Artemis SmartGARP Global Equity Fund
Q2 2025 update

Fund objective

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

Review of the quarter

The second quarter of 2025 was extremely volatile. ‘Liberation Day’ on 2 April, when US President Donald Trump announced tariffs (a tax on imports) on America’s trading partners, led to a sharp sell-off in global stockmarkets¹.  

This was followed by a series of concessions from the US administration, which gave rise to the phrase 'TACO' (Trump always chickens out²). He paused reciprocal tariffs; dramatically increased tariffs on China, before pausing these as well; then warned he would remove Chair of the Federal Reserve Jerome Powell, before confirming he had no plans to follow through with this threat.  

Markets understandably had a difficult time processing the rapid adjustments, with the MSCI All Country World index³ plummeting and then rebounding during April⁴, then staging a rally to leave second-quarter returns up 5% in sterling terms⁵.  

Despite the recovery, we believe there are issues that remain concerning, particularly around the trajectory of US debt, with Trump’s One Big Beautiful Bill Act projected to add about $5trn to the deficit⁶. That being said, hard economic data (factual data, such as figures for US growth and inflation) remained robust⁷, which we interpret as illustrating the resilience of the US economy. 

Outside of the US, we have observed encouraging signs in Europe and emerging markets. We believe Europe’s economic tailwinds go beyond Germany’s stimulus package, which was approved in March and includes a €500 billion infrastructure fund, as well as higher borrowing limits for federal states⁸. Public sector lending appears to be picking up, in our view, after a period of deleveraging and we have noticed a change in tone from the European Central Bank, moving from a focus on controlling costs to increasing competitiveness.  

For emerging markets, there are interesting developments in Korea, as its new president seeks to push forward with shareholder reforms⁹ and stimulate the economy with looser fiscal rules¹⁰. 

Performance

The fund outperformed its benchmark, the MSCI All Country World index¹¹, during the second quarter with an 8.8% return versus 5.0% for the index in sterling terms¹². It was also significantly ahead of its peer group, the Investment Association’s IA Global sector¹³, which gained an average of 5.3%¹⁴.      

For the past five calendar years of 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, class I accumulation units, to 30 June 2025. 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.

Contributors/detractors   

It was encouraging to see the fund post another solid quarter. As usual, the selection of individual companies drove returns, with regional asset allocation detracting¹⁵. Sectors of note included technology – where despite being underweight (a below-average position) a strong industry, we were able to outperform through investing in the right shares – and materials (such as natural resources). Consumer names detracted, albeit marginally¹⁶.  

Our top contributor to relative performance was our underweight to Apple, followed by exposure to Babcock (which delivers engineering, support and critical systems to defence and civil markets), Asia Vital Components (which makes cooling equipment to stop electronic devices overheating), Lundin Gold (a Canadian mining company) and Indra Sistemas (a defence, air traffic and space company). 

Our biggest detractors included our underweight position in Microsoft, which rose strongly, as well as holdings in Halozyme (the drug delivery technology specialist), JD.com (a Chinese e-commerce company) and Petrobras (the Brazilian oil and gas company).

Activity 

During the quarter we made a number of transactions, buying Elite Material (a technology company in Taiwan), Expand Energy (which specialises in natural gas exploration) and Philip Morris (the tobacco giant). We sold Petrobras on oil price weakness and we also sold General Motors and Asahi Kasei (a Japanese chemical company). 

Our portfolio positioning remains largely unchanged: we are near our maximum underweight to the US (47.1% for the fund compared with 67.2% for our benchmark¹⁷), with overweights (above-average positions) in emerging markets and Europe. At a sector level, we are most overweight banks and natural resources and most underweight technology and financial services.  

We continue to be exposed to businesses whose share prices are trading at reasonable valuations, in our view, and who are benefiting from above-average growth and upgrades to profit forecasts.    

Outlook

Our portfolio is differentiated, in that it doesn’t look like or behave like its benchmark. It has an active share of 80%¹⁸, which means that 80% of its holdings deviate from the benchmark index. 

The benchmark itself, meanwhile, has become increasingly concentrated. The MSCI All Country World Index’s US exposure increased from 42% to 64% in the 15 years to 30 June 2025, whilst its technology exposure has risen from 10% to 25%¹⁹. Therefore, we feel that a fund like ours, which has low correlation to its benchmark, could add some useful diversification to investors’ portfolios.