciated by 0.57% against the dollar, in line with the performance of emerging market currencies. As expected, Brazil, being a relatively more closed economy, outperformed other regions in the context of the tariffs, being subject to the base 10% tariff. The domestic interest rate curve saw a significant flattening, with 10-year bonds retreating ~100 bps and closing the month with a yield of 14.06%. Market expectations regarding the monetary tightening cycle also adjusted: at the end of March, the curve indicated the Selic rate at 15.2% in July 2025; by the end of April, it priced in the end of tightening in June, with the rate at 14.7%. This repricing across the short and long ends of the curve contributed positively to the performance of domestic equities, primarily benefiting our allocation in the utilities sector — currently our main sectoral exposure. We continue to believe in the importance of maintaining a portfolio concentrated in quality companies, with low leverage and resilience to the macroeconomic environment. During the month, we marginally reduced our relative exposure to the utilities and low-income housing construction sectors, and increased our stake in domestic consumer companies. We remain attentive to opportunities in specific micro stories.

Growing uncertainty regarding U.S. trade and tariff policy and its potential economic impacts continued to affect markets in March. Portfolio shifts continued to favor emerging market assets, including Brazil, in contrast to the U.S. stock market. The Ibovespa rose 5.9% for the month (and 8.3% year-to-date), while the S&P fell 4.1% (-4.6% year-to-date in 2025).Brazil, being a relatively closed economy, is expected to be little impacted by Trump's anticipated announcement on reciprocal tariffs, scheduled for early April. Furthermore, we have observed increased interest in Brazil among foreign investors, resulting in positive inflows to the stock market for the fourth consecutive month.On the international front, it's important to note that the U.S. Federal Reserve kept interest rates stable for the second consecutive meeting, citing uncertainties about the economic outlook. Short-term inflation data came in line with market expectations, while economic activity indicators remained resilient.While we see a more favorable international scenario for emerging market assets and the Brazilian stock market, domestically, we observe a government lacking commitment to austere fiscal policy and concerned about declining popularity, as recent polls indicate. Consequently, domestic long-term interest rates remain elevated, despite the approaching end of the monetary tightening cycle. The market projects two additional 50 bps hikes by June, resulting in a terminal Selic rate of 15.25%.The main factors supporting this scenario are a more stable exchange rate (with an 8% appreciation year-to-date) and the expectation of an economic slowdown. However, the economic stimulus measures the government intends to announce in the coming months could hinder the disinflation process. For example, payroll-deducted loans for private sector employees were launched this month, with the potential to reduce personal loan rates and boost consumption.We believe it remains essential to maintain a portfolio concentrated in quality companies, resilient to the economic scenario and with low leverage. We maintained our positions concentrated in utilities, low-income homebuilders, and sought opportunities in specific micro stories.

The global landscape continued to be the primary driver of markets, with increased volatility following new statements from Trump indicating a potential hardening of US trade policy and growing concerns about a slowdown in the American economy. In Brazil, attention focused on government approval ratings, which showed a further decline in the president's popularity and sparked speculation about when investors will shift their focus from current economic policy to pricing in the possibility of an opposition government in the 2026 elections. Against this backdrop, the US S&P 500 index fell 4.3% for the month, while the Brazilian market showed mixed performance, with the Ibovespa closing near stability (+0.3%) and the real experiencing a slight depreciation (-1.2%). Notably, the Chinese stock market index rose 8.7% for the month, driven by expectations of new economic stimuli. It remains difficult to predict the impact of the new Trump administration policies on the American economy: increased tariffs on trade partners, a fiscal austerity policy with the creation of the so-called "Department of Government Efficiency" (DOGE), and tax cuts. The intensification of protectionist rhetoric has generated concern among investors, especially in emerging markets more dependent on global trade. In Brazil, the month was marked by a further decline in government approval ratings, with polls showing increased public dissatisfaction, even in regions where the left has historically maintained favoritism. This worsening popularity led the government to adopt a more aggressive stance on economic stimulus measures, reigniting concerns about its commitment to fiscal balance. On the corporate front, Petrobras released its quarterly results with higher-than-expected capex, which resulted in a lower dividend distribution for the period. Furthermore, shares of retail companies performed negatively after reporting results below investor expectations. Given this scenario, we maintain a defensive portfolio positioning, investing in sectors less sensitive to the economic cycle and with low leverage. Our main positions remain concentrated in utilities, banks, and low-income housing developers, sectors that we believe offer a more balanced combination of resilience and appreciation potential in the medium term.