Artemis Funds (Lux) – Global Focus update
The manager reports on the fund over the quarter to 31 March 2025.
Source for all information: Artemis as at 31 March 2025, unless otherwise stated.
Objective
The fund is actively managed. Its aim is to increase the value of shareholders’ investments primarily through capital growth.
Review of the quarter to 31 March 2025
Much of global equities’ weakness during the quarter was attributable to the US market, which was affected by growing uncertainties around President Donald Trump’s policy on trade as well as declining consumer confidence and inflation expectations. Europe was the best-performing region, with interest rate cuts, better economic data and strong results from previously beaten-up sectors providing support early in the period. Later on, the Trump-led shift in geopolitics resulted in a loosening of the debt brake by the newly elected German government, spurring fiscal spend.
China led emerging market performance on hopes of further stimulus measures and a reappraisal of the country’s technology stocks on AI innovation, notably after ‘DeepSeek Day’: this marked the launch of a Chinese start-up that had built an efficient large-language model using cheaper and less advanced equipment than US competitors.
Against this backdrop the fund fell 4.8%, compared with a loss of 1.3% from its MSCI AC World index benchmark.
| Three months | Six months | One year | Three years | Five years | Since launch* | |
|---|---|---|---|---|---|---|
| Artemis Funds (Lux) – Global Focus | -4.8% | -9.2% | -8.6% | -3.1% | 54.6% | 34.7% |
| MSCI AC World NR USD | -1.3% | -2.3% | 7.2% | 22.2% | 102.7% | 65.2% |
Negatives
IT and software development company Globant was our biggest detractor after 2025 revenue-growth guidance came in below expectations. We nonetheless added to the position because the stock has rarely traded as cheaply as at its current valuation.
Amazon and Taiwan Semiconductor Manufacturing (TSMC) were hit by fears over the AI tech spending cycle and a potential slowdown in the US. As the clear leader in semiconductor manufacturing, TSMC should have the pricing power to navigate these headwinds, while its valuation remains appealing.
Similarly, Nvidia sold off after DeepSeek called into question the leadership of western technology companies when it comes to AI. We continue to evaluate the possible impact of this threat, noting that increased hyperscaler (providers of cloud-computing services) spending announcements since then suggest it is yet to affect demand.
Positives
Constellation Energy jumped higher on the back of its acquisition of Calpine and expectations of an upgrade to hyperscaler spending on AI in 2025. We sold out on the back of this outperformance.
Wheaton Precious Metals announced record revenues in 2024, helped by the rising gold price.
From a relative point of view, we benefited from avoiding Tesla, Alphabet, Apple and Broadcom as these stocks fell.
Activity
Our biggest purchase of the quarter was Standard Chartered. The bank is returning to net income growth via its less capital-intensive non-lending businesses and, along with disciplined cost control and large share buybacks, we think this suggests returns should improve further from here. It got off to a strong start.
Fiserv, a provider of financial services technology, has been one of our strongest performers over the past six months. However, most of our rationale for holding it is down to its Clover payments system, which sells mainly into US SMEs (small and medium-sized enterprises) and would be among the businesses hardest hit by a recession. While Fiserv should still be a winner once the economy begins to recover on the other side, we did not feel the valuation reflected the risk of a slowdown, so decided to reduce our position.
We exited a few positions during the quarter, including ASML due to worries that big spenders on semiconductors such as Intel and Samsung will buy fewer lithography machines.
| Discrete performance, 12 months to year end |
YTD | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|---|---|---|
| Artemis Funds (Lux) – Global Focus | -4.8% | 5.5% | 14.7% | -20.9% | 17.4% | 20.8% | - | - | - | - |
| MSCI AC World NR USD | -1.3% | 17.5% | 22.2% | -18.4% | 18.5% | 16.3% | - | - | - | - |
Outlook
The level and speed of the implementation of Trump’s tariffs caught investors by surprise and the market environment may have fundamentally shifted, requiring us to reassess the outlook for the companies in the portfolio. The end state of the president's current policies is still unclear, so we remain alert to the impact on the portfolio and will continue to incorporate this into the earnings outlooks of our holdings as per our investment process.
Where fundamentals go, multiples will follow, and understanding the real impact on the portfolio companies’ earnings is key. To facilitate this and our next moves in the portfolio, we have been putting our stocks through the below macro framework with four different scenarios to give us a sense of the range of possible earnings estimates and at what valuations each may be priced in at. Where we feel the risks are no longer reflected in share prices, we are making adjustments.
How does each of our stocks do in the following scenarios?
Market volatility also provides dislocations in valuations and so we are looking at the current turmoil as an opportunity, especially as correlations fall after the initial market shock.
We continue to focus on quality businesses trading at attractive valuations. This is evident from our portfolio’s higher return on equity and profit margins and lower leverage ratio than the global index. We believe such a profile is even more important at times of market stress.