Artemis Global Income Fund
Q2 2026 update

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

Overview

The second quarter saw the US and Iran make stuttering progress towards a fragile ceasefire. It also saw the first meeting of the US central bank's interest rate setting committee under new leadership. In a normal quarter, either event might have dominated attention. Instead, the market's focus was often on the heavy investment in artificial intelligence (AI) infrastructure.

During the first half of the year, Alphabet, Amazon, Meta, Microsoft and Oracle promised to invest hundreds of billions of dollars to increase their AI capacity¹. To this point, the main beneficiaries of their spending have been the semiconductor companies that make the chips used in AI data centres.

So, while global stockmarkets moved higher over the quarter, the returns in South Korea, which is home to two of the world's largest semiconductor companies, were spectacular². Semiconductor shares also led the gains in the US, reflecting surging prices for memory chips³. 

While some of the gains were dramatic, they simply reflected the fact that trillions of dollars of investment are being directed towards building AI infrastructure. It remains unclear what returns – if any – this investment will eventually produce. For now, however, it remains the engine driving corporate profits in the US higher and propelling growth in the economy.⁴

Performance 

The Artemis Global Income Fund returned 12.4% over the quarter versus 14.2% from its first benchmark, the MSCI AC World Index⁵. Its second benchmark, the IA Global Equity Income sector, returned 10.4%⁶. 

Although the fund generated a healthy positive return, it handed back a portion of its outperformance relative to the index in the first quarter of the year. Even so, with a return of 20.5%, the fund remains ahead of the index (up 12.7%) and the average return from the IA’s Global Equity Income sector (up 9.8%) over six months to 30 June. It is also ahead of both benchmarks over one, three, five and 10 years.

 Discrete calendar-year performance

Past performance is not a guide to the future.  

Source: Lipper Limited, class I accumulation units, to 31 December 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. This class may have charges or a hedging approach different from those in the IA sector benchmark. 

Negatives - Relatively low exposure to technology

The fund owns shares in several companies that supply the components needed to expand AI infrastructure. These include Cisco Systems, Nanya, Lam Research and Samsung Electronics. It also has indirect exposure to Samsung Electronics and SK Hynix through Samsung Life, Samsung C&T and SK Inc. These companies own meaningful stakes in the two Korean chipmakers⁷. All of these holdings performed well during the quarter.

The fund tends to have less invested in technology shares than the index. In part, that is because many technology companies pay little (or no) dividends and their share prices often look high compared with their profits. Over the quarter, this held back its performance relative to the index as the share prices of a number of large technology companies that it did not own, such as Micron Technology, AMD and Intel, more than doubled.⁸

Positives - European banks 

A notable characteristic of our fund in recent years has been its investments in the European banking sector. After the Global Financial Crisis, banks spent a decade paying down debt and reducing risk. Regulators also limited their speculative trading and excessive lending. As a result, some banks now resemble highly cash-generative utility companies.⁹

The European Central Bank raised interest rates during the quarter. This increased the gap between the interest that banks such as Raiffeisen and Banca MPS receive and the interest they pay.¹⁰ The fund's holdings in both companies contributed strongly. Banca MPS also benefited when Banco BPM and Intesa Sanpaolo made rival takeover offers.

Activity

Many of the companies the fund invests in do not fit neatly into any particular theme. Even so, many of our strongest holdings over the past year fell into three broad groups:

• Companies that supply AI infrastructure
• Gold-mining companies
• Defence companies

With many of these companies' share prices having risen quite sharply, we took some profits and invested the proceeds elsewhere. To be clear: we are open to the possibility of adding to these holdings again. For now, however, we believe there is the potential for heightened volatility in stockmarkets – particularly in some of the most popular companies and trends – and it seems prudent to broaden the fund's exposure into other sectors.

We also took some profits on the fund's holdings in chipmakers, miners and defence companies. We used the proceeds to invest in pharmaceutical, telecom and food companies. We want to ensure the fund has the potential to perform under a wide range of economic and market conditions. We would emphasise, however, that this represents a rebalancing of the portfolio rather than a reinvention.

Outlook 

We can identify a number of clear positives. Corporate profits are growing strongly. Companies in the US reported that their profits per share were 18% higher in the first quarter of this year than they were a year earlier. This was the fastest growth since economies reopened after Covid in 2021¹¹. Heavy investment in AI is flowing through supply chains around the world, supporting economic growth. 

Together, this could suggest the optimism that this year's gains in stockmarkets have expressed is justified. We are aware, however, that much of that optimism depends on continued investment in AI. Markets also face war, higher energy prices and new leadership at the US central bank. Inflation is rising and the Japanese government's borrowing costs have reached their highest level in 30 years¹². The combined impact of all of these changes on the global financial system is unpredictable.

After a long period of rising markets, individual ('retail') investors are now playing a larger role, especially in the US and Korea. They tend to hop rapidly between popular shares and investment themes. That, along with the increased popularity of investment products that amplify gains and losses (‘leveraged ETFs’) is contributing to greater volatility in many of the stockmarket's most popular trades.¹³

Given these risks, we think it is sensible to avoid some of the most popular areas of the stockmarket. The fund's investments are spread across 96 companies listed in 21 countries and 15 currencies.¹⁴