Global Fund Update – July 2026
Global equities have enjoyed a strong start to 2026. We are pleased to report that the Goshawk Global Fund rose by 7.4% in the first half of the year and by just under 10% in the second quarter.
The US market declined modestly in June but still gained around 10% in the first half of 2026, helped by an incredible rally in the semiconductor space as the Philadelphia Semiconductor Index gained over 100%, adding $2trillion in value over the period. Our investment in the sector, Intel, rose around 280% in the first half and we have prudently reduced this position to reflect the company’s high valuation, although we have high regard for the turnaround plan being executed by the new management.
The US economy has remained resilient despite the conflict in the Middle East, where a fragile truce has been in place since 17th June. Shipping traffic has modestly increased in the Strait of Hormuz, sending the oil price sharply lower and back to around $70 at the end of the quarter, despite significant disruption to supply and the need to replenish reserves that were dramatically run down during the conflict. We have broadly maintained our weighting in the energy sector and have closed out our position in Ithaca Energy.
The new Chair of the Federal Reserve, Kevin Warsh, has finally begun his tenure. Chairing his first FOMC meeting in June, interest rates were left on hold as inflationary pressures persist. It is even possible that US rates could rise later this year, which would be ironic as President Trump criticised Warsh’s predecessor Jerome Powell for being “too late” to cut rates in 2025. At the meeting, it was noted that prices were “too high” and that the Fed “recognise that inflation has been running well ahead of the Fed’s long stated inflation goal of 2 percent that has been going on for more than five years. Persistently high prices are a burden for the American people … I am pleased to report that members of the FOMC are unambiguous and unanimous. The committee will deliver price stability”. The summary of economic projections that the Federal Reserve produces on a regular basis updated forecasts to show expected GDP growth of 2.2% this year, rising to 2.3% next year with an unemployment rate of 4.3% and PCE inflation of 3.6%.
Stocks & Portfolio Moves
One of the more surprising events of the first half of 2026 was the substantial equity raise by Alphabet, which sold $84.75billion worth of new shares to help fund its aggressive capital expenditure plans for artificial intelligence. Investors have been used to companies like Alphabet generating immense amounts of cash flow and buying back stock while being able to invest in their business to strengthen their existing moat and diversify into new areas of growth. The unprecedented levels of investment we are seeing in data centres and chip development have completely changed the business models of companies like Alphabet, Amazon, Meta and Microsoft, and of those names, only Alphabet has outperformed the global market this year despite a period of weakness following a peak of near $400 in mid-May.
We have maintained our position in Alphabet and believe that the company remains well-positioned for growth from multiple drivers including its existing search business, Gemini, YouTube and its cloud business GCP, which is growing very strongly on the back of insatiable demand for data centre capacity.
We have also held our position in Amazon, which modestly underperformed in the first half of the year. Although it has also transformed its business model from being highly cash generative to cash consumptive, it also invests huge amounts of capex into its cloud services business. We view Amazon shares as attractively valued for the strength of its franchises in cloud services, ecommerce and advertising.
The recent heatwave in Europe and America has highlighted the increasing structural demand growth for the heating, ventilation and air conditioning (HVAC) industry. Trane Technologies has been in our portfolio for a number of years, and we regard this company as of the highest quality within the industry, generating a strong return on capital and excellent cash flow that drives excellent capital allocation. Trane shares performed strongly in the first half after a modest 2025 as inventories in US residential HVAC bottomed out. Trane is also benefitting from data centre investment, and we are maintaining our position in the stock following its 26% rise in the first half of the year. We are also looking at other industry opportunities as it appears that climate change is going to continue to be a major driver of growth in this industry, notably in Europe where the air conditioning industry is far less prevalent than places like the United States.
Accenture is the smallest position in the portfolio following a reduction earlier this year and very disappointing share price performance. This was exacerbated when the company revealed its results towards the end of June and modestly downgraded its revenue growth expectations for the current year to a range of 4-5% from 4-6%, while leaving earnings and cash flow projections unchanged. Consulting has been one of the industries most affected by the fear of disintermediation from AI, and this has contributed to a material derating of Accenture shares and held back the performance of another of our portfolio constituents, IBM. For now, we have decided to hold on to our small holding in Accenture, but are not adding to it until it is clear that the company will ultimately be a winner from new technological project implementation, which has been the case historically.
Fortinet has been one of our best performing stocks this year, rising by around 93%. Until quite recently, its shares had been struggling as investors appeared to be concerned that existing cyber security businesses could be at risk of “SaaSpocalypse” disintermediation, but the company’s recent results reaffirmed the importance of its role in countering the increased security risk created by AI. Fortinet shares rallied strongly on the day of its results and have continued to move higher subsequently and, having met with the company and reviewed our position, we are maintaining our current weighting.
We added a new position in Truist Financial during the second quarter as an improving regulatory backdrop and good industry “stress test” results showed a strong outlook for the US banking industry, also helped by the view that interest rate cuts have come to an end for now and, as noted earlier, could rise. We like Truist as it has a strong branch footprint in the growing US southern states such as the Carolinas and Tennessee. These states have been the beneficiaries of low taxation policies that have driven considerable population growth, and we expect this to continue. Truist has a strong capital ratio and offers an attractive 4% yield, and we anticipate increasing this position over time, especially if the current regulatory environment continues to increase the amount of capital the company is able to return to shareholders.
Japanese stocks enjoyed a strong first half of the year with the Nikkei 225 rising over 40%. We remain optimistic about our Japanese portfolio, where we own five names including robotics and factory automation companies Yaskawa and Keyence, both of which saw shares rise by more than 40% in the period. In addition, our Japanese bank, SMFG, performed strongly, rising by just under 30% and benefitting from Japanese policy makers finally responding to the need for higher interest rates at the BoJ’s most recent meeting, with expectations of further increases later this year.
We reduced our exposure to European equities via a number of disposals, including German reinsurance company Munich Re after a difficult period for the company as industry pricing has become more competitive, a situation we expect to persist for some time. Elsewhere in Europe, we saw good performance from our industrial companies Schneider Electric and Siemens, which both rose over 20% in the first half and are benefitting from the tailwinds created by investment in data centres and a continued drive to greater electrification.
Outlook
We see equity markets and our funds at new highs, but do not think that this reflects excess valuations. Many of the largest stocks in equity indices seem to be overvalued, especially SpaceX, whose IPO we avoided, but we have continued to reduce our exposure to such stocks, selling our Broadcom and Microsoft holdings in the second quarter. Many other equities, especially outside the USA, are on modest valuations and are seeing fair business conditions.
However, equity investors do need to keep an eye on bond markets. Bonds have behaved poorly, core inflation levels remain stubbornly high and, despite oil prices now falling, may be a challenge in the second half of the year. If interest rates need to rise, equity markets as a whole may be more tricky, but that should not be a major headwind if we can select stocks on fair valuations which are growing well.
Goshawk Asset Management
Data source: Goshawk Asset Management, Bloomberg
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