The Evenlode Global Opportunities fund closed 2025 by rising 0.9% in December vs a 0.8% return for its comparator benchmark, the MSCI World Index, bringing a very disappointing year to a close. For 2025 as a whole the Fund NAV per share rose 7.1% as against a 21.1% increase in the MSCI World Index (USD terms).

After a false dawn in the first four months of 2025, the trauma of the Liberation Day tariffs announcement, perhaps counter-intuitively, led to a re-concentration of equity strength in pockets of idiosyncratic earnings momentum like semiconductors, banks, defence, and capital goods. While economic growth remained strong in the US and positive in the rest of the world, it was highly concentrated, particularly in AI data centre development. On top of this, the powerful post-Liberation Day rally coincided with an extraordinary market panic over the sustainability of barriers to entry across a variety of industries which could theoretically be affected by AI models, particularly software and information services. The Fund has high exposure to these industries. There has been no evidence of disruption in portfolio companies and the outlook for our affected companies remains excellent; over time, we expect the accumulating weight of strong results to force share prices back up. We cannot really complain, for as active fund managers we depend on market inefficiencies to present us with buying opportunities like these.

Since launch performance splits into two remarkably different halves. In the period from launch¹ to 31 January 2024 the Fund returned 6.7% annualised vs. 4.5% for the MSCI World. It has since then returned just 5.8% annualised vs. 19.7% for the MSCI World (USD terms). Earnings delivery for the Fund’s portfolio companies remained solid in this latter period, comfortably better than the index, and looks set to continue in this vein into 2026. In short, the net result of not being in key ‘style buckets’ while also owning thematically unfashionable companies during a cyclical rally has been a sharp derating of the Fund which has driven over 100% of relative underperformance, given the superior earnings delivery of the portfolio.

If our expectations of portfolio earnings delivery are borne out, the market is now presenting an extraordinary opportunity for investors with an appetite for duration to increase their stakes in businesses with highly diversified and durable cashflows on unusually attractive valuations.

¹ 10 May 2021