Artemis US Select Fund update
Cormac Weldon and Chris Kent, managers of the Artemis US Select Fund, report on the fund over the quarter to 30 June 2025.
Source for all information: Artemis as at 30 June 2025, unless otherwise stated.
Fund objective
The fund’s objective is to grow capital over a five-year period.
Performance
The fund returned 10.1% over the quarter, beating its benchmark, the S&P 500 Index1, which returned 4.4%. The fund’s second benchmark, the IA North America NR2 sector, returned 5.0%.
For full five-year discrete performance, please see the table below. Please remember that past performance is not a guide to the future.
Calendar year performance | YTD | 2024 | 2023 | 2022 | 2021 | 2020 |
---|---|---|---|---|---|---|
Artemis US Select Fund | -6.2% | 29.5% | 21.8% | -14.9% | 22.7% | 15.2% |
S&P 500 NR GBP (WHT 15%) | -3.0% | 27.2% | 19.2% | -7.8% | 29.9% | 14.7% |
IA North America NR | -3.6% | 23.1% | 17.6% | -10.5% | 26.1% | 16.4% |
Market review
In the second quarter of 2025, despite sweeping US tariffs (taxes on imports), escalating tensions in the Middle East and growing concerns over US debt sustainability, global stockmarkets delivered strong returns: the S&P 500, the index tracking the leading companies in the US, climbed 10.8% (in dollar terms)3.
It began with a sharp sell-off of shares following the announcement of "reciprocal" tariffs by the US on 2 April; however, markets rebounded strongly after the US administration delayed enforcement4. Investor sentiment was further buoyed by robust economic data, including April’s jobs report5 and softer-than-expected inflation6.
However, credit ratings agency Moody’s then downgraded the US’s ability to repay its debt and long-dated Treasury yields (interest paid on US bonds with more than 10 years until maturity) edged higher (bond yields have an inverse relationship with prices)7.
Despite these challenges, the resilience of economic activity, combined with the absence of any tariff-induced inflation, provided a supportive backdrop for shares. However, the US dollar saw broad-based weakness, recording its worst H1 performance since 19738.
Positives
Apple: In a strong market, it was surprising that our biggest contributor to relative performance was our biggest underweight (below average position in a company compared with the benchmark). We feel Apple is now being recognised as an expensive low-growth company with significant threats to its competitiveness.
Comfort Systems: We added to the building-and-service provider on weakness caused by DeepSeek (a Chinese artificial intelligence research company which, when first launched earlier this year, was seen as posing a threat to the US’s dominance in this area) and tariffs (taxes on imports). Management cited strong demand persisting across tech/data centres, healthcare and semi fab (the factories where semiconductors are made) markets, with no current signs of slowdown in capital expenditure or customer activity.
Constellation: Constellation produces carbon-free energy in the US, primarily through nuclear power. Over the quarter it announced a 20-year agreement with Meta, the tech company formerly known as Facebook, to provide power from its Clinton Clean Energy Center to support Meta’s data centres in the region9. Having sold shares after a very strong run, we bought back in after markets fell and the tariff situation eased.
Seagate: Seagate produces hard disk drives (HDDs) as well as drives that are essential to personal computing and storage systems that are key components in data centres and cloud infrastructure. The business is currently experiencing a boom driven by data-centre growth.
Micron: Micron primarily produces DRAM and NAND10 flash memory technologies which are experiencing a demand surge due to data centre construction.
Negatives
Fiserv: This company operates a payments and financial technology platform. A large financial services segment and its Clover11 point-of-sale system were the key growth drivers.
The management is confident in stronger growth in the second half of 2025 as new products, markets and contracted deals ramp up.
Thermo Fisher: The life sciences business is less uncertain around tariffs. We believe any downside is fairly limited and the upside looks attractive over three years. Still, we hold a small position size.
Church & Dwight: This manufacturer of household and personal care products is best known for its Arm & Hammer brand, which spans a variety of categories including baking soda, toothpaste, laundry detergent and deodorants. The company owns a wide portfolio of other consumer brands as well. The broader sector, home and personal care, experienced weakness, with Pepsi and Procter & Gamble12 warning over the impact of tariffs. The company reported at the start of May13. We have since exited the position.
Allstate: The insurer primarily offers property and casualty products, including auto, home and life insurance. Allstate reported in April14, showing robust underlying growth despite some higher-than-anticipated catastrophe losses. Yet in the second quarter of the year, we believe its defensive profile likely held it back and it was a negative contributor to the portfolio.
Purchases
We made a number of changes over the quarter. We took our Nvidia position back to overweight as our analysis suggests profits will start to beat consensus estimates as the ramp-up of its new Blackwell chips starts. We also bought Texas Instruments, a maker of analogue chips, where we believe there will be a cyclical upturn in demand. Outside of these names we bought financial services company Wells Fargo, AbbVie, the pharmaceutical company and aircraft engineering company TransDigm.
Sales
To fund these purchases, we reduced some of our defensive stocks (that is, ones which are perform well generally whatever the state of the stockmarket), such as hypermarket retailer Walmart, beverage retailer Coca-Cola and Allstate. We also sold out of PG&E, the utility company.
Outlook
As we look forward, there is much to be optimistic about: robust economic health15, an earnings outlook that outpaces international peers16 and domestic policy initiatives that encourage investment17. We will be monitoring elements that would pose a risk: we think rising debt levels are a concern and inflation is expected to creep up as the impact of tariffs is incorporated into pricing. But on balance, we are positive.
2IA North America 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.
3Lipper to 30 June 2025
4Bloomberg to 30 June 2025
5https://www.theguardian.com/business/2025/may/02/us-april-jobs-report
6https://www.bloomberg.com/news/articles/2025-05-13/us-inflation-comes-in-softer-than-forecast-for-another-month
7https://ratings.moodys.com/ratings-news/443154
8https://finance.yahoo.com/news/usd-sees-worst-start-50-155700394.html
9https://www.constellationenergy.com/newsroom/2025/constellation-meta-sign-20-year-deal-for-clean-reliable-nuclear-energy-in-illinois.html
10https://www.semiconductors.org/wp-content/uploads/2021/02/Highest-Volume-Mainstream-Memory_Omdia.pdf
11https://www.fiserv.com/en-nl/who-we-serve/clover.html
12https://apnews.com/article/trump-tariffs-impact-pepsi-procter-gamble-prices-1d0f1da000f7823eeb852ff431997ea7
13https://finance.yahoo.com/news/church-dwight-first-quarter-2025-132325194.html
14https://www.allstatenewsroom.com/news/april-2025-monthly-release/
15Source: Goldman Sachs Investment Research as at 30 June 2025
16Source: Empirical Research Partners as at 30 September 2024.
17Cowen as at 11 April 2025.