Global Fund Update – April 2025

After two years of exceptional returns for global equities, the first quarter of 2025 delivered a negative overall market return. The Goshawk Global Fund fell 3.9% in the first quarter compared to the market decline of around 4.6% in Sterling.

Earlier in the quarter, many US companies reported a sense of business optimism as the second presidential term of Donald Trump got underway and US equities had a strong start to the year, rising 2.8% in January. However, as the quarter progressed, that optimism turned into a high level of caution as uncertainty around economic policy on tariffs and the possible unintended impact of the cost savings drive from DOGE all negatively impacted consumer confidence. This sent the US market lower, with the S&P 500 falling 7.2% in Sterling terms over the quarter.

Other global stock markets fared much better, with the Hang Seng gaining 18% as a degree of optimism returned to the Chinese economy. In Europe, a major policy shift by Germany led to a very strong period of performance. Japanese equities were mixed, as the Nikkei fell over 8% but the broader index measure showed a decline of 1.6% in Sterling terms.

In the first week of April President Trump announced tariffs, which are damaging to world trade and seem likely to cause a recession in the US and elsewhere. As an experienced team, we have managed money through many crises. It is hard to find much logic behind the tariff policies, which presents challenges, but few of the investments we have in the portfolio are directly challenged by the tariff policies. Also, our portfolios have low exposure to economically sensitive sectors such as banks or consumer cyclicals, and so should cope better than the index if the risk of recession rises.

Our approach is to use common sense. We have learnt to invest in companies that are very resilient and have good barriers to entry and reasonable valuations. Such investments tend to fall less than the equity index in these conditions. We do not know where or when markets will bounce, but as long as our funds fall less than most in times like this, we find they then benefit more than most when equity markets recover and achieve attractive returns over the longer term.

 

Portfolio Moves

As the quarter progressed, we adopted a more defensive position in the portfolio, adding to positions such as Johnson & Johnson and starting new positions in Procter & Gamble and telecoms company Singapore Telecommunications. These stocks tended to outperform in the period after many months of underperformance, and other defensive positions in the portfolio, including T-Mobile US and Verisk Analytics, also held up rather well.

We continued to reduce our overall position to the so-called “BATMMAAN”* stocks that represented around 25% of the global benchmark and, by the end of the quarter, were around 11% of our portfolio, and we continue to have a zero weighting in both Apple and Tesla. We cut back our holding in Alphabet, which had a difficult quarter as investors fretted that the ‘Search’ part of the business could be disintermediated by a variety of new AI-driven alternatives.

The impact of the introduction of a powerful new AI app known as DeepSeek by a Chinese startup sent shock waves through the tech and power-related sectors of the market at the end of January. This app apparently required considerably less processing power and cost far less money to develop than what has been spent by US hyperscalers and related infrastructure companies. Shares in semiconductor stocks, including Broadcom and Nvidia, saw hundreds of billions of dollars wiped off their valuations on the day and continued to struggle for the remainder of the quarter.

Similarly, many companies that have been excellent performers from the anticipated increase in power use from AI data centres, such as Schneider Electric, Trane Technologies, and even nuclear power stocks like Cameco, were also all severe casualties of the headlines. While it is too early to understand the implications of the news fully, it was a timely reminder to investors to be careful at a time when so many valuations have been propelled higher by the AI theme.

However, we do remain confident in the validity of the electrification theme in the Global Fund. We invested in companies like Schneider and Trane well before the importance of AI data centres become a factor. Subsequent meetings with various companies in the UK and US highlighted the need to make a massive infrastructure investment into the grid to enable electricity to play a greater role in the overall power generation landscape.

 

Stocks

Burlington Stores delivered a strong set of results in February. Burlington is a US off-price retailer based in New Jersey that operates around 1,100 stores. The business has seen a material improvement in its operational performance under the stewardship of CEO Michael O’Sullivan. Burlington reported comparable store sales growth of 6% in the final quarter of its fiscal year, well ahead of the guided range. For the year ahead, the company is prudently guiding to low underlying growth, which we believe will end up being conservative as O’Sullivan notes that this is the sort of economic environment in which its business model should thrive. Despite strong operating performance, Burlington shares fell 16.3% in the quarter.

Siemens shares enjoyed a strong quarter, delivering good results and also being the beneficiary of the planned infrastructure spend by the new German government as it seeks to accelerate growth after a period of economic stagnation. Incoming Chancellor Friedrich Merz was able to push through a massive stimulus package that included both defence and infrastructure spending and, although we acknowledge that this will take time to permeate into the economy, there will be a boost to Siemens from this investment and shares finished the quarter 15% higher.

Rolls-Royce enjoyed another powerful first quarter, rising by 31.7%, and now represents one of the largest active weights within the Global Fund, despite us modestly trimming the position back in the latter part of the quarter. Rolls delivered a stellar set of results, leading to material profit upgrades and the company stating that it would reach its medium-term targets a year ahead of the originally-stated 2028 plan. The company will be a beneficiary of its exposure to the defence industry both in its power division as well as from its core defence business, which is actually very focussed towards long-term contracts such as the US B52 and the AUKUS submarine programmes.

Spotify shares also enjoyed a strong quarter, rising 23% after once again delivering results that exceeded forecasts.

 

Outlook

It is not surprising that global equities have paused given how far they have risen in recent years and the range of unexpected headlines, tariff threats, and falling consumer confidence over recent months. Markets may now be aware that we are in a period of adjustment and the next results season may be downbeat.

Despite the headwinds, the management teams of the companies selected for the portfolio remain confident and equity valuations outside the largest equities in the world are reasonable. We have positioned the portfolios for resilience, but believe that a balanced portfolio of global equities offers good prospects for investment returns over the longer term.

 

Tim Gregory
Fund Manager
Goshawk Asset Management

 

*BATMMAAN – Broadcom, Alphabet, Tesla, Meta Platforms, Microsoft, Amazon, Apple, Nvidia

 

Data source: Goshawk Asset Management, Bloomberg

 

Disclaimer: This is a marketing document. Further information about Vermeer UCITS ICAV, including the current Prospectus and Key Investment Information Documents (“KIIDs”), are available in English and can be found at https://www.goshawkam.co.uk/. Past performance may not be a reliable guide to future performance. Investments can go down as well as up and therefore the return on investment will necessarily be variable. Income may fluctuate in accordance with market conditions and taxation arrangements. Changes in exchange rates may have an adverse effect on the value, price, or income of the product. Goshawk Asset Management is a trading name of North Atlantic Investment Services Limited (FCA no. 969870) with company no. 13800256. North Atlantic Investment Services Limited is authorised and regulated by the FCA (FRN 969870) and is incorporated in the United Kingdom (Company no. 13800256). Registered Office Address: 6 Stratton Street, Mayfair, London, W1J 8LD. Vermeer UCITS ICAV (“the Fund”) is registered with the Central Bank of Ireland as an open-ended umbrella-type Irish collective asset management vehicle with variable capital (Register Number C154687). Opinions expressed, whether specifically or in general or both, on the performance of individual securities and in a wider economic context represent our view at the time of preparation. They are subject to change and should not be interpreted as investment advice. This document is intended for use by shareholders of the Fund, persons who are authorised to carry out investment business, professional investors, and those who are permitted to receive such information. Nothing in this document should be construed as giving investment advice or any offer, invitation, or recommendation to subscribe to the Fund. Any decision to subscribe should be based on the Fund’s current Prospectus and KIIDs. Waystone Management Company (IE) Limited, as UCITS Man Co, has the right to terminate the arrangements made for the marketing of funds in accordance with the UCITS Directive. A summary of investor rights policies can be found at https://www.waystone.com/waystone/policies/.