Artemis US Select Fund
Q2 2026 update

• The fund returned 31.4% over the quarter versus 14.4% from its benchmark index
• Top contributors included Advanced Micro Devices, Seagate and Applied Materials
• Detractors included Intel, Walmart and Primoris Services 
• Markets are now looking beyond the conflict in the Middle East and are refocusing on company fundamentals 

US equities had a strong second quarter as investors looked past geopolitical uncertainty and focused instead on the resilience of the domestic economy. Early concerns about the impact of elevated energy prices eased following an interim agreement between the US and Iran, with Brent crude recording its largest quarterly decline since the pandemic. As fears of stagflation faded, a broad recovery helped the S&P 500 to its strongest quarterly return since the post-Covid rebound in 2020.  

Technology remained the principal driver of market performance as continued investment in AI infrastructure supported demand for the shares of semiconductor and memory companies. Yet earnings momentum broadened out during the quarter, with resilient economic data and improving corporate profitability supporting a wide range of sectors. While the Federal Reserve struck a more hawkish tone in response to continued strength in the labour market, investors were reassured by the resilience of the US economy and the durability of corporate earnings growth.

Performance 

In a strong quarter for the S&P 500, we were pleased to outperform convincingly, returning 31.4% versus 14.4% for the benchmark index. Over one year the fund has returned 44.7% compared with 26.1% for its benchmark. Stock selection was once again the key driver of returns. 

Past performance is not a guide to the future. Source: Lipper Limited/Artemis as at 30 June 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.

Contributors

Memory companies Micron Technology and Seagate continued to contribute positively to returns, as they benefited from growing demand for storage and a tightening market for memory. AI workloads are transitioning from training to the significantly more memory-intensive task of 'inference', where an AI model puts the patterns learned in training to work. 

The ongoing wave of investment in AI boosted demand for Advanced Micro Devices’ semiconductors. It also helped Lam Research and Applied Materials, both of which supply equipment used in chip manufacturing.

Detractors

Amazon came under pressure as investors rotated out of the AI hyperscalers and into the shares of companies that are the direct beneficiaries of the AI capex boom. Although we are running a large underweight in Microsoft, we believe Amazon is in a position of strength relative to the other hyperscalers. It produces its own CPUs (computer processing units), it already has significant compute capacity in its AWS cloud division and, of course, it has a strong retail business which continues to gain market share. We topped up our position. 

Primoris Services reported earnings that were well below expectations. We exited the position entirely and it has continued to underperform since our sale. 

Walmart underperformed after it announced a slight reduction in its earnings guidance for the second quarter and struck a more cautious tone in describing the outlook for the second half of the year. Although it remains unclear what impact higher gas prices will have on US consumers, the most important drivers of Walmart's business remain in place and anxieties around consumer spending should fade as the tensions in the Middle East ease. 

Our underweight position in Intel counted against us during the quarter as the stock rallied. 

Activity

We recycled some profits from Advanced Micro Devices into software company MongoDB, whose valuation was hit by fears of AI disruption. Those fears look misguided to us. We think it can use AI to enhance its product offering. 

The fund's exposure to the hyperscalers is evolving. As mentioned above, we added to Amazon but trimmed our positions in Meta and Apple due to concerns about their relative weakness in the AI buildout.

Beyond the AI theme, we bought UnitedHealth, as it looks attractively valued and is set to benefit from a recovery in earnings. 

In terms of sector positioning, we have maintained the fund's overweight to industrials and increased its exposure to healthcare. Its biggest underweights are in communication services and technology.

Outlook

The market's focus appears to have shifted away from geopolitical concerns and towards the underlying strength of the US economy and the future path of interest rates. While higher bond yields may continue to create periods of volatility, the fragile ceasefire in the Middle East has seen them retreat and oil prices move lower. Although the macro backdrop is admittedly uncertain, we believe the US remains well positioned given the resilience of domestic demand and continued corporate investment. Recent data have pointed to a resilient economy, with the manufacturing sector expanding after nearly three years of contraction. Earnings expectations for a broad range of companies have continued to improve and we hope to see evidence of this broadening-out trend continuing in the upcoming results season.

The buildout of AI infrastructure is another important theme. The hyperscalers’ investment plans, prospective public listings of companies such as Anthropic and OpenAI (and the recent IPO of SpaceX), and equity raises by the likes of Alphabet reinforce our conviction that investment in AI infrastructure has further to run. We continue to see attractive opportunities in businesses that supply the hardware, software and services underpinning this buildout.

While AI is clearly an important area of opportunity, our investment approach continues to be driven by bottom-up stock selection. We remain focused on identifying high-quality companies with differentiated, long-term growth prospects, both within AI and across a broad range of sectors where company-specific fundamentals, rather than macroeconomic outcomes, are the primary drivers of value creation.