Artemis Funds (Lux) - Global Value
Q2 2026 update

Artemis Funds (Lux) Global Value – is an actively managed fund. 

The Fund aims to increase the value of Shareholders’ investments primarily through capital growth over a five-year period.

Review of the quarter

The second quarter saw the US and Iran making stuttering progress towards a fragile ceasefire. It also witnessed the first meeting of the Federal Reserve's rate-setting committee under the leadership of its new chairman. In any other quarter, either might have defined market sentiment. But the sheer weight of capital being committed to the buildout of AI infrastructure – and changes in the structure of equity markets – means that these are far from normal times. 

Over the first half of this year, the AI hyperscalers – Alphabet, Amazon, Meta, Microsoft and Oracle – collectively pledged hundreds of billions of dollars of additional investment to building out their AI capacity. As movements in equity markets over the quarter reflected, the most immediate beneficiaries of this wave of investment were not the hyperscalers themselves but the companies who make the semiconductors at the heart of their vast data centres.

So, while global market indices moved higher over the quarter, the returns in South Korea, where semiconductor manufacturers are key index components, were spectacular. (Two semiconductor companies – SK Hynix and Samsung Electronics – account for over half of the Korean market by value). Semiconductor stocks also led the gains in the US, reflecting surging prices for memory chips and their lengthening order books. The Philadelphia Stock Exchange Semiconductor Index, which tracks the fortunes of chip manufacturers, posted the largest quarterly gain in its history, returning 88% in US dollar terms. 

While these gains may seem dramatic, they simply reflect the fact that, in its sheer size, the wave of investment in AI is without precedent. The AI hyperscalers are collectively committing trillions of dollars in capital to the AI buildout. It remains unclear what returns – if any – this investment will eventually produce. For now, however, it remains the engine driving earnings higher in the tech-heavy US market and propelling growth in its economy.

Our portfolio contains several suppliers of the essential 'picks and shovels' of the AI investment boom, including semiconductors. In the technology sector, they include Cisco Systems, Nanya, Lam Research and Samsung Electronics. It also has indirect exposure to SK Hynix and Samsung through investments in Samsung Life, Samsung C&T and SK Inc, which have meaningful stakes in the two Korean semiconductor giants. All of these holdings performed well over the quarter.

Reflecting a lack of meaningful dividends, below-average free cashflow yields and, in some cases, high valuation multiples, the fund has a structural underweight to technology. As such, the biggest negative for the fund's relative returns were the technology stocks it doesn’t own, such as Micron Technology, AMD and Intel, all of which enjoyed triple-digit returns.

Our holdings in European banks performed well

Reflecting our desire to offer a portfolio that has little in common with market indices or its peers, we have a significant allocation to European banks. Over the decade that followed the financial crisis, banks de-leveraged, de-risked and found that regulators prevented them from engaging in speculative activities or over-extending their credit books. As a result, they now resemble highly cash-generative utilities. 

In a quarter that saw the European Central Bank raising interest rates and so boosting banks' net interest margins, our holdings in Raiffeisen and Monte Paschi made notable contributions to returns. Monte Paschi received an additional boost when Banco BPM and Intesa Sanpaolo tabled rival takeover bids. 

As the acquisition of Germany's Commerzbank by Italy's UniCredit suggests, the long-awaited process of cross-border consolidation in the European banking sector finally appears to be under way. This is the real prize for investors. In the meantime, our banks continue to return a healthy flow of cash to us through dividends and share buybacks.

Activity

Following the fund's launch on 24 March, the managers assembled a well-diversified and genuinely global portfolio, with holdings in 91 attractively valued companies spanning 21 countries and 15 different currencies. 

Outlook

In one light, the outlook for equity markets may appear positive: we can see powerful growth in corporate earnings across multiple sectors and geographies. In the first quarter of this year, US companies reported their earnings per share were 18% higher than in the same period last year, marking their fastest rate of growth since the post-Covid reopening year of 2021. The vast amounts of liquidity being supplied by the AI investment boom are surging through multiple supply chains worldwide, fuelling economic growth and creating opportunities for those investors who can anticipate where it might flow next. (Might Korean banks prove to be the next beneficiaries of the AI-driven boom in the Korean economy?)

Viewed in this way, the exuberance being expressed by some areas of the equity market may appear well founded. At the same time, we are conscious that it largely rests on the wave of investment in AI and that it is taking place against a backdrop of war, volatile energy prices and at a time when 10-year Japanese government bonds (JGBs) are touching their highest level in 30 years. Markets are also navigating a change in personnel at the head of the US Federal Reserve. As inflationary pressures grow and yields on JGBs rise, some of the essential plumbing of the global financial system is being reconfigured in real time. 

Meanwhile, after a long bull market, retail investors are playing a larger role in stock markets, particularly in the US and Korea. Many are using leveraged ETFs to trade in and out of thematic baskets of stocks and individual company shares. These vehicles amplify gains but they also magnify losses. As a result, share prices of companies that are part of the most popular momentum trades have become extraordinarily volatile and, in our view, somewhat detached from fundamentals. Shortly after the quarter ended, Samsung announced that its quarterly operating profits were 19 times higher than in the same quarter last year. In response, its shares fell by 10%.

In view of all these uncertainties, and given that cyclically adjusted valuation multiples are at historically elevated levels, it feels sensible to avoid some of the most popular areas of the equity market. We have a portfolio that is well diversified geographically. We also take comfort from having a portfolio that is significantly cheaper than the index on a price-to-earnings basis, which pays twice the dividend yield and whose holdings are growing their earnings and dividends more quickly.