May Report

Market Commentary

Equity markets posted strong gains in May, led by the US market, which outperformed for the first full month since President Trump’s re-election. The rally was supported by resilient corporate earnings and a sharp rebound in large-cap Information Technology stocks. Despite lingering uncertainty around trade policy, investors responded positively to a string of better-than-expected results across sectors.

Outside the US, European markets extended their lead on a year-to-date basis, supported by steady macroeconomic indicators and a weaker US dollar. Gains were broad-based across the region, though currency appreciation contributed to relative strength. Emerging Markets also advanced, though at a slower pace, as Chinese equities remained under pressure from ongoing tariff disputes and muted domestic activity.

Currency markets were active, with the US dollar weakening meaningfully as investors grew increasingly concerned about rising federal debt levels tied to Trump’s proposed “big beautiful” budget bill. Erratic policy communication, particularly around reciprocal tariffs, added to volatility. Sector performance reflected this uncertainty: Information Technology led returns, driven by renewed investor enthusiasm for AI and semiconductors, while Health Care was the only sector to decline amid regulatory overhangs.

Portfolio Commentary

The Fund returned 4.3% in May, underperforming the broader market, largely due to weakness across its Health Care holdings. The sector struggled during the month, and several portfolio names were negatively impacted by regulatory developments and earnings-related disappointments.

UnitedHealth Group, a leading US-based health insurer, was the most significant detractor. Shares fell more than 25% following reports of a potential Department of Justice investigation and increased uncertainty around the future profitability of its Medicare Advantage business. The team grew concerned about margin pressure and the risk that pricing adjustments could slow future enrolment. As a result, the position was exited during the month.

Other Health Care names also underperformed. Vertex Pharmaceuticals, a US biotechnology company focused on cystic fibrosis treatments and other genetic diseases, declined after delivering weaker-than-expected first-quarter results. Alcon, a Swiss manufacturer of eye care products, lowered its full-year outlook, citing tariff-related headwinds that impacted demand. Sector sentiment more broadly was weighed down by an executive order from the US administration aimed at reducing prescription drug prices.

In contrast, The Trade Desk, a US-based digital advertising platform specialising in programmatic and connected TV channels, was a key positive contributor. The company posted first-quarter revenue growth of 25% year-on-year, well ahead of expectations, reflecting continued strong demand across its platform.

In the Information Technology sector, NVIDIA, a US-based semiconductor company known for its leading position in graphics processing units (GPUs) and AI infrastructure, rebounded sharply after reporting record quarterly earnings. The Fund had repurchased the stock in late 2024 and added to the position in April, although relative contribution was limited due to the size of the holding.

The Fund initiated a new position in Visa, a global leader in digital payments technology. Operating in over 200 countries and territories, Visa continues to benefit from the global shift away from cash and towards electronic transactions. With robust free cash flow, strong operating leverage, and competitive scale, the company is well positioned to compound value over the long term.

The Fund remains focused on building a portfolio of high-quality businesses with durable competitive advantages, sustainable growth drivers, and strong financial discipline. In an environment marked by policy uncertainty and shifting macro narratives, the investment team continues to emphasise long-term business fundamentals.