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SUMMARY
- Global equity markets trended higher in July against a backdrop of ongoing US tariff announcements, which led to mixed regional performance.
- The Portfolio returned 3.1% for the month.
- The Portfolio is overweight in the health care sector, which was generally weak. However, strong stock selection added to relative gains, with Thermo Fisher Scientific a notable contributor.
COMMENTARY
Market Commentary
Global share markets rose in July, supported by continued optimism around artificial intelligence (AI) and signs of resilience in the global economy. The portfolio benefited from a stronger US dollar, which was up about 3% over the month.
The US market led gains, rebounding after a softer first half of the year, while Emerging Markets also performed strongly thanks to robust demand for AI chips from suppliers in Taiwan and South Korea. European markets were weaker, both in the eurozone and beyond, as uncertainty around tariffs weighed on sentiment and large-cap names such as Novo Nordisk and ASML issued softer outlooks.
By sector, information technology led performance, with the semiconductor industry rising more than 6%. Health care and consumer staples were weaker, although AI remained a key driver of investor enthusiasm, particularly in semiconductor-related businesses.
Portfolio Commentary:
Results across the portfolio were mixed, with some standout performances and other areas of relative weakness.
Meta Platforms, the owner of Facebook and Instagram, was a notable contributor after reporting second-quarter results that comfortably beat expectations for revenue and margins. Growth in its advertising business remained strong, and the company continues to integrate AI into its platforms to improve content personalisation, ad targeting, and creative tools. Management also outlined ambitious AI investment plans, with capital expenditure for 2026 projected at around US$100 billion. While these initiatives have the potential to enhance user engagement and long-term growth, the scale of investment means we will be watching closely to ensure they deliver meaningful returns.
Progressive, the US auto insurer first added to the portfolio in May, was another positive contributor. We increased our holding during the month, reflecting our conviction in the company’s competitive advantages. Progressive invests heavily in marketing and technology, building a strong brand and a direct-to-consumer sales edge. Coupled with disciplined underwriting and access to large amounts of pricing data, this has helped sustain margins and supports our view that Progressive can continue to deliver profitable growth ahead of peers.
In health care, Thermo Fisher Scientific rose after upgrading its outlook for the 2026 financial year, while the absence of underperforming names such as Novo Nordisk and UnitedHealth Group also added to relative returns.
In information technology, AI enthusiasm drove gains in Synopsys, a leader in chip design software. However, our underweight position in NVIDIA detracted as semiconductor stocks rallied.
Within communication services, Netflix reported subscriber and revenue growth ahead of its own guidance, but broadly in line with bullish market expectations. While operational performance was solid, the share price eased as investors locked in profits after a strong run earlier in the year.
The portfolio remains positioned in high-quality companies with durable growth drivers, strong balance sheets, and the ability to navigate periods of uncertainty. The team continues to seek out businesses that can deliver sustainable long-term value for shareholders.