| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Global equities surged 13.8% in Q2 2026, driven by resurgent optimism around AI capital expenditure and semiconductor demand. Technology-heavy markets and economies embedded in semiconductor supply chains delivered exceptional performance, with emerging markets posting their strongest quarterly gains since 2009. Korea and Taiwan led, benefiting from sustained hyperscaler spending on AI infrastructure, high-bandwidth memory, and advanced fabrication. The announcement of a US-Iran ceasefire framework eased Middle East tensions, causing oil prices to retreat sharply and the energy sector to underperform significantly. Central banks maintained restrictive policy stances, with the ECB raising rates 25 basis points in June despite cutting growth projections, while the Fed held steady under new Chair Kevin Warsh. Inflation pressures moderated but remained above target in key regions. Performance became increasingly concentrated in a narrow group of AI beneficiaries, with investors differentiating between companies with tangible AI earnings versus thematic exposure. Valuation concerns introduced volatility late in the quarter, though the AI investment cycle's durability remained intact with record semiconductor equipment results reinforcing the thesis.
Q2 2026 was dominated by the AI capital expenditure cycle, which drove exceptional performance in semiconductor-exposed markets, particularly Taiwan and Korea, while geopolitical de-escalation in the Middle East led to sharp energy price declines and sector underperformance.
The outlook remains constructive for AI-related investments and semiconductor supply chains, with the investment cycle showing durability despite valuation concerns. Geopolitical risks have moderated following the US-Iran ceasefire, though energy market normalization remains incomplete. Central banks are maintaining restrictive policy stances with heightened sensitivity to inflation, even as growth risks persist. Performance is expected to remain concentrated in technology and AI beneficiaries, with emerging markets particularly well-positioned given their role in semiconductor supply chains.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 7 2026 | 2026 Q2 | - | AI, emerging markets, energy, growth, inflation, Middle East, semiconductors, technology | - | AI infrastructure spending drove Q2 2026's 13.8% global equity surge, with semiconductor-exposed markets Taiwan and Korea delivering exceptional gains on sustained hyperscaler demand. US-Iran ceasefire collapsed oil prices, hammering energy stocks. Emerging markets posted their strongest quarter since 2009, though performance concentrated narrowly in AI beneficiaries. Central banks maintained restrictive policy despite moderating inflation. Technology and semiconductor supply chains dominated returns while commodities and energy lagged sharply. |
| Apr 7 2026 | 2026 Q1 | - | AI, energy, geopolitics, inflation, Middle East, oil, technology | - | Q1 2026 saw global equities fall as Middle East conflict drove oil above $100, triggering inflation fears and central bank hawkishness. Energy stocks surged while tech experienced AI-driven rotation from software to infrastructure. Commodities gained 40% while bonds sold off on rate hike expectations. |
| Oct 6 2025 | 2025 Q3 | BTC-USD, ETH-USD | AI, crypto, equities, Fed, global, gold, rates, technology | - | Global markets delivered strong Q3 2025 gains driven by the AI boom, solid earnings, and Fed rate cuts. Technology sectors led performance with record Nasdaq highs. Emerging markets outperformed on dollar weakness and trade progress. Digital assets rebounded strongly with Bitcoin hitting new highs. Precious metals rallied to records while elevated valuations and geopolitical risks persist. |
| Jul 30 2025 | 2025 Q2 | - | AI, crypto, Defense Spending, global, rates, tariffs, technology, Trade Policy | - | Global markets recovered strongly in Q2 2025 after initial tariff volatility, with equities posting double-digit gains led by AI and defense stocks. Central banks neared end of easing cycles while focus shifted to fiscal sustainability. Trade negotiations provided relief from Liberation Day tariff threats, supporting emerging markets and risk assets broadly. |
| Mar 17 2025 | 2024 Q4 | - | Benchmark, CAPE, Concentration, diversification, global, Magnificent, value | - | Schroders Value Perspective faced 2024 relative underperformance due to MSCI World concentration in Magnificent 7 stocks. The fund's diversified value approach trades at 8x CAPE with significant discount to growth. Historical patterns suggest next decade may reverse recent trends, favoring active managers and value investing as speculative excesses correct. |
| Nov 14 2024 | 2024 Q3 | BARC.L, NWG.L | banks, Buybacks, Forecasting, Rotation, Uk, value |
NWG.L BARC.L |
Schroders Value team demonstrates their disciplined approach is working, with UK banks like NatWest and Barclays delivering strong returns through operational improvements and massive shareholder distributions. They're rotating from winners into the most beaten-down areas where valuations are lowest, maintaining conviction in significant long-term outperformance despite unpredictable timing. |
| Jul 30 2024 | 2024 Q2 | 5991.T, 6995.T, 9404.T, BMY, LZB, MHK, PFE, SBH, SWK | Concentration, Cyclical, global, Japan, Midcaps, underperformance, Valuations, value | - | Schroders Value Global fund underperformed in Q2 as growth stock concentration continued, but the manager maintains conviction in their value approach. Portfolio emphasizes US midcaps facing cyclical headwinds and Japanese companies benefiting from regulatory reform. They believe current market concentration will reverse over the next decade, making this an attractive entry point for long-term value investors. |
| Jan 2 2024 | 2023 Q4 | CSCO, UBER | disruption, growth, rates, technology, valuation, value | - | Higher interest rates are ending the era of subsidized disruption that burned through billions in investor capital. Traditional value businesses face reduced competitive pressure as unprofitable disruptors fail, creating opportunities for profit growth and re-rating. The team emphasizes that valuation matters more than growth, positioning for medium-term outperformance as economic reality returns. |
| Feb 27 2023 | 2022 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI-related capital expenditure and infrastructure buildout dominated Q2 2026 performance, driving technology-heavy markets and semiconductor supply chains. Investors increasingly differentiated between companies simply exposed to AI themes versus those demonstrating tangible earnings contributions from AI adoption. The AI investment cycle remained intact with record results from semiconductor and equipment companies, though valuation concerns introduced volatility. |
Semiconductors Cloud Data Centers GPUs Memory |
Semiconductor CycleMemory chip and advanced component manufacturers benefited from a sharp upcycle in AI-related demand, particularly for high-bandwidth memory and advanced fabrication. Korea and Taiwan delivered exceptional performance driven by sustained hyperscaler capital expenditure benefiting the North Asia hardware supply chain. Semiconductor equipment companies posted record results reinforcing the cycle's durability. |
Memory Foundries Semi Equipment Taiwan South Korea | |
OilOil prices fell sharply during Q2 2026 following the announcement of a US-Iran ceasefire framework and memorandum of understanding, which eased concerns about broader regional conflict and energy supply disruptions. Energy sector underperformed as oil prices retreated from intra-quarter highs, though shipping via the Strait of Hormuz remained well below pre-conflict levels. |
Energy Middle East Geopolitical Refiners | |
InflationInflation pressures moderated during the quarter, supporting equity valuations and risk appetite. However, the ECB raised rates by 25 basis points in June given above-target inflation resulting from the energy shock caused by Middle East conflict. Central banks became less willing to look through inflation shocks even as growth risks increased. |
Rates ECB Energy Monetary Policy | |
Emerging marketsEmerging markets posted their strongest absolute quarterly performance since 2009, ending markedly ahead of developed markets. Performance was dominated by technology-oriented markets of Taiwan and Korea benefiting from AI demand, though returns were increasingly concentrated in a narrow group of AI beneficiaries. Markets judged the Middle East conflict's broader impacts to be contained. |
Taiwan South Korea Technology Asia-Pacific | |
GoldGold and other precious metals came under pressure amid rising inflation expectations, which make return-generating assets such as government bonds more attractive. Precious metals declined sharply during the quarter as part of broader commodity weakness. |
Precious Metals Commodities Inflation | |
| 2026 Q1 |
OilOil prices surged above $100 due to Middle East conflict disrupting production and shipping through the Strait of Hormuz. Energy stocks were standout performers as integrated producers, refiners and infrastructure companies benefited from higher prices. |
Energy Geopolitics Supply Prices Conflict |
AIAI narrative created dichotomy within technology sector. Investors rotated towards AI infrastructure businesses like semiconductors and cloud computing, while traditional software stocks declined over concerns that generative AI could undermine software-as-a-service subscription models. |
Technology Infrastructure Software Disruption | |
GeopoliticsUS and Israeli strikes on Iran disrupted oil flow through Strait of Hormuz, creating considerable uncertainty for global economy and financial markets. The conflict dominated markets in March, introducing volatility and significant sell-offs across asset classes. |
Iran Conflict Risk Uncertainty Markets | |
InflationHigher oil prices fueled worries over inflation and potential interest rate rises. Annual inflation in eurozone rose to 2.5% in March from 1.9% in February. Central banks shifted hawkish as energy price shock raised concerns about persistent inflation. |
Rates Energy Central Banks Policy | |
| 2025 Q3 |
AIThe AI boom continued to drive strong market performance across global equities in Q3 2025. Technology and communication services sectors were strong performers, with renewed enthusiasm for AI helping boost the technology-heavy Nasdaq to record highs. Asian markets, particularly Taiwan and Korea, benefited from continued demand for artificial intelligence and AI-related stocks. |
Technology Semiconductors Growth Innovation Computing |
RatesThe Federal Reserve delivered a 25 basis point rate cut to 4.0%-4.25% in September, which was well-anticipated and fully priced by markets. The Bank of England also cut rates to 4.0% in August. Rate cut expectations and dovish Fed stance supported market performance, particularly benefiting emerging markets and digital assets. |
Federal Reserve Monetary Policy Interest Rates Central Banks Liquidity | |
CryptoDigital asset markets staged a strong rebound in Q3 2025, with Bitcoin rising 7% and Ethereum surging 67%. Bitcoin reached a new all-time high of $124,500 in August. The passage of the GENIUS Act in July provided comprehensive regulatory clarity for stablecoins, benefiting Ethereum as the home to much stablecoin innovation. |
Bitcoin Ethereum Regulation Institutional Adoption Stablecoins | |
GoldPrecious metals experienced a significant rally in Q3 2025, with gold and silver posting record-breaking gains. Higher gold prices drove a rally in basic materials sectors, particularly benefiting markets like South Africa where stronger precious metals prices supported index performance. |
Precious Metals Commodities Safe Haven Inflation Hedge Mining | |
Trade PolicyUS trade policy remained a key market theme, though concerns were less headline-dominating than earlier in the year. Companies globally continued reconfiguring supply chains to reduce dependence on the US and China. Progress on US-China trade talks benefited emerging markets, while tariff uncertainties affected various regions differently. |
Tariffs Supply Chain China Geopolitics Trade Wars | |
| 2025 Q2 |
Trade PolicyUncertainty over US trade tariffs dominated markets in Q2, with President Trump unveiling Liberation Day tariffs that were later suspended for 90 days to allow negotiations. The initially announced 10% tariff on all US imports and higher reciprocal tariffs sparked volatility before markets recovered on the more conciliatory approach. |
Tariffs Trade Negotiations Liberation Day Reciprocal |
AIArtificial intelligence continued to drive market performance with the Magnificent 7 stocks staging a strong recovery after earlier weakness. Taiwan benefited from continued investor optimism about AI, while technology stocks with AI exposure led gains in the US market. |
Artificial Intelligence Technology Magnificent 7 Taiwan Recovery | |
Defense SpendingDefense stocks continued their strong performance amid an agreement at the NATO summit for countries to lift defense spending. The industrials sector, particularly defense companies, led advances in European markets during the quarter. |
NATO Defense Military Industrials Spending | |
RatesCentral banks neared the end of their rate cutting cycles with the ECB cutting twice by 25bps each time and the Bank of England cutting to 4.25%. The focus shifted from monetary policy to fiscal policy concerns and debt sustainability as rate cutting cycles concluded. |
Central Banks Rate Cuts ECB Bank of England Monetary Policy | |
CryptoDigital asset markets were shaped by major regulatory developments with both Bitcoin and Ethereum returning more than 30% during the quarter. The US Senate passed the Genius Act providing clarity for stablecoin regulation, supporting institutional adoption of blockchain technology. |
Bitcoin Ethereum Stablecoins Regulation Blockchain | |
| 2024 Q4 |
ValueThe portfolio trades at approximately 8x CAPE, significantly cheaper than the market's cheapest quintile at 10x CAPE. Value stocks trade at a 65% discount to growth versus the long-term discount of 40%, presenting attractive opportunities for patient investors. |
Value CAPE Discount Growth Cheapest |
AIThe Magnificent 7 companies have considerable investments in AI, creating a crowded trade with fragility in valuations. The AI hype was highlighted by the dramatic selloff on January 27th when stocks priced for perfection faced corrections. |
AI Magnificent Hype Crowded Selloff | |
| 2024 Q3 |
ValueThe team emphasizes their disciplined value investing approach, focusing on stocks trading at large discounts to fair value. They highlight that more than a century of data shows value investing outperforms on average and over time, requiring patience and consistency to deliver long-term performance advantages. |
Value Discount Fair Value Outperformance Discipline |
BanksUK banks have delivered higher returns than the Nasdaq-100 since end of 2020, with total returns of 102% versus 60%. NatWest and Barclays are highlighted as examples of strong operational performance finally translating to share price appreciation through significant shareholder returns via dividends and buybacks. |
Banks NatWest Barclays Returns Buybacks | |
BuybacksThe letter extensively discusses share buyback programs as a key driver of shareholder returns. NatWest distributed £12.5bn to shareholders over three years equal to half its market cap, while Barclays is returning £10bn over three years representing 40% of its market cap. |
Buybacks Shareholder Returns Capital Return Market Cap Distribution | |
| 2024 Q2 |
ValueThe fund maintains a concentrated value approach despite recent underperformance relative to growth stocks. The manager emphasizes that valuations matter over longer time horizons and believes the cheapest part of the market is meaningfully undervalued versus its long-term history. They expect value to outperform in the coming decade as market concentration reverses. |
Value Undervalued Cheap Multiples Outperformance |
JapanThe portfolio has exposure to deep-value Japanese companies benefiting from regulatory reform and improved capital allocation. Several Japanese holdings have converted strong operational performance into shareholder returns, with companies like Nippon Television Holdings announcing buybacks and auto suppliers NHK Spring and Tokai Rika demonstrating value investing opportunities. |
Japan Regulatory Reform Capital Allocation Buybacks Auto Parts | |
Small CapsThe fund has significant exposure to US midcap consumer-facing businesses with solid long-term franchises that have fallen to attractive prices due to cyclical headwinds. These include companies like Stanley Black & Decker, Mohawk Industries, La-Z-Boy, and Sally Beauty. |
Small Caps Midcaps Consumer Cyclical Franchises | |
| 2023 Q4 |
RatesInterest rates act as a financial curfew - when zero, capital flows freely to uneconomic ventures, but higher rates restore discipline and end the era of unlimited free money that characterized the last decade. |
Interest rates Zero rates Capital allocation Monetary policy |
ValueTraditional value businesses face less competitive pressure as subsidized disruptors fail, creating opportunities for profit growth and re-rating given significant valuation dispersion between value and growth. |
Value investing Valuation dispersion Re-rating Traditional businesses |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Nov 14, 2024 | Fund Letters | Schroders Value Perspective Global | NWG.L | NatWest Group plc | Financials | Banks | Bull | London Stock Exchange | buybacks, capital return, Cost Reduction, Operational Turnaround, return on equity, UK Banks, Value | Login |
| Nov 14, 2024 | Fund Letters | Schroders Value Perspective Global | BARC.L | Barclays PLC | Financials | Banks | Bull | London Stock Exchange | Branch Rationalization, capital return, cost-cutting, return on equity, UK Banks, undervalued, Value | Login |
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