Artemis US Select Fund
Q2 2025 update

Fund objective

The fund’s objective is to grow capital over a five-year period.

Performance

The fund returned 10.1% over the quarter, beating its benchmark, the S&P 500 Index¹, which returned 4.4%. The fund’s second benchmark, the IA North America NR² sector, returned 5.0%.   

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

Calendar year performance (%)

Past performance is not a guide to the future. Source: Lipper Limited/Artemis to 30 June 2025 for class I distribution units, 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. This class may have charges or a hedging approach different from those in the IA sector benchmark.

Market review 

In the second quarter of 2025, despite sweeping US tariffs (taxes on imports), escalating tensions in the Middle East and growing concerns over US debt sustainability, global stock markets delivered strong returns: the S&P 500, the index tracking the leading companies in the US, climbed 10.8% (in dollar terms)³. 

It began with a sharp sell-off of shares following the announcement of "reciprocal" tariffs by the US on 2 April; however, markets rebounded strongly after the US administration delayed enforcement⁴. Investor sentiment was further buoyed by robust economic data, including April’s jobs report⁵ and softer-than-expected inflation⁶.  

However, credit ratings agency Moody’s then downgraded the US’s ability to repay its debt and long-dated Treasury yields (interest paid on US bonds with more than 10 years until maturity) edged higher (bond yields have an inverse relationship with prices)⁷.  

Despite these challenges, the resilience of economic activity, combined with the absence of any tariff-induced inflation, provided a supportive backdrop for shares. However, the US dollar saw broad-based weakness, recording its worst H1 performance since 1973⁸. 

Positives 

Apple: In a strong market, it was surprising that our biggest contributor to relative performance was our biggest underweight (below average position in a company compared with the benchmark). We feel Apple is now being recognised as an expensive low-growth company with significant threats to its competitiveness.  

Comfort Systems: We added to the building-and-service provider on weakness caused by DeepSeek (a Chinese artificial intelligence research company which, when first launched earlier this year, was seen as posing a threat to the US’s dominance in this area) and tariffs (taxes on imports). Management cited strong demand persisting across tech/data centres, healthcare and semi fab (the factories where semiconductors are made) markets, with no current signs of slowdown in capital expenditure or customer activity.  

Constellation: Constellation produces carbon-free energy in the US, primarily through nuclear power. Over the quarter it announced a 20-year agreement with Meta, the tech company formerly known as Facebook, to provide power from its Clinton Clean Energy Center to support Meta’s data centres in the region⁹. Having sold shares after a very strong run, we bought back in after markets fell and the tariff situation eased.  

Seagate: Seagate produces hard disk drives (HDDs) as well as drives that are essential to personal computing and storage systems that are key components in data centres and cloud infrastructure. The business is currently experiencing a boom driven by data-centre growth. 

Micron: Micron primarily produces DRAM and NAND¹⁰ flash memory technologies which are experiencing a demand surge due to data centre construction.  

Negatives 

Fiserv: This company operates a payments and financial technology platform. A large financial services segment and its Clover¹¹ point-of-sale system were the key growth drivers.  

The management is confident in stronger growth in the second half of 2025 as new products, markets and contracted deals ramp up.  

Thermo Fisher: The life sciences business is less uncertain around tariffs. We believe any downside is fairly limited and the upside looks attractive over three years. Still, we hold a small position size.

Church & Dwight: This manufacturer of household and personal care products is best known for its Arm & Hammer brand, which spans a variety of categories including baking soda, toothpaste, laundry detergent and deodorants. The company owns a wide portfolio of other consumer brands as well. The broader sector, home and personal care, experienced weakness, with Pepsi and Procter & Gamble¹² warning over the impact of tariffs. The company reported at the start of May¹³. We have since exited the position. 

Allstate: The insurer primarily offers property and casualty products, including auto, home and life insurance. Allstate reported in April¹⁴, showing robust underlying growth despite some higher-than-anticipated catastrophe losses. Yet in the second quarter of the year, we believe its defensive profile likely held it back and it was a negative contributor to the portfolio.  

Purchases 

We made a number of changes over the quarter. We took our Nvidia position back to overweight as our analysis suggests profits will start to beat consensus estimates as the ramp-up of its new Blackwell chips starts. We also bought Texas Instruments, a maker of analogue chips, where we believe there will be a cyclical upturn in demand. Outside of these names we bought financial services company Wells Fargo, AbbVie, the pharmaceutical company and aircraft engineering company TransDigm.  

Sales 

To fund these purchases, we reduced some of our defensive stocks (that is, ones which are perform well generally whatever the state of the stock market), such as hypermarket retailer Walmart, beverage retailer Coca-Cola and Allstate. We also sold out of PG&E, the utility company. 

Outlook 

As we look forward, there is much to be optimistic about: robust economic health¹⁵, an earnings outlook that outpaces international peers¹⁶ and domestic policy initiatives that encourage investment¹⁷. We will be monitoring elements that would pose a risk: we think rising debt levels are a concern and inflation is expected to creep up as the impact of tariffs is incorporated into pricing. But on balance, we are positive.