Artemis Positive Future Fund update
Sacha El Khoury manager of the Artemis Positive Future Fund reports on the fund over the quarter to 30 June 2025.
Source for all information: Artemis as at 30 June 2025, unless otherwise stated.
Review of the quarter to 30 June 2025
Equity markets ended the quarter rallying strongly, making a full recovery from April’s tariff-induced sell-off. The S&P 500 completed its fastest ever comeback from a 15% drawdown thanks to improving sentiment around trade negotiations and robust US economic data allaying concerns of a macroeconomic slowdown.
However, deals are yet to be struck with many of the US’s largest trade partners, which remains a source of uncertainty for the market. Another concern is the sustainability of fiscal spending, which is unlikely to be alleviated by US President Donald Trump’s One Big Beautiful Bill Act. The US dollar had its worst first half of the year for more than five decades.
Towards the end of the quarter, oil rallied in response to Israeli (and eventually US) strikes on Iranian nuclear sites, but fell just as sharply following a ceasefire that has thus far continued to hold.
Amid this volatility, the Artemis Positive Future Fund returned 5.1% in the three months to 30 June 2025, compared with 5.0% from its benchmark (as of 1 February 2025, the benchmark changed to the MSCI ACWI Mid Cap index; returns up to 1 February 2025 reflect those of the MSCI AC World index) and 5.3% from its IA Global peer group.
Three months | Six months | One year | Three years | Five years | |
---|---|---|---|---|---|
Artemis Positive Future Fund | 5.1% | -4.3% | -6.3% | -0.9% | N/A |
MSCI ACWI NR / MSCI ACWI Mid Cap NR* | 5.0% | 1.4% | 8.1% | 44.4% | N/A |
IA Global NR | 5.3% | 0.5% | 4.2% | 32.7% | N/A |
Positives
The fund’s allocation to the AI value chain such as semiconductors had a positive impact on performance, especially towards the end of the quarter, as investors were incrementally reassured over the durability and longevity of spending in this area. Taiwanese testing company Chroma ATE, Japanese equipment manufacturer Disco, European cable company Prysmian and US semiconductor supplier onsemi were in our top 10 contributors, as were Vertiv and Nvent, both of which manufacture cooling systems for data centres.
Elsewhere, shares in Latin American challenger bank Nu Holdings responded positively to the award of a banking licence in Mexico as well as the rollback of punitive US tariffs. Despite already boasting 100 million customers in Latin America, Nu still has a material white-space growth opportunity thanks to the region’s attractive demographics and a population that remains significantly underbanked compared with many parts of the world. Operating leverage and return on equity are high thanks to an asset-light branchless model. Profitability should continue to improve as a result.
Negatives
Our overweight in healthcare worked against us during the quarter. The sector was disproportionately affected by the uncertainty of tariffs, given the reliance on global supply chains and China for key components as well as relatively limited pricing power in the short term due to the long-term nature of contracts. Enovis and GE Healthcare Technologies were among the detractors here, while biotech Revvity and animal pharmaceutical company Zoetis were pulled down by the general malaise that spread to related sectors.
Merchant payments and fintech company Fiserv was the biggest single detractor after it announced disappointing volume growth for its Clover franchise. In technology, Motorola Solutions came under pressure despite a decent set of results, after its order backlog fell from the equivalent period in 2024.
Purchases
We made no new purchases during the quarter, instead adding to existing positions amid the substantial volatility.
For example, we increased our position in water engineering consultant Tetra Tech. This is a legacy position we inherited upon taking charge of the fund in March 2024, with an initial position of more than 5%.
While it is undoubtedly a high-quality business capable of delivering growth, the high valuation at the time led us to continuously reduce the position throughout 2024. We eventually slashed it to 1.5% after the US elections as we feared a reversal of sentiment and regulatory support – a set of circumstances that unfortunately materialised, with DOGE cutting funding schemes such as USAID.
However, as sentiment (and the share price) subsequently hit a multi-year low at the end of the first quarter, we felt the pendulum had swung too far the other way and we significantly increased our position.
Tetra Tech’s quarterly update at the beginning of May confirmed that – aside from USAID (which represented about 10% of sales and less in profits) – momentum remains strong and execution faultless. It also raised full-year guidance. This represents a good example of our team’s disciplined approach to quality and valuation.
Sales
We took some profits from Japanese insurer Sompo, the shares in which have returned more than 400% (in local currency) over the past five years. Positive interest rates in Japan have helped to transform the profitability of many banks and insurers, and this – combined with strong execution, the unwinding of a web of cross shareholdings and a focus on boosting shareholder returns – has helped to cement Sompo’s exceptional performance.
We sold the remainder of our position in sportswear company On Holding after the share price doubled in 2024, re-rating significantly as a result. Despite strong earnings growth and brand penetration over this period, we were concerned about the impact of tariffs – in particular on Vietnam which accounts for 90% of On’s supply. High-frequency data around brand heat had also shown deterioration, while general consumer sentiment took a nose-dive in the quarter. Given the valuation still looked stretched after the post-Liberation Day sell-off, we sold out and recycled the capital into other areas that we felt offered a better risk/reward trade-off.
Engagement activity
We engaged with the following companies during the quarter:
- Cable manufacturer Prysmian, which is well-positioned to benefit from the accelerating electrification trend. The conversation focused on the biodiversity impact of its marine cable installations and shareholder feedback on its remuneration report, which attracted notable dissent at the April AGM.
- Vulcan Materials, a US manufacturer of aggregates, asphalt and concrete. We wanted to understand the biodiversity impact of its business even though it does not operate in areas where this is likely to be an issue. It does operate in water-stressed areas where it aims to collaborate with local stakeholders given the cost-saving opportunities from effectively recycling water. It is only targeting low-carbon opportunities in specific markets and these currently provide only incremental benefits to its top-line revenue.
- Zoetis, the diverse portfolio of which – including diagnostics, genetic testing and collaborative partnerships – helps produce healthier animals that use less resources per unit of output. We discussed the company’s sustainable agriculture opportunities as well as antimicrobial resistance given the strategic decisions following the spin-off from Pfizer to reduce antibiotic sales.
- Saint-Gobain, a global construction materials manufacturer based in France. Following on from a conversation in March, the company elaborated on how it identifies priority biodiversity sites, including the datasets used and the proportion of active quarries involved. It also clarified the balance between voluntary and regulatory biodiversity management plans, the financial significance of biodiversity, its initiatives to restore quarries post-operation and the challenges in achieving a goal of 100% biodiversity management plans at all sites. We encouraged the company to share its catalogue of best practices for biodiversity implementation to elevate industry standards.
Since quarter end, we published our Impact Report for 2024, which you can find on our website. The report details the various impacts delivered by the fund’s investment activities, including engagements, over 2024.
Outlook
The speed with which US equities have recovered their sharp Liberation Day losses has broken records. Risk-on sentiment has returned as a result of falling uncertainty, robust macroeconomic data and positive earnings prints from several of the multi-trillion-dollar behemoths that sit atop US indices.
Long-dated bonds have sold off around the world as the fiscal taps remain jammed on. Germany has abandoned the world’s strictest set of fiscal rules with the release of the ‘debt brake’ to finance a huge programme of fiscal expansion with no appreciable means by which to reduce deficits anywhere.
Our interactions with investee companies suggest to us that despite a challenging narrative around sustainability initiatives, they are becoming ever more financially material and affecting the top and bottom lines. Momentum across a number of our themes has therefore been more resilient than one might have expected, which gives us confidence that the portfolio is well placed to deliver an attractive combination of financial and non-financial outcomes to our investors.
We continue to focus on high-quality companies that can deliver a positive impact on people and planet where they intersect with profit.