Morgan Stanley operates as a global financial services company. The firm provides investment banking products and services to its clients and customers including corporations, governments, financial institutions, and individuals. It operates through the following segments: Institutional Securities, Wealth Management, and Investment Management. The Institutional Services segment provides financial advisory, capital-raising services, and related financing services on behalf of institutional investors. The Wealth Management segment offers brokerage and investment advisory services covering various types of investments, including equities, options, futures, foreign currencies, precious metals, fixed-income securities, mutual funds, structured products, alternative investments, unit investment trusts, managed futures, separately managed accounts, and mutual fund asset allocation programs. The Investment Management segment provides equity, fixed income, alternative investments, real estate, and merchant banking strategies. The company was founded by Harold Stanley and Henry S. Morgan in 1924 and is headquartered in New York, NY.
COMMENTARY
Market Review
Global equity markets edged lower in November as volatility increased, driven by uncertainty around US policy and concerns about the pace of generative AI investment. While some US economic data was delayed early in the month due to the government shutdown, subsequent releases were broadly consistent with recent trends of modest growth and easing inflation. The Fund’s currency hedge added value during the month as the US dollar weakened slightly relative to the Australian dollar.
In the US, labour market conditions remained soft, with low unemployment claims but limited hiring momentum. Core producer price inflation held steady at 2.9% year-on-year, reinforcing the view that inflation pressures continue to moderate. Purchasing managers’ data showed improvement in services activity, while manufacturing remained subdued. Consumer confidence was broadly unchanged at low levels. Expectations for a Federal Reserve interest rate cut in December increased over the month, helping stabilise financial conditions.
Elsewhere, economic conditions remained mixed. In Europe, growth showed tentative improvement from low levels, supported by stronger retail sales and firmer confidence indicators. Retail sales rose ahead of expectations in October, while both consumer and business surveys recorded modest gains. Inflation remained contained across the region. In China, growth remained weak, with slower retail sales and industrial production, ongoing weakness in fixed asset investment and continued pressure in the residential property market.
Despite subdued global growth, monetary policy remains supportive across major regions. Axiom believes its focus on companies with positive operating momentum and improving fundamentals, where dynamic earnings growth remains a key driver of long-term returns, is well suited to this environment.
Portfolio Commentary
The Fund underperformed the benchmark in November. At the sector level, communication services contributed positively, while information technology and industrials detracted as volatility increased around generative AI investment and expectations for infrastructure spending. The portfolio remained overweight information technology and communication services, with underweights to financials and consumer staples, consistent with Axiom’s dynamic growth approach.
At the stock level, Alphabet was a key contributor as strong performance from October extended into November. The release of its latest large language model, Gemini 3, which ranked highly across industry benchmarks, reinforced confidence in Alphabet’s innovation. The company also announced new internally developed Tensor Processing Unit semiconductor systems that support sentiment across its generative AI ecosystem. Broadcom, a global semiconductor and infrastructure software company, also performed well as Alphabet’s key design partner, with supply chain research pointing to potential upside to TPU-related demand.
Siemens Energy, a European provider of power generation and grid infrastructure equipment, contributed following its Capital Markets Day, where management raised medium-term revenue growth and margin targets, improving confidence in the company’s earnings outlook.
Detractors included Oracle, a US-based enterprise software and cloud infrastructure provider, which declined as sentiment weakened around OpenAI-related infrastructure spending following increased competition from new foundational models. Oracle’s underlying fundamentals were unchanged, and the Fund maintained its position. Fujikura, a Japanese manufacturer of optical fibre and connectivity solutions, also pulled back after strong year-to-date performance as the Fund took profits, despite continued robust industry fundamentals. Axon, a US-based public safety technology company, underperformed following its earnings report, although backlog and software revenue growth continued to accelerate. Given valuation considerations, the position was reduced while retaining a positive long-term view.
Portfolio positioning was broadly stable. The Fund added to Alphabet, ASML, the Dutch supplier of advanced semiconductor manufacturing equipment, and Amphenol, a global producer of electronic connectors, reflecting confidence in longer-term demand trends. Reductions were made to Axon, Meta Platforms and Uber, reflecting valuation discipline. The Fund exited Tokio Marine, a Japanese property and casualty insurer, amid slowing premium growth and redeployed capital into more dynamic Japanese exposures, including Hitachi and Sony. There were no new position initiations during the month.
There were no MSCI ESG rating changes in November. Engagement activity included discussions with JPMorgan Chase and ServiceNow, focusing on emissions targets, disclosure practices and the internal use of generative AI.