Artemis SmartGARP Global Smaller Companies Fund
Q1 2026 update

Summary

• The Artemis SmartGARP Global Smaller Companies fund outperformed over the quarter, returning 6.8% versus 3.1% for the MSCI AC World Small Cap Index. 
• Energy stocks such as Par Pacific, DHT Holdings and Türkiye Petrol were beneficiaries of a sharp rise in the oil price and contributed to the fund's outperformance over the quarter. The biggest negatives were Hindustan Petroleum, Macy’s and iA Financial.
• Because SmartGARP draws our attention to companies whose valuations are attractive, this fund has relatively little in common with its benchmark or peer group, both of which have a significantly higher allocation to the US.

Performance

Despite the sudden outbreak of a new war in the Middle East, smaller companies across the globe had a relatively good quarter. With a return of 3.1% (in sterling terms), they beat the broader global market as measured by the MSCI AC World Index, which fell by 1.3%. Energy, utilities and technology stocks led, while consumer discretionary and consumer staples stocks lagged. On a country level, South Korea, Brazil and Taiwan all delivered double-digit returns but India struggled. The US also had a notably poor quarter.

Although March saw share prices across global markets – including those of smaller companies – falling sharply in response to the conflict in Iran, the fund still generated a positive return of 6.8% over the quarter, outperforming the benchmark MSCI ACWI Small Cap Index.  

Past performance is not a guide to the future. Source: Lipper Limited/Artemis, from 10 October 2025 to 31 March 2026 for class I accumulation 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. Classes may have charges or a hedging approach different from those in the IA sector benchmark.

From a regional standpoint, the fund enjoyed positive relative returns across emerging markets, North America, Europe and Asia. Its holdings in Japan were marginal detractors. On a sector level, holdings in energy stocks such as Par Pacific, DHT Holdings, Türkiye Petrol, DOF Group and HF Sinclair were beneficiaries of a sharp rise in the oil price and contributed to the fund's outperformance. Having a relatively low level of exposure to the consumer discretionary sector also helped. 

The biggest contribution to returns, however, came from CF Industries, a fertilizer business based in the US. The sudden tightening in global fertilizer market due to the conflict in Iran pushed prices higher. The fund's exposure to beneficiaries of the conflict was, however, not due to any geopolitical insight on our part but was, as always, a response to SmartGARP's identification of those companies' attractive financial characteristics.

On the detracting side, there was not a significant amount to note. The biggest negative was a holding in Hindustan Petroleum, an oil marketing company whose profitability was hampered, rather than helped, by higher oil prices. Other negatives included two of the holdings in the US: Macy’s, the retailer, and iA Financial, an insurer. Technology was the only sector where the fund's holdings delivered notably negative returns. 

Transactions and positioning

We made a number of changes to the portfolio over the quarter. One of our largest new additions was GigaCloud, a US-based e-commerce company that helps retailers to buy and sell bulky items such as furniture, appliances and fitness equipment. Other additions included US payments-provider Prog Holdings and Avnet, which distributes electronic components worldwide. In Japan, meanwhile, we established a new holding in Suruga Bank. 

In terms of sales, we exited our holdings in: Donaldson, a US-based provider of filtration and emission-control systems; Forterra, a UK-based supplier of building materials; Odontoprev, a Brazilian dental-plan provider; and German airline Lufthansa. 

Our preference for companies where SmartGARP has identified attractive valuations results in a portfolio that has little in common with either its benchmark or its peers, many of which have a significantly higher allocation to the US. Around 33% of our portfolio is currently allocated to US-based companies versus 52% of the index. This is offset by having a significantly higher weighting to emerging markets (26% of our fund versus 14% of the index) and Japan (around 14% of our fund versus 11% of the index). 

On a sector level, meanwhile, the fund has significantly more capital allocated to the basic resources and oil & gas sectors than the index, and significantly less invested in healthcare and technology. As a result, we believe this fund offers something complementary to many investors' existing global equity exposure, which is often biased towards the US, as well as something different to the majority of its global small-cap peers.