Artemis Global Select Fund update

Alex Stanić and Natasha Ebtehadj, managers of the Artemis Global Select Fund, report on the fund over the quarter to 31 March 2024 and their views on the outlook.

Source for all information: Artemis as at 31 March 2024, unless otherwise stated. 

The fund’s objective is to grow capital over a five-year period. In the quarter to 31 March 2024, it returned 10.7%, ahead of its benchmarks the MSCI All Country World index1, which returned 9.2%, and its Investment Association Global sector2 average, which returned 7.7%.

For full five-year discrete performance, please see below. Please remember that past performance is not a guide to the future. 

Japan did the best of all major stockmarkets during the quarter. For the past couple of years, its companies have been encouraged to change the way they are run to improve returns for investors – for example by paying out more in dividends rather than holding on to excess cash. These changes are now beginning to deliver results.

However, a fall in the value of the yen meant international investors made less money than Japanese ones in this market.

The US stockmarket was also strong, as technology firms benefited from demand for artificial intelligence (AI) applications and the components necessary to power them. But with US inflation at about 3%, well above the Federal Reserve’s (the US’s central bank) target, expectations for interest rate cuts have fallen, which makes shares look less attractive compared with other assets.

China’s Hang Seng was the worst-performing major stockmarket over the quarter, as consumer spending and its housing market remained week. There was some better economic news in March, when industrial firms recorded an increase in profits in the first two months of the year, following a fall in 2023.

The oil price (Brent Crude) rose 13.6% in dollar terms over the quarter, due to supply constraints. From a relative perspective, the fund was harmed by its below-average (underweight) position in energy companies.

Top contributors to performance

  • Chip designer Nvidia
  • Social network company Meta
  • Online retailer Amazon

The biggest negatives for performance

  • HDFC Bank
  • Energy company Baker Hughes
  • Chip manufacturer Intel

Activity

In terms of where we invest by region, we have taken profits in our Japanese holdings after they did well. We now have an underweight in the US and an overweight (above-average position) in Europe.

We have an overweight in emerging markets (countries that are less economically developed), after investing in Indian and Mexican companies, as well as two new Chinese ones.

When it comes to industries, the fund remains overweight healthcare, financials and consumer discretionary (providers of non-essential goods and services).

We initiated new positions in the following companies during the quarter:

  • Spirit maker Campari Group
  • Semiconductor company AMD
  • Health insurer Elevance Health
  • Data-storage technology company Micron Technology
  • Low-cost airline Ryanair
  • Food & beverage company Nestlé

We sold-out of these companies during the quarter:

  • Technology company Siemens
  • Intel
  • Baker Hughes

Outlook

The strong recent performance of global stockmarkets has led to questions about whether we are entering ‘bubble’ territory. While some industries are trading on high valuations, in general we are still finding plenty of attractive opportunities across global markets.

We would recommend reading a 2011 article from Marc Andreessen (founder of venture capital firm Andreessen Horowitz) called “Why software is eating the world”. This can help you understand why the strong returns generated by many of the world’s largest technology companies over the past 15 or so years could be sustainable, although we believe their prospects may begin to diverge from here.

Their growth wouldn’t have been possible without semiconductors, which are becoming ever more powerful. This is why we have invested in many companies involved in the semiconductor supply chain.

We are also focused on other more neglected areas. For example, we own Thermo Fisher Scientific and Revvity in the life sciences (pharmaceuticals and medical equipment) industries. Long-term growth trends for these companies remain supportive, despite shorter-term issues.

Similar dynamics are at play in consumer stocks, where we have recently invested in Campari and Nestlé. Inflationary pressures have led consumers to buy goods with lower profit margins over the past 18 months, but this has created opportunities to buy strong businesses where, although sales and profit growth have slowed down in the short term, the long-term opportunity remains compelling.

Similarly, we have been selectively buying Chinese consumer companies such as online retailer PDD and delivery facilitator Meituan. Although these have massive long-term growth opportunities and good management teams, their valuations have fallen due to worries about the economic and political environment in China.

We continue to focus on best-in-class businesses delivering sustainable growth and high profit margins, but that trade at attractive valuations.

1MSCI AC World NR: A widely-used indicator of the performance of global stockmarkets, in which the fund invests. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark.
2IA Global NR: A group of other asset managers’ funds that invest in similar asset types as this fund, collated by the Investment Association. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark. 

 

Annualised performance 12 months to 31 March 2024 2023 2022 2021 2020
Artemis Global Select Fund, class I accumulation GBP 20.2% -8.3% 14.1% 31.3% 2.2%
MSCI AC World NR GBP 20.6% -1.4% 12.4% 38.9% -6.7%
IA Global NR 16.9% -3.2% 9.0% 40.5% -5.6%
Past performance is not a guide to the future. Source: Artemis/Lipper Limited, class I accumulation units to 31 March 2024. 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. Our benchmark index is the MSCI AC World NR.

 

Natasha Ebtehadj

Manages:

‘Global select’, ‘global focus’ and ‘Leading consumer brands’ strategies

Natasha is a fund manager in Artemis‘ ‘global select’ team.

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