Global Fund Update – September 2026
Global equities rose in August despite continuing concerns with respect to rising global bond yields. The Goshawk Global Fund gained 2.5% during the month and is up 10% year-to-date.
In the United States, the recently appointed Chair of the Federal Reserve, Kevin Warsh, set out his framework for monetary policy at the annual Jackson Hole Symposium in Wyoming. Warsh commented that inflation levels remain too high, that the Fed will work towards its long-held objective of 2% inflation and that interest rates could rise in the coming months if inflation data remains stable.
Rising bond yields have understandably grabbed a lot of attention in recent weeks as the ever-increasing debt that the US has accumulated is costing more and more to service. Treasury Secretary Scott Bessent introduced countermeasures to try to control the yield curve, but these met with very little success and rates continued to rise, with ten-year Treasury yields creeping towards 5% while thirty-year yields are well over that level. US equities to this point have remained very sanguine about these moves, but we are closely monitoring this situation and maintaining a cautious approach in our portfolios.
Rising government bond yields have not been helped by the considerable increase in corporate bond issuance by companies, including the likes of Alphabet and Amazon, to fund enormous capital expenditure plans as they continue to build out their artificial intelligence infrastructure, believing that we are at the very beginning of a surge in demand for data centre cloud capacity that will justify the vast sums of money they are spending. This represents a major shift in behaviour for megacap companies in the US, where we have been used to hugely cash-generative business models that have funded growth and large share buyback programmes, with companies including Microsoft, Alphabet and Amazon having all now become significant consumers of capital.
Stocks & Portfolio Moves
The attempt by Treasury Secretary Bessent to control the yield curve pushed the gold price higher in August, helping the performance of Newmont, which we added back into the portfolio in early July. Newmont has had a somewhat chequered past, but its recent results showed that it has really turned a corner. Newmont benefits from producing over 5million ounces of gold per annum and is targeting to achieve 6million by 2027. Having acquired the assets of Australian-based Newcrest Mining in 2023 for nearly $17billion, Newmont significantly added to its gold reserves, but also added a significant amount of copper to its portfolio. The copper price has been very strong this year, driven by a shortage of supply and increasing demand for electrification from the global grid and electric vehicles. Newmont’s quarterly results showed very strong cash generation of $2.2billion which, even as it continues to invest in and expand its existing assets, is enabling the company to buy back shares very aggressively. Management noted that they had already completed $1.7billion of the $6billion existing buyback programme, with the company now having bought back over 100million shares since the beginning of 2024. Newmont has over $3billion of net cash on its balance sheet and remains very well placed to continue to invest in growth while increasing its dividend and aggressively reducing its share count.
In the healthcare sector, Merck shares enjoyed a strong month after Moderna announced successful trial results of an experimental MRNA vaccine for skin cancer, which is given in conjunction with Merck’s cancer drug Keytruda. Keytruda currently generates over $30billion of annual sales and is due to see its patent protection expire in 2028. However, this new development could see the useful life of Keytruda extend further and it remains to be seen what other areas of cancer therapy Moderna’s new vaccine, if approved, could reach. Merck shares rose by 13.5% in August, taking year to-date gains to over 40%, and we remain comfortable with our existing position.
In the medical technology sector, Agilent Technologies produced a very strong set of results at the end of the month, with revenue growth of over 7% and strong margins leading to full-year revenue and profit guidance upgrades. Agilent has over 20% of its sales in China, which has been holding the company back in recent years. However, the company’s latest results showed that the region bounced back very strongly, giving Agilent increased confidence in its outlook beyond this fiscal year. Management noted that its medical instruments business was benefitting from a combination of their own product innovation and increased re-shoring to the US by the pharmaceutical industry. Five of the ten largest global pharma companies are Agilent customers which have committed to new major capital projects in the US, providing it with a major future tailwind. Agilent is a relatively new holding in the portfolio and has performed well, which set a high bar for its latest earnings report. We modestly reduced our position into this strength in August, but the stock remains a core holding.
In our Chinese portfolio we sold our position in Baidu early in August after a period of poor performance and increasing concerns about its traditional search and advertising business, which is being hit hard by competition from AI. Baidu has been attempting to pivot its business to an AI-led model via the manufacturing of its own chips, foundation models and to a cloud-based AI infrastructure which now accounts for over 50% of revenues. While this strategy is meeting with some success, we have become concerned that the pace of the decline in its traditional business has worsened materially, leading to downgrades in profit expectations, and have focussed our positioning on Alibaba, which is pursuing a similar strategy.
Intel and Alibaba became the latest of our portfolio holdings to announce equity raises to help fund aggressive spending plans. Intel announced a $15billion equity placing, which met with such strong demand that it upsized this offering to over $20billion to meet an increasing capex programme to support new customers in its Foundry division, which has been severely loss-making and lost $2billion in its latest quarter, but is now moving towards an inflection in profitability. Intel plans to spend over $20billion in capex in 2026 and this is forecast to increase further in 2027, including a $5billion investment in Ireland. Alibaba also launched a $10billion equity placing towards the end of the month to fund its growth strategy in AI and enable itself to offer customers a “full stack” of AI capabilities, including chips, cloud infrastructure and foundation models. While it is a major shift in corporate behaviour to see large companies requiring equity raises to fund growth programmes, we are comfortable with the strategy these businesses are following and plan to maintain our current holdings.
Outlook
Our portfolio has a modest exposure to US equities, having no exposure to a number of the largest technology stocks. The portfolio has greater exposure to healthcare companies, companies which aid electrification and the roll out of renewables, and Japanese equities, especially those which lead in robotics. We believe these biases will protect capital reasonably well were equity markets to react adversely to rising global bond yields.
We also believe that these themes offer considerable growth potential in themselves while avoiding excess focus on the AI boom. This balance, we think, is prudent as we approach the US mid-term elections and Wall Street ambitions to float Anthropic as the largest IPO of all time. We are cautious but not bearish.
Goshawk Asset Management
Data source: Goshawk Asset Management, Bloomberg
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