| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Renaissance's International Small Cap Equity strategy delivered positive absolute returns and outperformed its benchmark in Q4 2025, capping off a strong year for international equities that saw the largest outperformance versus U.S. peers in over fifteen years. The portfolio benefited from an underweight to Health Care and positive stock selection, particularly in Communication Services. Key contributors included Tower Semiconductor, which gained from accelerating AI demand and capacity expansion plans, while Paysafe was the largest detractor due to weak growth and regulatory headwinds. Portfolio activity included adding Aris Mining, a Colombian gold miner positioned to benefit from elevated gold prices and production expansion, and TravelSky Technology, a Chinese aviation IT provider benefiting from travel recovery. The team exited Nomad Foods and Golar LNG due to margin pressures and earnings headwinds. Looking ahead, tariff implementation uncertainty poses risks to 2026 global growth, though international equities continue offering compelling value at a 33% discount to U.S. peers with double-digit earnings growth expected.
International small cap equities offer compelling value trading at a 33% discount to U.S. peers with double-digit earnings growth expected, despite tariff uncertainties and mixed regional dynamics.
International equities continue to offer a compelling mix of value and growth, trading at a 33% discount to U.S. peers, with double-digit earnings growth expected in 2026 and 2027.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 21 2026 | 2025 Q4 | 0696.HK, 4536.T, ARIS.TO, DCBO, EFXT, ERO, GLNG, IMOS, KLBN4.SA, NOMD.L, PSFE, PTXKY, RDWR, TMVWY, TSEM, TTVSY | AI, China, Copper, gold, international, Mining, semiconductors, small cap |
TSEM PSFE ARIS CN |
Gold rose 64% in 2025, its best year since 1979, driven by concerns over Federal Reserve independence, U.S. government deficit, geopolitical tensions, and central banks diversifying from U.S. dollar-based assets. Precious metals are viewed as dollar and inflation hedges. Copper had a strong year as supply disruptions at major mines continued. Demand is expected to rise in 2026 as copper is a key component in electrification push, maintaining imbalanced supply/demand and upward price pressure. Chinese technology companies with AI exposure performed well during the year. Tower Semiconductor benefited from accelerating AI demand, with strong momentum in RF infrastructure and silicon photonics businesses where customer demand far outpaces current supply. Chinese stocks performed well, particularly technology companies with AI exposure. However, hopes for economic growth acceleration failed to materialize as meaningful stimulus follow-through did not occur. Government officials have signaled further stimulus in 2026 with more proactive fiscal policy. |
| Oct 21 2025 | 2025 Q3 | 425 HK, FIHL, NOMD, TSEM IT | China, EVs, International Equities, semiconductors, tariffs |
TSEM TSEM |
International small caps outperformed U.S. equities with strong gains in Asia and Europe. Tower Semiconductor and Minth Group illustrate exposure to AI hardware and EV components. The managers see long-term opportunities in undervalued international equities, especially as tariffs and macro risks stabilize. |
| Jul 21 2025 | 2025 Q2 | BBY LN, CLS, FINV | active, international, meanreversion, SmallCap, valuation |
CLS CN BBY LN |
The letter highlights opportunities in international small-cap equities where valuations remain depressed relative to U.S. peers. Inefficient coverage and lower investor attention create mispricings that active managers can exploit. A disciplined focus on fundamentals aims to capture mean reversion over a full cycle. |
| Mar 31 2025 | 2025 Q1 | FINV, ITRN, TGLS, TIGO, TSEM IT, YUEIY | - | - | |
| Dec 31 2024 | 2024 Q4 | ATAT, CLS, ERO CN, PLYA, STNG | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency | |
CopperMarket shifted from deficit to surplus as Chinese demand stalled for first time in 25 years while supply expanded by 3 million tonnes since 2021. Exchange inventories reached 1.2 million tonnes, highest since 2003. Bearish outlook as China transitions from under-consuming to over-consuming copper. |
Base Metals China Inventories Surplus | |
GoldGold returned +65% in dollars in 2025, driven by broadening demand from central banks, professional and retail investors. Central banks now hold 24% of reserves in gold versus 23% in US Treasuries for the first time. Maintained 12% portfolio allocation throughout the year. |
Central Banks Reserves Diversification Demand | |
| 2025 Q3 |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency |
InternationalHigh-quality international businesses trade at fractions of US multiples, with the manager positioning clients to take advantage of this divergence. Despite US equity market dominating investor mindshare, the rest of the world returned 32.6% in dollar terms in 2025 versus SPY's 17.7%. |
Discount Opportunity Outperformance Quality Positioning | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
| 2025 Q2 |
InternationalHigh-quality international businesses trade at fractions of US multiples, with the manager positioning clients to take advantage of this divergence. Despite US equity market dominating investor mindshare, the rest of the world returned 32.6% in dollar terms in 2025 versus SPY's 17.7%. |
Discount Opportunity Outperformance Quality Positioning |
ValuationAI-related companies continue to command premium valuations while other sectors remain reasonably priced. This valuation divide continues to guide investment activity, with the fund remaining wary of companies trading at exceedingly high valuations that imply exceptional multi-year earnings growth. |
Premium Divide Discipline Stretched Reasonable |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 21, 2025 | Fund Letters | Michael E. Schroer | TSEM | Tower Semiconductor Ltd. | Information Technology | Semiconductors | Bull | NASDAQ | AI, data centers, diversification, Foundry, growth, Photonics, semiconductors | Login |
| Oct 21, 2025 | Fund Letters | Michael E. Schroer | TSEM | Tower Semiconductor Ltd. | Information Technology | Semiconductors | Bull | NASDAQ | AI, data centers, diversification, Foundry, growth, Photonics, semiconductors | Login |
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | CLS CN | Celestica Inc. | Information Technology | Electronic Manufacturing Services | Bull | New York Stock Exchange | AI, Canada, electronics, hyperscalers, manufacturing, Networking | Login |
| Jul 21, 2025 | Fund Letters | Michael E. Schroer | BBY LN | Balfour Beatty plc | Industrials | Construction & Engineering | Bull | New York Stock Exchange | backlog, construction, Defense, infrastructure, Projects, UK | Login |
| Jan 21, 2026 | Fund Letters | Michael E. Schroer | TSEM | Tower Semiconductor Ltd. | Information Technology | Semiconductors | Bull | NASDAQ | AI, Capacity, Margins, Photonics, Rf, semiconductors | Login |
| Jan 21, 2026 | Fund Letters | Michael E. Schroer | PSFE | Paysafe Limited | Financials | Transaction & Payment Processing Services | Bear | New York Stock Exchange | Fintech, growth, Margins, Payments, Regulation | Login |
| Jan 21, 2026 | Fund Letters | Michael E. Schroer | ARIS CN | Aris Mining Corporation | Materials | Gold | Bull | New York Stock Exchange | deleveraging, expansion, Freecashflow, Gold, Mining | Login |
| TICKER | COMMENTARY |
|---|---|
| 0696.HK | We also purchased TravelSky Technology (China), a provider of information technology solutions for the aviation and travel industry in China. The continued recovery of international travel following the prolonged COVID downturn and the expansion of the visa-free policy in China should support near-term growth, while the Systems Integration segment should be a long-term beneficiary of the Chinese government's target to upgrade 400 airports by 2035. |
| ARIS.TO | During the quarter, we purchased Aris Mining (Canada), a gold miner with operations in Colombia. The company has significant growth potential from expansion plans for its mines in Colombia, as overall gold production is expected to double over the next two years. High free cash flow from elevated gold prices has allowed the company to deleverage quickly and should help the company finance future growth projects in Colombia and Guyana with internally generated cash. |
| GLNG | We also sold Golar LNG (Bermuda), as earnings in 2026 will be impacted by the completion of its contract and the relocation of its Hilli FLNG vessel. |
| NOMD.L | Conversely, we sold Nomad Foods (United Kingdom) during the quarter, as the frozen food manufacturer's margins will likely be negatively impacted by rising input costs that are not expected to be immediately recovered through price increases. |
| PSFE | The largest detractor from performance was Paysafe (United Kingdom). The online payments provider reported a weak quarter, with Digital Wallets growing more slowly than anticipated and margins in the Merchant Solutions segment coming under pressure. Given ongoing regulatory headwinds and a growth trajectory that continues to fall short of expectations, our investment team chose to exit the position. |
| TSEM | Tower Semiconductor is a foundry of analog semiconductor solutions. During the quarter, management reported strong results in its optical semiconductor business, leading management to pull forward the timeline for achieving its long-term goals. |
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