The Evenlode Global Opportunities portfolio returned +10.8% in October, compared with -0.8% for its comparator benchmark, the MSCI World Index. This was a welcome reversal following a prolonged period in which market returns have been concentrated in a relatively narrow group of companies, those benefiting from the rapid expansion of AI infrastructure.

Several holdings that had been out of favour for much of the year recovered strongly in October. These were the information services companies we have written about many times before: Wolters Kluwer (+25%), Experian (+21%) and RELX (+20%). Market infrastructure businesses also performed well, including London Stock Exchange (+16%), CME (+15%) and ICE (+10%), as did the payments networks Mastercard (+15%) and Visa (+14%). Hasbro was the strongest performer this month (+35%) following strong results. This is a unique company with a portfolio of iconic franchises, including “Magic: The Gathering” and “Dungeons & Dragons”, whose passionate fan communities underpin a valuable and increasingly digital gaming business.

Third-quarter results have also started to come through, with reporting portfolio companies posting weighted-average organic revenue growth of c8% and operating profit growth of c17%, alongside margin expansion.

October's earnings reports from AI-related companies renewed concerns about the sustainability of the enormous infrastructure buildout, prompting a sharp sell-off in Information Technology and Semiconductor sectors. Investors increasingly want evidence that the returns justify the huge investments. Whilst we are firm believers in the potential of generative AI technology to transform businesses and improve productivity, we are increasingly sceptical about the economics of how the technology is being built and financed.

Evenlode's long-held strategy is to invest in a carefully selected portfolio of high-quality businesses at sensible valuations, capable of compounding cash flow across a range of market environments. While the path ahead will not be linear and further volatility is inevitable, October offered an encouraging reminder that strong business fundamentals ultimately prevail over market sentiment. The Evenlode Global Opportunities portfolio today offers a compelling combination of business quality and prospective returns, and we are excited by the opportunities ahead.