June was a very mixed month for global equities, with leadership remaining narrow for much of the period before beginning to broaden into month-end and the first trading days of July. Evenlode Global Opportunities underperformed its comparator benchmark over June, but in the first two trading days of July we saw the fund recoup the lost performance, as capital began to rotate out of frothy sectors like Semiconductors and into less crowded areas like Health Care and Consumer. While two days do not make a trend, the move was notable because of the magnitude and violence of the unwind.

We believe the market, and therefore the portfolio, currently stands at an interesting crossroads. Many of the companies in the portfolio have been caught in “AI loser” narratives that we do not believe will hold over the long term. These businesses continue to perform very well, growing earnings mid-teens or higher (with no signs of slowing down) and trading on increasingly appealing valuations. While we do not know when the inflection will come, or what the catalyst will be to dispel the current narrative, we do know that narratives can change on a dime, as we have started to see in early July.

During the month, we initiated a new position in Gaztransport & Technigaz. GTT is an example of a high-quality engineering business that sits within the Energy sector but is not itself an energy company. Its economics are driven by specialist technology for LNG (Liquefied Natural Gas) cryogenic containment, a highly attractive royalty model and a long runway from the growth in global LNG trade.

Honeywell Aerospace also began trading during the month as an independent entity. In May, we initiated a position in the Honeywell conglomerate ahead of the spin-off, to gain access to this high-quality aerospace asset at what we believed was a very attractive implied valuation. Following the separation on 29 June, we sold the remaining Honeywell business and reinvested the proceeds into Aerospace.

Both GTT and Honeywell Aerospace represent the type of durable technology-led businesses we are looking for. Every technology advancement in history eventually becomes commoditised. To sustain attractive earnings growth over the long term, a company needs something on top of its technology - a market position protected by customer risk-aversion, compliance, certification or government-granted permissions. These are exactly the characteristics we see in both businesses.

We would like to take this opportunity to thank our investors for their patience and continued support through a difficult first half of the year. We remain confident in the quality of the businesses held in the fund and believe the strategy is very well placed to reward patient capital over time.