March Report

March 2025 saw broad-based equity market weakness, with the US leading in declines, but most major international markets also falling. In the United States, equities came under pressure from persistent inflation, renewed trade tensions, and hawkish signals from the Federal Reserve. Elevated rate expectations weighed on valuations while softening consumer data and margin compression in key sectors added to concerns about slowing growth.

European equities declined, although losses were partially cushioned by resilient corporate earnings and signs of easing inflation across the region. Investor sentiment remained fragile, however, particularly in the UK, where macro uncertainty and political instability weighed on confidence.

Asian markets were mixed. Chinese equities posted gains, supported by positive earnings surprises and improving economic momentum. In contrast, Japanese equities declined, driven by weaker industrial activity and more cautious corporate guidance.

A key development occurred in early April when the US administration imposed sweeping tariffs on all imports, with significantly higher rates targeting China and India. This triggered a sharp rise in global market volatility, with markets initially selling off but then staging a swift recovery (at the time of writing) following news that the US may pause or reconsider some tariffs.  The longer-term implications of the trade conflict remain unclear. However, they present a meaningful risk to global growth, with investors now reassessing supply chain exposure, regional alignment, and geopolitical risk across portfolios.

Portfolio highlights

The Fund declined 1.9% in March, outperforming its benchmark by 1.1%. The result was driven by strong stock selection and geographic positioning. The underweight to US equities continued to add value. Broadly, our bias towards non-US businesses with robust fundamentals and pricing power positioned us well in what became a volatile and fragmented global equity environment.

One of the top contributors was FlatexDEGIRO, a leading European online brokerage. The stock rose sharply on the back of multiple analyst upgrades, supported by resilient retail trading activity and a strong outlook for European financials. The company benefits from a scalable operating model, low-cost structure, and expanding client base across the continent. Having built the position at attractive levels in 2023, we are now actively reducing the weight following recent strength while remaining constructive on the long-term fundamentals.

TechnoPro Holdings also added meaningfully to performance. The Japanese provider of engineering staffing services continues to deliver on both growth and capital return metrics. In March, the company increased its interim dividend and reiterated its 50% payout ratio target. Operationally, it reported rising revenues and improved gross margins, underpinned by strong demand for technical personnel. TechnoPro is a resilient compounder with exposure to secular themes, including workforce digitisation and infrastructure modernisation. This position was initiated in January and has performed well since entry.

On the negative side, Cantaloupe detracted from returns. The US-based provider of smart vending and cashless payment solutions struggled amid rising macro uncertainty, particularly following the trade war escalation. The company’s exposure to international markets and reliance on hardware supply chains left it vulnerable to sentiment swings. While we remain confident in its long-term growth potential and scalable technology platform, we are closely watching macro and FX-related risks in the near term.

Overall, the portfolio remains tilted towards high-quality businesses operating in attractive niches. We continue to focus on capital discipline and durable growth. Turnover remains low, with changes during the month largely confined to rebalancing positions rather than introducing new names.