Artemis Funds (Lux) – SmartGARP Pan-European Equity
Q1 2026 update

Objective

Artemis Funds (Lux) – Pan-European Equity was launched on 18 November 2025 and is an actively managed fund. Its objective is to increase the value of shareholders’ investments primarily through capital growth over a five-year period.

Overview

In early March, we reached our 25th anniversary of running money under the SmartGARP investment process. Our funds have performed well over the years because SmartGARP steers us towards stocks that subsequently outgrow the market.  

SmartGARP works by exploiting as many factors as possible. We like to buy stocks with good growth, low valuations, upgrades to profit forecasts and good price momentum. SmartGARP tends to struggle when themes change and when the market is very narrow. In March, the market changed direction and became focused on one thing (the oil price), so we found it difficult to make much progress. Higher-risk stocks exhibiting good growth and earnings upgrades performed poorly, while low-risk, modestly valued stocks did well. As such, our factors were mixed.

Performance

There was a huge amount of dispersion in markets during Q1. Energy, telecoms, basic resources and utilities performed well, while areas most exposed to higher energy prices and demand drop-off suffered, including consumer discretionary names, financials and real estate.

In terms of fund performance, stock selection within healthcare and exposure to energy names helped. Our largest detracting sector was financials (mainly banks).

Spanish oil & gas company Repsol, Nordics fertiliser business Yara and wind turbine operator Nordex were among our strongest performers. We also benefited on a relative basis from a lack of exposure to SAP and LVMH, both of which came under pressure over the quarter.

In terms of detractors, it was more a case of names that we didn’t own. ASML had a good quarter, as did oil companies Shell and TotalEnergies, none of which we had exposure to. Our holdings in Tui (travel) and Societe Generale (banking) also detracted.

Activity 

Over the past quarter, we moved further underweight in industrials and nudged up our exposure to oil. By country, we reduced our exposure to Greece and added to France and the UK.  

In terms of stocks, we reduced our positions in Novartis (healthcare), Italgas (energy), Loomis (cash management) and Bayer (biopharma). We recycled the proceeds into companies such as BNP Paribas (banking), Repsol (energy), GSK (biopharma) and Yara (fertiliser). In general, the logic was to ensure the fund owns attractively valued stocks with earnings upgrades.  

By way of example, we bought Yara because it was cheap and growing. Yara makes fertiliser from Norwegian-sourced energy. The crisis in the Middle East transformed investor sentiment so the shares re-rated. Maybe we got lucky – but maybe the risks were skewed in our favour.

We initiated a position in Capgemini, which offers consulting, digital transformation and technology services. Until quite recently, the stock traded on a significant premium to the market, but worries about AI mean it is now unloved by investors. 

In terms of how this leaves fund positioning, we remain overweight in banks, insurance and travel & leisure, but underweight in industrial goods & services and food & beverages. Although country allocation is an output of the bottom-up view SmartGARP provides, we continue to favour southern Europe. We are overweight Spain and Italy, and underweight Switzerland and Germany. We are also overweight the UK, where our exposure has increased.

Outlook

Trades such as those described above in Yara and Capgemini – buying unloved stocks where news is good – tend to skew the odds of success in our favour. Over the past 25 years, stock selection has been the main driver of returns for our range of SmartGARP strategies. Our inclination is to keep an eye on broad sector themes, but to focus most of our attention on looking for mispriced stocks.

In the short term, markets are voting machines, but in the long run, they are weighing machines, as John Maynard Keynes once pointed out. Much attention is focused on the Gulf crisis at the moment, which is understandable but perhaps unhelpful from an investment point of view.  

Events in the Middle East and their impact on energy prices and the global economy are hard to predict. If oil prices remain high, then a recession could ensue, but if oil starts flowing again, the risks of recession will be lower. Nobody knows for sure what will happen. Investors are (understandably) reluctant to pay heed to bottom-up news flow from companies when geopolitics is dominating attention. 

Amid this uncertainty, our simple goal is to keep doing what we have been doing for a quarter of a century: focusing on stocks with good financial characteristics.