Artemis Global Select Fund update
Natasha Ebtehadj, manager of the Artemis Global Select Fund, reports on the fund over the quarter to 31 March 2025.
Source for all information: Artemis as at 31 March 2025, unless otherwise stated.
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 7.5% over the quarter, compared with losses of 4.3% from its MSCI AC World index benchmark and 4.6% from its IA Global peer group.
| Three months | One year | Three years | Five years | |
|---|---|---|---|---|
| Artemis Global Select | -7.5% | -8.0% | 1.3% | 51.8% |
| MSCI AC World NR GBP | -4.3% | 4.9% | 24.7% | 94.7% |
| IA Global NR | -4.6% | -0.1% | 13.0% | 72.9% |
Negatives
IT and software development company Globant was our biggest detractor after 2025 revenue-growth guidance came in below expectations. We nonetheless added to our position as the stock has rarely traded as cheaply as at its current valuation.
Nvidia sold off after DeepSeek called into question the leadership of western technology companies in AI. We continue to evaluate the possible impact of this threat, noting increased hyperscaler (providers of cloud computing services) spending announcements since then suggest it is yet to affect demand.
Amazon and TSMC were also 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.
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.
Our biggest purchase of the quarter, Standard Chartered, got off to a strong start. The bank is returning to net income growth via its less capital-intensive non-lending businesses which, along with disciplined cost control and large share buybacks, suggests returns should improve further from here.
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 and Broadcom as these stocks fell.
Purchases
We started a new position in Procter & Gamble, one of the world’s largest consumer products companies. There are signs that the company is returning to volume growth as the inflation-led price growth of recent years moderates, while its large scale and portfolio breadth give it negotiating power when dealing with the likes of Amazon and Walmart.
Another new position, Tetra Tech, provides management consulting and engineering services for industrials. The stock de-rated significantly on the back of negative sentiment about its US revenues and worries that DOGE would cut back on USAID (United States Agency for International Development) and federal spending. However, our analysis suggests that even in the worst-case scenario the company can still increase revenues and boost profit margins.
Elsewhere, we added to tech giant Meta, as we believe its innovation-led product cycle, which includes AI use cases, is resulting in stronger engagement and hence revenue trends. However, its undemanding valuation suggests the market is underestimating its earnings potential.
We also added to aerospace & defence company Safran on a correction. The company's new LEAP engine should drive revenue growth and higher margins from aftermarket servicing.
Sales
We exited numerous positions during the quarter. While chocolatier Lindt has delivered on pricing and volume growth, these strengths appeared priced in and we felt Procter & Gamble represented a better opportunity.
Growing concerns regarding barriers to entry in China, intensifying competition and concerns over future free cashflow generation meant our long-term investment thesis on Japanese manufacturer SMC was no longer valid.
We sold out of ASML due to worries that big spenders on semiconductors such as Intel and Samsung will buy fewer lithography machines.
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, both with sales (for example Fiserv) and additions (for example Tetra Tech).
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.
Source: Lipper Limited/Artemis as at 31 March 2025 for class I accumulation GBP.
All figures show total returns with dividends and/or income reinvested, net of all charges.
Performance does not take account of any costs incurred when investors buy or sell the fund.
Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class.
Classes may have charges or a hedging approach different from those in the IA sector benchmark.
Benchmarks: MSCI AC World NR GBP; A widely-used indicator of the performance of global stockmarkets, in which the fund invests. IA Global NR; A group of other asset managers’ funds that invest in similar asset types as this fund, collated by the Investment Association. These act as ’comparator benchmarks’ against which the fund’s performance can be compared. Management of this fund is not restricted by these benchmarks.