Artemis Funds (Lux) – US Focus
Q1 2026 update

Objective

Artemis Funds (Lux) – US Focus is an actively managed fund. The fund invests principally in equities of companies that are listed, headquartered or that exercise the predominant part of their economic activities in the US. Its objective is to increase the value of shareholders’ investments primarily through capital growth. 

On 14 April 2026 the name of the fund changed from Artemis Funds (Lux) – US Select to Artemis Funds (Lux) – US Focus.

Review of the quarter to 31 March 2026

The year started strongly, with the additional investment announced by AI hyperscalers helping to support positive sentiment. The market also showed signs of broadening, increasing opportunities for active managers to generate outperformance across a range of sectors. This was followed by more uncertainty heading into March, as escalating geopolitical tensions in the Middle East drove a rise in oil prices. 

While US economic data remained resilient through January and February, sentiment weakened when US strikes on Iran prompted renewed concerns around inflation. This led to a repricing of interest-rate expectations and a rise in bond yields. Despite this, underlying economic conditions remained supportive. With the shift in interest-rate expectations introducing volatility, the backdrop continued to favour businesses with strong balance sheets, pricing power and global revenues.

US equities ended a volatile quarter slightly lower, with the March sell-off accounting for most of the decline. Although mega-cap technology stocks saw periods of renewed leadership during the quarter, market performance became less concentrated over time. Leadership rotated more frequently, with value-oriented and defensive sectors showing improved relative performance alongside periods of strength in growth stocks. This represents a change from the narrower market environment seen in 2025, with a wider range of companies contributing to returns.

Source: Bloomberg as of 31 March 2026

Despite concerns about the economic outlook, earnings forecasts for S&P 500 companies increased. A broad range of sectors and themes contributed to this, including additional investment in AI infrastructure, growing demand for semiconductors, rising commodity prices and stimulus from the 'One Big Beautiful Bill', which is driving consumer spending. In this environment, we believe active management remains key to exploiting a broadening set of opportunities.

Performance

The fund’s performance for the quarter lagged the benchmark, with a -6.8% return versus -4.4% for the S&P 500 USD NTR. Due to the timing of pricing, the fund’s performance figure does not capture the market rally on 31 March and therefore it is substantially different from close-of-business numbers, which show the fund returning -4.7% for the quarter, net of fees (versus -4.4% for the index). 

Whilst stock selection contributed positively to returns, sector allocation detracted, in part owing to the underweight to oil & gas. It is worth noting that one-year performance to the end of March is strong, at 25.6% compared with 17.4% for the benchmark, putting the fund in the top quartile of its peer group.

Past performance is not a guide to the future. Source: Lipper Limited/Artemis as at 31 March 2026 for class I Acc USD. 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. 

*As at 6 Aug 24 the benchmark changed to S&P 500 NTR (Standard). Returns up to 6 Aug 24 reflect those of the S&P 500 TR.

Fund 10-year discrete performance

Past performance is not a guide to the future. Source: Lipper Limited/Artemis as at 31 December 2025 for class I Acc USD. 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. As at 6 Aug 24 the benchmark changed to S&P 500 NTR (Standard). Returns up to 6 Aug 24 reflect those of the S&P 500 TR.

Detractors

Individual holdings that detracted from performance during the quarter included Constellation Energy, IQVIA, Wayfair and Rocket Companies. In addition, the fund’s underweight to energy stocks counted against it as the oil price spiked.

Independent power producer Constellation Energy was affected by potential regulatory changes in one region of the US wholesale power market. Proposals to cap wholesale electricity prices and reform auctions raised concerns about energy pricing and producers' profit margins.

IQVIA provides clinical-research services and healthcare data to the life sciences industry. The shares were caught up in a sell-off driven by concerns that AI would disrupt data-oriented businesses. However, we believe widespread disruption to the drug-development process is unlikely in the medium term and the company should benefit from a recovery in demand.

The recent performance of e-commerce company Wayfair, which sells furniture, homewares and decor online, was also affected by worries about disruption from AI. We believe the balance between risk and reward here remains compelling over the medium term. Wayfair will benefit from any recovery in the housing market and is taking share in the home furnishings industry.  

A small position in Rocket Companies was a slight detractor from performance. The company consists of tech-driven real estate, mortgage and financial services businesses. The balance between risk and reward in the event that mortgage rates start moving in the right direction looks attractive. The conflict in the Middle East, however, has clearly introduced a lot of uncertainty, driving up mortgage rates. While we still think housing affordability is on the political agenda, we are carefully managing the position sizing. 

Contributors

Beneficiaries of the huge wave of capital investment in AI data centres performed well and contributed to the fund’s returns over the quarter. For GE Vernova, a manufacturer of power generation equipment, demand (particularly from data centres) continued to outstrip supply. 

Bloom Energy also provides power solutions for data centres. Its solid oxide fuel cells offer power that is clean, efficient, always on and scalable. The company has announced major deals with data centre participants and operators, including Oracle Cloud Infrastructure, Brookfield Asset Management and American Electric Power.

Applied Materials, a semiconductor equipment and materials engineering company, benefited from an optimistic outlook for wafer-fabrication equipment due to demand from AI data centres.

Seagate Technology, which supplies memory to data centres, performed well, driven by strong results and robust demand. 

Looking beyond the AI theme, ATI was also a strong performer. It produces specialty nickel and titanium alloys used in aerospace engines and airframes. Strong demand, a growing base of installed engines and elevated maintenance activity are driving sustained pricing power and attractive earnings growth.

Activity

We sold our position in Microsoft and reduced our positions in Amazon and Alphabet, reflecting our view that there are more attractive opportunities elsewhere.

The capital from these transactions was recycled into Broadcom, reducing our underweight in a stock that we believe will benefit from AI data centre spending. 

We initiated a position in Targa Resources, a midstream energy business active in transportation and storage in the US Permian field. Its focus is on gas and NGLs (natural gas liquids), whose production is growing more quickly than oil, reflecting changing gas-to-oil ratios in the Permian Basin. The company is investing in a new NGL pipeline and in additional export facilities, which should accelerate its growth. 

We also added holdings in consumer goods company Procter & Gamble and Citizens Financial Group, a regional bank. 

In terms of positioning, the fund's largest overweight positions continue to be in industrials and healthcare. We have been reducing its allocation to the technology, consumer services and consumer discretionary sectors and its underweight to the Magnificent Seven is now at its highest to date. 

Outlook

Looking ahead, the macro backdrop remains mixed but broadly supportive of US equities. Recent data continues to point to resilient, if moderating, economic growth. Despite some volatility, the ISM manufacturing survey continues to signal expansion. Input cost pressures have re-emerged, particularly in the form of higher energy prices. Nonetheless, demand for metals and components is being supported by low inventories and steady consumer activity. 

Uncertainty remains elevated, with geopolitical developments, fiscal dynamics and inflation continuing to influence interest-rate expectations. In this environment, larger companies remain relatively well positioned: their scale, pricing power and balance-sheet strength can help to offset pressures on margins.

Importantly, we are seeing signs of a gradual broadening in market leadership beyond the narrow group of mega-cap stocks. Combined with elevated dispersion in returns, this is creating a more favourable backdrop for active management, where opportunities are increasingly driven by company-specific fundamentals rather than index concentration.