Artemis Global Select Fund update
Natasha Ebtehadj, manager of the Artemis Global Select Fund, reports on the fund over the quarter to 30 June 2025.
Source for all information: Artemis as at 30 June 2025, unless otherwise stated.
Review of the quarter to 30 June 2025
The US led global equities lower at the start of the quarter, due to fears about the impact of the tariffs announced by Donald Trump on 'Liberation Day'. The subsequent postponement and reduction in these tariffs meant the correction quickly turned into a recovery and it was the dollar rather than the S&P 500 that was the real victim of all the uncertainty: while the index returned to its starting level for 2025 in local currency terms, the greenback had its worst first half of the year for more than five decades. For once, investors were better served by allocating their money to other regions.
We believe the main message for investors to take away from the quarter is that the market has firmly entered a period in which macro concerns are driving asset prices. Worries over the future economic direction of the US, epitomised by the moves on tariffs and the passing of the One Big Beautiful Bill Act have resulted in asset allocators being forced to question their exposure to the world's largest economy.
During the three-month period, the Artemis Global Select Fund returned 4.2%, compared with 5.0% from its MSCI AC World index benchmark and 5.3% from its IA Global peer group.
| Three months | Six months | One year | Three years | Five years | |
|---|---|---|---|---|---|
| Artemis Global Select | 4.2% | -3.6% | -4.7% | 19.5% | 36.9% |
| MSCI AC World NR GBP | 5.0% | 0.6% | 7.2% | 43.2% | 71.0% |
| IA Global NR | 5.3% | 0.5% | 4.2% | 32.7% | 52.8% |
Detractors
The two biggest detractors during the period were fintech Fiserv and healthcare provider and insurer UnitedHealth.
Shares in Fiserv fell after its Clover business, which provides hardware and software payment solutions to SMEs, experienced a slowdown in sales growth. Having previously taken some profits in the company, we added to our position on the weakness: we believe the slowdown to be temporary and Fiserv has a track record of consistent earnings delivery through economic cycles.
In its Q1 results, UnitedHealth announced another unexpected knock to profits from higher usage of its healthcare services, which caused us to re-evaluate the longer-term investment case. Later in the quarter, its shares sold off further when chief executive Andrew Witty unexpectedly stepped down and guidance for 2025 was suspended. We exited our position as we could no longer see an earnings path that we could model with confidence given the multiple uncertainties around pricing, usage and regulation.
Contributors
Semiconductor stocks rebounded strongly during the quarter, with SK Hynix, TSMC, Nvidia and Texas Instruments among our top 10 contributors. We only bought into the latter stock in April – see the 'Activity' section below for more details.
Ryanair delivered strong quarterly results which reiterated positive trends for 2025 in both ticket pricing and demand. The stock was also added to the MSCI World index at the end of May, which should help boost ownership among investors.
Digital bank Nu Holdings benefited from a rebound in Latin American markets as fears over tariff threats rescinded, most notably in Mexico where Trump did not dismantle the United States-Mexico-Canada Agreement (USMCA). This decision implied a pragmatic angle in the US president's ideology where he refrained from targeting its biggest trading partners. In addition, Nu is ramping up its fintech banking model in Mexico, which is potentially its biggest market.
Activity
We initiated two major positions in the quarter – Texas Instruments and Sandoz – and continued to build our holding in Tetra Tech.
Texas Instruments designs and manufactures analogue chips and embedded semiconductors that are based on older technologies but are ubiquitous in everyday electronic devices.
Its competitive advantage is that it is vertically integrated: it manufactures its own chips, mainly in the US where production is often cheaper than in China – a rare feat and a poster-child of ‘Made in America’ if ever there was one.
Our investment case centres on two aspects:
- We believe we are at the trough of the industrial cycle, with global purchasing manager indices (PMIs) rarely climbing above the expansionary level of 50 for the past two-and-a-half years, while inventory levels have been run down.
- Texas Instruments is coming to the end of a heavy investment cycle in which it has spent significant amounts of money building factories in the US. As production ramps up, better utilisation should feed through to higher margins and returns.
Pharmaceutical Sandoz was spun out of Novartis in 2023. It manufactures and distributes generic and biosimilar medicine (biological medicine that is similar to a drug that has already been approved) for the treatment of diseases such as cancer, diabetes and arthritis.
Key to the investment case of Sandoz is the growth in biosimilars over the next few years, with many biological medicines coming off patent. Yet none of this is reflected in the share price. As the business model shifts towards this faster-growing side of the business, earnings should grow more quickly and the stock should re-rate.
Outlook
Our message at the beginning of year was that the earnings fundamentals of stocks looked healthy but the macroeconomic environment and geopolitics would be the main drivers of asset prices. We are now halfway through the year and this remains the case.
On the fundamentals, consensus estimates are for 10% EPS (earnings per share) growth over the course of the year* despite the prospect of a slowing macro environment, which is testament to the strength of some of the market's leading companies.
Nevertheless, equity prices continue to be volatile, with the following factors playing a part:
- Tariffs – the market still does not know the end point, due to endless rounds of bilateral negotiations with the US. An effective rate of 10% to 20% on US imports seems to be priced in.
- Bond yields – equity markets remain calm despite potential for the long end of the yield curve to become unanchored given the step-up in unfunded government spending.
- Growth – the path of global growth remains unclear. A recession is still a tail risk but growth may surprise to the upside if fiscal stimulus is well received.
Where we have seen more weakness in fundamentals is in Europe. Consensus EPS growth for 2025 has been revised down to 1% due to euro strength and lower earnings momentum in industrials and financials. However, after many years of lost growth following the financial crisis, the European equity story is better balanced. There is now fiscal headroom to spend, with Germany removing its debt brake, financial institutions repairing their balance sheets and the prospect of deregulation. We are starting to find more interesting ideas in this market as we incorporate the potential for better earnings growth into 2026 and beyond, with P/Es at 14x compared with 21x in the US.