| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.7% | 0.1% | 19.2% |
| 2025 |
|---|
| 19.2% |
The Baird Chautauqua International Growth Fund returned +0.11% in Q4 2025, underperforming the MSCI ACWI ex-U.S. Index which returned +5.05%. The quarter proved challenging as several themes that contributed positively earlier in the year reversed sharply, with Greater China holdings giving back gains amid profit-taking and value/cyclical leadership persisting where the fund had no exposure to European banks or materials. International equities delivered their widest annual outperformance versus U.S. equities since the Great Financial Crisis, driven by a weakening dollar, narrowing rate differentials, and attractive relative valuations. A significant de-escalation in U.S.-China trade tensions provided additional relief. The fund's concentrated, conviction-weighted portfolios focus on businesses aligned with secular trends including AI, cloud computing, semiconductor technology, e-commerce, and industrial automation. Key risks include persistent U.S. inflation above the Fed's target, softening labor markets, and potential tariff pass-through to consumer prices. The managers maintain cautious optimism entering 2026 with trade agreements removing severe tail risks.
Quality growth companies with strong competitive advantages, healthy profit margins, robust balance sheets, and consistent cash flow generation are well-positioned to withstand external economic shocks and capitalize on secular growth opportunities including cloud computing, AI, semiconductor technology, e-commerce, and industrial automation.
Looking ahead, we enter the new year with cautious optimism. Trade agreements have removed the most severe tail risks, but the underlying picture is mixed: inflation remains above target in the U.S., labor markets are softening, and central banks are no longer moving in unison. The key question for 2026 is whether the Fed can continue easing or whether persistent inflation forces a pause. Europe offers relative stability, though structural headwinds persist. And in China, policymakers have signaled a shift in priorities toward household incomes, but execution remains uncertain as export tailwinds may fade.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 6 2026 | 2025 Q4 | 2269.HK, 6098.T, 6954.T, ASML, BABA, BEKE, BEPC, CSU.TO, D05.SI, FFH.TO, GALDA.SW, GOOGL, INCY, LULU, MA, MU, PRX.AS, REGN, RYA.L, SCHW, SE, TEAM, TEMN.SW, TJX | AI, Automation, China, growth, international, semiconductors, Trade Policy, value | - | AI-related infrastructure demand drove commodities rally and memory semiconductors delivered outsized returns as high-bandwidth memory demand for AI datacenters rewarded players in that consolidated industry. Fanuc showcased significant advancements in AI-enabled robotics with commercialization potentially arriving in coming years. Significant de-escalation in U.S.-China trade tensions with Presidents Trump and Xi reaching agreement in October. U.S. reduced fentanyl-related tariffs and extended suspension of reciprocal tariffs for one year. Average effective U.S. tariff rate remains elevated at 17% compared to 2-3% at end of 2024. Economic data remained mixed despite trade war stabilization. Exports resilient but domestic demand stubbornly weak. Property sector downturn continues in fifth year. Policymakers identified raising household incomes as priority for boosting consumption, signaling recognition that economy's reliance on exports has become precarious. Memory semiconductors delivered outsized returns as high-bandwidth memory demand for AI datacenters rewarded players in that consolidated industry. Micron reported strong results with improved pricing in both DRAM and NAND, with demand continuing to outpace supply and management seeing tightness across 2026. Fanuc reported strong robot orders up 38% year-over-year, driven by reshoring-related automation demand in North America, European automation investments, and new energy vehicle spending in China. Company showcased significant advancements in AI-enabled robotics at international robot show. Sea Limited reported strong results with revenue growing 38% and gross merchandise value growing 28%, though Shopee's adjusted EBITDA margin declined sequentially as management signaled preference for growth over near-term margin optimization with ongoing investments in logistics and fulfillment capabilities. |
| Oct 13 2025 | 2025 Q3 | 6160 HK, ADYEN NA, BABA, CSU, GMAB, TCS IN | Artificial Intelligence, emerging markets, Global Growth, healthcare, valuation | - | The fund reports moderate returns driven by resilient performance in technology and consumer sectors, while maintaining exposure to long-term structural growth themes in AI adoption and healthcare innovation. Managers emphasize disciplined valuation and high-quality companies across Europe and Asia despite macro uncertainty. |
| Aug 7 2025 | 2025 Q2 | - | Franchises, Global Growth, innovation, international, valuation | - | The letter highlights international growth opportunities driven by innovation outside the U.S. Management stresses selective exposure to high-quality global franchises benefiting from local market leadership. Valuation discipline complements long-term growth orientation. |
| 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 |
AutomationFactory automation represents long-term structural growth opportunity. Keyence leads in sensors and machine-vision systems with 80% margins supported by direct sales model. Structural trends include rising automation, reshoring, and growing complexity in electric vehicle manufacturing providing long runway for growth. |
Factory Automation Industrial Sensors Machine Vision Robotics Industrial IoT | |
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 | |
E-commerceSeveral investments in e-commerce leaders across Asia and Latin America, including MercadoLibre, Sea Limited and Alibaba, faced a more competitive operating environment during the period. As long-term investors, SGA observes that competitive intensity in these markets tends to ebb and flow over shorter time horizons, with market leaders typically emerging from such periods with strengthened strategic positions given inherent network effects. |
Marketplaces Competition Network Effects Asia Latin America | |
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 | |
Trade PolicyRecent tariff policies continued to negatively impact U.S. consumers and companies throughout the year. However, international companies have been finding new trade arrangements and growth opportunities, benefiting from shifts in global trade patterns as the new U.S. administration alters terms of international cooperation. |
Tariffs International Growth Cooperation Impact | |
| 2025 Q3 |
AI Adoption |
|
Emerging marketsGlobal equities, especially those outside the U.S., powered equity returns. In emerging markets, shares of companies linked to commodities were the strongest performers as commodities rallied. Even after a strong year for international and emerging markets shares, we still see some of the best value in the world in these areas. |
International Commodities Non-US Best Value | |
GrowthGrowth retained a narrow edge for the full year in large caps despite underperforming in Q4. Technology and Communication Services delivered exceptional longer-term returns, though near-term leadership may remain more evenly distributed. A sustained Growth resurgence will likely depend on renewed confidence in AI-driven earnings. |
Growth Technology AI Communication Services Mega-cap | |
| 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 |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| 2269.HK | WuXi Biologics' new order momentum remains robust, and its capex plan is progressing as scheduled. The stock had appreciated over 100% in the first three quarters of the year and faced some profit-taking in 4Q25. |
| 6954.T | Fanuc reported September quarter results that beat consensus estimates, raising full-year operating profit guidance by 10% on demand recovery and improved utilization rates. Robot orders were particularly strong, up 38% y/y, driven by reshoring-related automation demand in North America, European automation investments, and new energy vehicle spending in China. Furthermore, at an international robot show in December, Fanuc showcased significant advancements in AI-enabled robotics, with commercialization that may arrive in the coming years. |
| ASML | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| BABA | Alibaba was a detractor during the quarter after the company reported mixed fiscal Q2 results. While cloud revenue growth accelerated and margins remained stable, the core commerce business struggled with slowing growth and significant profit pressure, particularly in the quick commerce segment where heavy investment and intense competition led to a sharp decline in profitability. |
| BEKE | Chinese property platform KE Holdings also finished lower as investor confidence waned amid reported margins and earnings momentum reported lower than expectations, overshadowing headline revenue growth. |
| CSU.TO | Broad pressure on the stocks of software companies enabled us to initiate a position in Constellation Software. This is a unique business we had on our radar for a long time but were never able to purchase due to its high valuation. At its core, the company is a permanent capital vehicle designed to acquire 'vertical market software' (VMS) businesses and hold them indefinitely. |
| D05.SI | We have followed the company for many years, but aside from occasional trades, we had not felt compelled to build a meaningful position in a business—even one that is an industry leader—whose business is traditionally mainly asset-based lending and whose earnings are still meaningfully influenced by interest-rate cycles. Over the previous two years, we have been increasingly impressed by the extent to which DBS has converted scale and technology into a structural economic moat. |
| FFH.TO | In the Philippines we hold Ayala Corporation; and we hold Fairfax India. The last of these is a little anomalous in that India is not an undervalued market; we have faith in the ability of Fairfax to invest successfully for the long term. |
| GALDA.SW | The Switzerland-based pharmaceutical company's stock has outperformed, driven in part by strong sales growth of its prescription biologic treatment for moderate to severe eczema. The company raised guidance during its last earnings call, reflecting continued strong demand for its products. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| INCY | Biopharma Eli Lilly, biotech stocks Incyte and United Therapeutics, and life sciences giant Danaher all contributed positively to strong Q4 performance. |
| LULU | This downward pressure was partially mitigated by the 28% increase in Lululemon's stock from our purchase price of $162 per share. |
| MA | The enduring appeal of card payments is their universality. Consumers trust that Visa and Mastercard will be accepted globally. After more than 20 years of litigation, Visa and Mastercard agreed to yet another settlement that gives merchants greater flexibility |
| MU | Core gains were led by investments in the Technology sector including Micron |
| PRX.AS | Prosus is a core, long-term holding primarily valued for its substantial stake in Tencent, a company we believe has significant growth potential and a strong global competitive advantage. A key element of our thesis is that Prosus's current market capitalization is less than the value of its Tencent holding alone. In addition to the Tencent stake, Prosus holds an estimated $35 billion in other listed and unlisted assets. |
| REGN | Performance was driven by strength in large-cap longs, specifically Regeneron |
| RYA.L | After posting an in-line September quarter and providing a better-than-expected outlook for the holiday travel season based on forward bookings, Ryanair outlined a bullish long-term outlook. Based on continued industry capacity constraints and the company's widening unit cost advantage, Ryanair believes it can raise fares while maintaining its significant value gap to competitors and increase net profit per passenger from €10 today to €12 to €14 over the next decade. |
| SCHW | We also added to The Charles Schwab Corporation, which is benefiting from positive earnings revisions, expanding margins, and higher capital returns after having repaid nearly all of its high cost funding. |
| SE | During the quarter, we initiated a new position in Sea Limited, a Southeast Asian consumer internet company with an integrated ecosystem combining e-commerce, digital payments, and entertainment. Sea has a diversified business model, with its Shopee e-commerce platform, a mobile-centric marketplace that provides integrated payments, logistics infrastructure, and seller services. |
| TEAM | We sold Atlassian, which produces collaboration software, as we reduced our overweight exposure to software because we feel that AI has widened the range of outcomes for predominantly seat-based revenue models. |
| TEMN.SW | Temenos reported solid 3Q25 results and raised FY25 guidance. Management commented on several large deals in the pipeline for 4Q25 and a stable sales environment. The strong results amid negative market sentiment post the recent CEO departure led to significant price appreciation. |
| TJX | TJX Companies, an off-price retailer, delivered solid third-quarter results and had a strong start to the fourth quarter as better merchandise availability yielded broader and higher-quality assortments that supported traffic, same-store sales and earnings growth. |
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