Artemis Global Select quarterly review, December 2023

Alex Stanić and Natasha Ebtehadj, managers of the Artemis Global Select Fund, report on the fund over the quarter to 31 December 2023 and their views on the outlook.

Source for all information: Artemis as at 31 December 2023, unless otherwise stated. 

Fund objective

The fund’s objective is to grow capital over a five-year period.

Performance

The Artemis Global Select Fund made 6.3% in Q4, as did its MSCI All Country World index1 benchmark. However, this return was slightly behind its second benchmark, the IA’s Global2 sector, where the average gain was 6.8%.  

For full five-year discrete performance, please see below. Please remember that past performance is not a guide to the future. 

Shares from the US led the global stockmarket in the quarter, with the country’s central bank, the Federal Reserve, indicating it may cut interest rates soon. In addition, inflation and unemployment fell, while data suggested the consumer was in good shape. US government bonds rose sharply, with November their best month since May 1985. European shares also performed well, aided by falling inflation in the eurozone, yet despite weakening economic conditions, the European Central Bank has shown no enthusiasm for cutting interest rates.

Although inflation has been persistent in Japan, its central bank decided to keep interest rates at low levels. The yen weakened over the quarter and Japanese shares underperformed the global stockmarket.

Shares in emerging markets rose on the back of strong economic growth in Brazil, Mexico, India and South Korea. In China, however, house prices and new home sales continued to fall, while consumer sentiment remains low.

In terms of sectors, the global stockmarket was led by those more sensitive to interest rates, such as technology and real estate, and economic conditions, such as industrials and financials, which were aided by news that the US avoided a recession. Less economically sensitive sectors such as consumer goods and healthcare lagged behind. Energy was the only sector that posted negative returns, as despite OPEC (Organization of the Petroleum Exporting Countries) cuts to oil production, non-OPEC countries led by the US markedly increased supply, which pushed down prices.

US technology-related shares (Amazon, Microsoft, Uber and Intel) accounted for four of the five biggest contributors to the fund's performance over the quarter. The list of shares that detracted from performance was far more varied in terms of sectors, although it included three US names: insurance broker Aon, energy firm Baker Hughes and health insurer Humana.

Recent purchase Meituan also disappointed, falling 26%. We bought the Chinese online retailer in the fourth quarter due to the advantages associated with its dominant position in food delivery. Despite competitive pressures, it has the potential to quickly expand profit margins and sales in the coming years. It was priced attractively before its fall and now looks like even better value.

Top contributors to performance were:

  • US technology-related companies Amazon, Microsoft, Uber and Intel
  • German industrial conglomerate Siemens

The biggest negatives for performance were:

  • US insurance broker Aon
  • US energy firm Baker Hughes
  • Japanese electronics company Panasonic

Activity

Purchases

  • Nvidia – US semiconductor company
  • Nike – US sportswear retailer
  • Eagle Materials – US cement and wallboard producer
  • LSE – the London Stock Exchange
  • Hilton Worldwide – US hotels group
  • Meituan – Chinese online retailer
  • Intercontinental Exchange – US operator of financial exchanges
  • Wells Fargo – US bank
  • NXP Semiconductors – Dutch semiconductor company
  • NU Holdings – US digital bank operating in Brazil

Sales

  • Agilent – US provider of scientific equipment
  • Rockwell Automation – US provider of industrial equipment
  • Thai Beverage – Thai alcoholic drinks company
  • Diageo – British alcoholic drinks company
  • Merck – German pharmaceutical
  • Singtel – Singaporean communications conglomerate
  • Unilever – British consumer goods company
  • Humana – US health insurer
  • Sumitomo Mitsui Financial Group – Japanese bank
  • Adobe – US software company

We have moved from an above-average (overweight) to a below-average (underweight) position in Japanese holdings after the market rose and we took profits. Despite increasing our position in emerging markets over the quarter, with new positions in Brazil and China, we remain slightly underweight overall. Our main overweight is to Europe, although we also have a larger-than-average position in the US.

In terms of sectors, we are underweight energy and consumer goods and overweight healthcare. Although the latter underperformed last year, the growth drivers behind it remain intact and valuations are attractive. We increased our overweight in financials with the addition of Intercontinental Exchange, NU Holdings and Wells Fargo in the US and LSE in the UK. Sales in consumer goods included Unilever and Diageo in the UK and Thai Beverage in Thailand.

Elsewhere, we took profits in Rockwell Automation and Adobe in the US, German pharmaceutical Merck, Japan's Sumitomo Mitsui Financial Group and Singaporean communications conglomerate Singtel.

Outlook

Global stockmarkets remain highly sensitive to economic concerns – namely interest rates in the US, sluggish growth in China and the potential for significant policy changes in Japan. As a result, we retain an emphasis on strong businesses with low levels of debt. We particularly like high-quality businesses that are supported by long-term growth trends but trade at attractive valuations due to short-term problems.

Technology dominated global stockmarkets in 2023, with the information technology (IT) and communication services sectors returning 51.4% and 38.1% respectively3. Yet this 12-month view perhaps says more about the starting point – over two years, the IT sector is up just 4.2% while communication services is down 11.3%4.

As long-term investors, we look at these abrupt short-term changes in share prices as excellent opportunities to buy companies that will benefit from long-term growth themes.

1MSCI AC World NR: A widely-used indicator of the performance of global stockmarkets, in which the fund invests. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark. 
2IA Global NR: A group of other asset managers’ funds that invest in similar asset types as this fund, collated by the Investment Association. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark. 
3Source: Artemis, MSCI, Bloomberg as at 31 December 2023. 
4Source: Artemis, MSCI, Bloomberg as at 31 December 2023. 

 

Discrete performance 12 months to 30 September 2023 2022 2021 2020 2019
Artemis Global Select Fund, class I accumulation GBP 8.1% -10.8% 18.9% 16.7% 26.6%
MSCI AC World NR GBP 15.3% -8.1% 19.6% 12.7% 21.7%
IA Global NR 12.5% -11.1% 18.2% 15.1% 22.3%
Past performance is not a guide to the future. Source: Artemis/Lipper Limited, class I accumulation units to 31 December 2023. 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. Our benchmark index is the MSCI AC World NR.

 

Market volatility risk 

The value of the fund and any income from it can fall or rise because of movements in stockmarkets, currencies and interest rates, each of which can move irrationally and be affected unpredictably by diverse factors, including political and economic events. 

Currency risk 

The fund’s assets may be priced in currencies other than the fund base currency. Changes in currency exchange rates can therefore affect the fund's value. 

Concentration risk 

The fund may have investments concentrated in a limited number of holdings. This can be more risky than holding a wider range of investments. 

Emerging markets risk 

Compared to more established economies, investments in emerging markets may be subject to greater volatility due to differences in generally accepted accounting principles, less governed standards or from economic or political instability. Under certain market conditions assets may be difficult to sell. 

ESG risk 

The fund may select, sell or exclude investments based on ESG criteria; this may lead to the fund underperforming the broader market or other funds that do not apply ESG criteria. If sold based on ESG criteria rather than solely on financial considerations, the price obtained might be lower than that which could have been obtained had the sale not been required. 
 

THIS IS A MARKETING COMMUNICATION. BEFORE MAKING ANY FINAL INVESTMENT DECISIONS, REFER TO THE FUND PROSPECTUS, AVAILABLE IN ENGLISH, AND KIID/KID, AVAILABLE IN ENGLISH AND IN YOUR LOCAL LANGUAGE DEPENDING ON LOCAL COUNTRY REGISTRATION, FROM WWW.ARTEMISFUNDS.COM OR WWW.FUNDINFO.COM. 

ARTEMIS DOES NOT PROVIDE INVESTMENT ADVICE ON THE ADVANTAGES OR SUITABILITY OF ITS PRODUCTS AND NO INFORMATION PROVIDED SHOULD BE VIEWED IN THIS WAY. ARTEMIS ONLY PROVIDES INFORMATION ABOUT ITS OWN PRODUCTS AND SERVICES AND DOES NOT ADVISE INVESTORS. SHOULD YOU BE UNSURE ABOUT THE SUITABILITY OF AN INVESTMENT, YOU SHOULD CONSULT A SUITABLY QUALIFIED PROFESSIONAL ADVISER. 

Natasha Ebtehadj

Manages:

‘Global select’, ‘global focus’ and ‘Leading consumer brands’ strategies

Natasha is a fund manager in Artemis‘ ‘global select’ team.

View Profile

Investment in a fund concerns the acquisition of units/shares in the fund and not in the underlying assets of the fund.

Reference to specific shares or companies should not be taken as advice or a recommendation to invest in them.

For information on sustainability-related aspects of a fund, visit the relevant fund page on this website.

For information about Artemis’ fund structures and registration status, visit artemisfunds.com/fund-structures

Any research and analysis in this communication has been obtained by Artemis for its own use. Although this communication is based on sources of information that Artemis believes to be reliable, no guarantee is given as to its accuracy or completeness.

Any statements are based on Artemis’ current opinions and are subject to change without notice. They are not intended to provide investment advice and should not be construed as a recommendation.

Third parties (including FTSE and Morningstar) whose data may be included in this document do not accept any liability for errors or omissions. For information, visit artemisfunds.com/third-party-data.

Important information
The intention of Artemis’ ‘investment insights’ articles is to present objective news, information, data and guidance on finance topics drawn from a diverse collection of sources. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by Artemis or any third-party. Potential investors should consider the need for independent financial advice. Any research or analysis has been procured by Artemis for its own use and may be acted on in that connection. The contents of articles are based on sources of information believed to be reliable; however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation is given as to its accuracy or completeness. Any forward-looking statements are based on Artemis’ current opinions, expectations and projections. Articles are provided to you only incidentally, and any opinions expressed are subject to change without notice. The source for all data is Artemis, unless stated otherwise. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested.