| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14% | 17.5% | 6.5% |
Emerald's Growth Equity Strategy returned 17.5% net in Q2 2026, driven by overweights in semiconductors, cybersecurity, and communications. Applied Materials, Tokyo Electron, and Fortinet surged 88-113% as AI infrastructure demand accelerated. The portfolio was refocused on software companies positioned as long-term AI winners, with ServiceNow emerging as the enterprise AI orchestration layer and cybersecurity leaders becoming mission-critical partners rather than disruption victims. The manager acknowledges AI is in an advanced bubble stage, with their proprietary indicator flashing warning signs, particularly around speculative 2nd and 3rd tier semiconductor names. However, they believe the final parabolic rally seen in historical bubbles is missing, and valuations remain well below dot-com extremes. Quality growth stocks have been dramatically de-rated on unwarranted AI disruption fears, creating selective opportunities. The strategy stays fully invested given AI's transformational potential and the risk of exiting too early, focusing on deepening understanding of underlying businesses to identify sustainable long-term winners. Broad enterprise AI adoption is expected in 2027-2028, providing a multi-year runway.
AI represents the most consequential innovation in human history and is transitioning from hype to implementation, creating a multi-year investment opportunity despite near-term bubble risks. The manager maintains concentrated exposure to high-quality AI beneficiaries across semiconductors, cybersecurity, and enterprise software, while avoiding speculative 2nd and 3rd tier names. Cybersecurity is viewed as a major AI winner rather than disruption victim, with leading platforms becoming mission-critical partners. Quality growth stocks have been dramatically de-rated due to unwarranted AI disruption fears, creating selective opportunities. The manager stays fully invested given the risk of missing long-term upside outweighs timing short-term corrections, focusing on companies with sustainable competitive advantages and clear paths to benefit from AI adoption.
The manager expects to stay fully invested in AI-related themes despite acknowledging bubble risks, as many signs associated with a bubble bursting are currently missing. They believe AI is the most consequential innovation in human history and the willingness to invest will remain strong as long as belief in AI's transformational power remains unbroken, adoption keeps growing, and financing conditions remain supportive. The focus will be on deepening understanding of AI technology and businesses to allocate funds into the right quality companies with the highest chance of being long-term winners. Broad enterprise AI adoption is not expected until 2027-2028, providing a longer runway for the theme.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 15 2026 | 2026 Q2 | 6857.T, 8035.T, AMAT, AMZN, ASML, AVGO, BKNG, CRWD, FTNT, GOOGL, META, MSFT, NOW, NVDA, SAP, SNPS, TMO, ZS | AI, Bubble, cybersecurity, Enterprise, quality growth, semiconductors, software, technology |
FTNT CRWD 6857.T NOW |
Emerald returned 17.5% in Q2 on semiconductor and cybersecurity strength, but warns of bubble risks in speculative AI names. The manager stays fully invested in high-quality AI beneficiaries, viewing cybersecurity as a major winner and enterprise software leaders as orchestration layers rather than disruption victims. Quality growth stocks offer compelling value after dramatic de-rating on unwarranted AI fears. Multi-year AI adoption runway supports staying the course. |
| Mar 31 2026 | 2026 Q1 | AVGO, BKNG, FTNT, NOW, ORCL, SAP | AI, cybersecurity, Enterprise, growth, semiconductors, software, technology |
FTNT AVGO NOW ORCL SAP |
Growth equity strategy down 9.4% in volatile Q1 marked by AI fears and Iran war. Manager trimmed semiconductor winners, added beaten-down software quality at attractive valuations. Maintains conviction that enterprise software with deep IT integration benefits from AI rather than faces disruption. Focus on quality growth companies positioned for long-term AI adoption cycle. |
| Jan 14 2026 | 2025 Q4 | 0700.HK, 6857.T, 8035.T, AAPL, AMZN, ASML, AVGO, AZN.L, BABA, FTNT, GOOGL, META, MSFT, NOW, NVDA, ORCL, TMO, TSM | AI, China, Cloud, cybersecurity, growth, infrastructure, semiconductors, technology | - | Emerald delivered 16.0% net returns in 2025 led by semiconductor equipment stocks. The manager strategically positioned for AI infrastructure growth while re-entering Chinese technology through Alibaba and Tencent following regulatory environment improvements. Despite AI bubble concerns and passive investing distortions, they maintain conviction in quality companies with strong moats, believing bottom-up research will capitalize on long-term transformation opportunities. |
| Sep 30 2025 | 2025 Q3 | 1211.HK, 8035.T, AMAT, AMZN, ASML, AVGO, CRM, DDOG, ENTG, FTNT, GOOGL, INTU, LSEG.L, MDT, MSFT, NOW, ORCL, SAP, TMO, ZS | AI, Bubble, Cloud, growth, infrastructure, semiconductors, technology | - | Growth Equity Strategy gained 4.3% in Q3 driven by AI infrastructure winners Oracle, Broadcom, and ASML. Oracle's transformational cloud growth positions it among tech giants with $455B contracted revenue. AI bubble risks are rising with 40-100% gains across tech plays, but long-term adoption opportunities continue expanding. Portfolio rebalanced through trimming winners and adding Medtronic and BYD. |
| Jun 30 2025 | 2025 Q2 | - | AI, earnings, Economic Growth, Fed policy, rates, small caps, technology | - | Markets hit new highs in Q3 driven by Fed rate cuts, AI investment momentum, and broadening leadership to small caps. The Russell 2000 surpassed 2021 highs while technology spending grew 14% year-over-year on AI buildout. Looking ahead, markets are positioned for a soft landing scenario though tight credit spreads and expensive AI valuations present risks. |
| Mar 31 2025 | 2025 Q1 | - | Fed policy, inflation, Market Commentary, tariffs, Trade Policy, volatility | - | Trade policy volatility dominated 2025's first half, driving dramatic market swings between Q1 selloff and Q2 rebound. Despite tariff uncertainty causing inflation expectations to rise, actual inflation remained subdued. The S&P 500 ended the half up 6.1% after fully reversing Q1 losses, suggesting markets view tariff impacts as modest and temporary. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI is described as the most consequential innovation in human history, with adoption progressing rapidly among consumers and enterprises. The manager sees AI moving from hype to implementation, with positive impacts on sales and productivity becoming visible. However, broad enterprise AI adoption and deployment of Agentic AI is not expected until 2027-2028 due to infrastructure and security requirements. |
Artificial Intelligence Enterprise Adoption Agentic AI Infrastructure Productivity |
Semiconductor CycleThe manager highlights a parabolic rise in semiconductor stocks, particularly memory chips and semiconductor equipment providers, driven by AI demand. Applied Materials, Tokyo Electron, and Advantest were top performers. However, the manager expresses concern about the sustainability of the rally, particularly in 2nd and 3rd tier semiconductor names, and notes the excesses seen in Q2 as potential bubble indicators. |
Memory Chips Semi Equipment HBM Testing Valuations | |
CybersecurityThe manager is highly bullish on cybersecurity, viewing it as a major beneficiary of AI rather than being disrupted by it. Fortinet and CrowdStrike reported strong demand driven by an increasingly complex threat environment intensified by AI. The manager maintains an overweight position and expects growth rates at leading cybersecurity firms to accelerate for years to come due to enlarged attack surfaces and shortened response times. |
Threat Environment Platform Solutions AI Defense Demand Acceleration Attack Surface | |
BubbleThe manager acknowledges clear signs that AI is in an advanced stage of a bubble, with the Emerald Tech Sector Bubble Indicator showing deterioration in valuation and fundamental sections. However, they believe the bubble is not about to burst yet, as the final explosion of investor euphoria and parabolic market rise seen in historical bubbles is still missing, and valuations are nowhere near dot-com or Nifty-Fifty extremes. |
Valuation Extremes Investor Euphoria Market Excesses Bubble Indicators Historical Parallels | |
Enterprise SoftwareSoftware stocks continued to underperform in Q2 due to fears of AI disruption, but the manager's refocusing on strongest business models started to bear fruit. ServiceNow is positioned as the orchestration and governance layer for enterprise AI, moving from 'platform of platforms' to 'AI of the AIs'. The manager believes not all software businesses are equal and some will be net beneficiaries of AI, requiring a selective approach. |
AI Disruption Platform Strategy Workflow Automation Business Models Selectivity | |
QualityThe manager notes that valuations for high-quality growth stocks have compressed drastically to levels not seen in a very long time, driven by fear of AI disruption to established moats. They believe this fear is often unwarranted and see an excellent investment opportunity for disciplined, long-term quality-growth investors. The portfolio maintains a healthy allocation to out-of-favor quality growth stocks as potential support if speculative names run out of momentum. |
Valuation Compression Competitive Moats Long-term Growth Selectivity Business Quality | |
| 2026 Q1 |
AIAI presents both disruptive risk and opportunity for software players, with selectivity being crucial. Enterprise AI adoption remains at an early stage with meaningful deployment unlikely before 2027-2028. Software deeply integrated into IT systems and managing mission-critical data will benefit from AI agents rather than be disrupted. |
Enterprise Software Agentic AI Software Integration AI Adoption Mission Critical |
CybersecurityGrowing cybersecurity risks and increasing complexity create a push towards security platforms. Fortinet's integrated product approach is resonating with customers, particularly in the SMB segment and increasingly with larger enterprises. AI enhances threat detection capabilities. |
Security Platforms SMB Enterprise Security Threat Detection Network Effects | |
SemiconductorsSemiconductor equipment stocks were the best performers in Q1. The fund trimmed positions in Applied Materials and Tokyo Electron after steep rallies in late January and February. Broadcom delivered strong AI revenue guidance well above expectations. |
Semi Equipment AI Revenue Position Trimming Performance Guidance | |
Enterprise SoftwareValuations across enterprise software have roughly halved over the past six months despite healthy business results and solid growth outlooks. This represents a valuation dislocation driven by investor fears rather than fundamentals, creating entry points into high-quality names. |
Valuation Dislocation SaaS Enterprise IT Growth Outlooks Quality Names | |
| 2025 Q4 |
AIManager believes market's assessment of AI risk differs from their own, with approximately 60% of underperformance attributed to positions where AI impact concerns drove stock declines. They view AI-impacted investments as having vast addressable markets and sustainable competitive advantages, expecting valuations to expand as market perspective aligns with theirs. |
Artificial Intelligence Disruption Valuation Software Analytics |
QualityFund exclusively invests in businesses with superior characteristics including high barriers to entry, sustainable competitive advantages, and durable growth prospects. Manager notes their focus on leading businesses has been foundation of strategy since inception, though this approach was out of favor in 2025 as investors sold higher-quality investments for riskier stocks. |
Earnings Quality Competitive Advantages Margins Cash Flow | |
Small CapsStrategy of owning competitively advantaged small and medium-sized businesses remained out of favor for most of the quarter. Fund observed improvement in early December as investors showed renewed enthusiasm for high-quality small-cap stocks, with significant outperformance potential when their style comes back into favor. |
Small Cap Growth Russell 2000 Style Rotation | |
| 2025 Q3 |
AIThe AI arms race among technology companies is in full flight with massive investments in AI infrastructure. The long-term opportunity in Generative AI keeps growing as adoption rates increase and usage broadens, with 77% of companies using AI for automation patterns. However, risks are rising with more signs of an AI bubble forming. |
Infrastructure LLMs Automation Bubble Investment |
CloudOracle's cloud infrastructure growth guidance was upgraded dramatically, with Oracle Cloud potentially becoming equal to or larger than Google Cloud Platform by FY29-30. Microsoft's Azure accelerated growth to 39% driven by AI demand and digital transformation. |
Infrastructure Hyperscaler Growth Azure OCI | |
SemiconductorsASML's High NA EUV technology is key for future growth with strong competitive positioning for the next 10-15 years. Broadcom is gaining share with XPU customers and is positioned as a prime beneficiary of AI infrastructure buildout through AI chips, networking, and corporate software. |
EUV Lithography XPU Networking Equipment | |
Electric VehiclesBYD's vertically integrated supply chain provides a 15-25% cost advantage over legacy OEMs while maintaining gross margins comparable to Toyota. The company stands out as the most complete and defensible EV platform globally with expertise in electronics and batteries. |
Integration Batteries Cost Platform China | |
| 2025 Q2 |
AITechnology-related investment grew 14% year-over-year in Q2, the fastest pace since the late 1990s, driven by AI industry buildout including high-performance computer chips, cloud architecture, and data centers. Management teams across the AI supply chain report strong demand with spending plans in the hundreds of billions and order backlogs spanning years. AI enthusiasm has fueled outsized gains in technology and semiconductor stocks, though some question whether spending is outpacing potential revenue growth. |
Data Centers Semiconductors Cloud Technology |
RatesThe Federal Reserve cut interest rates by 0.25% in September after a 9-month pause, framing it as a risk management cut to keep economic expansion on track. The central bank updated its policy forecast to include two more rate cuts before year-end with potential for more in 2026. The rate cut marked a shift toward policy support and fueled optimism for a soft landing scenario. |
Monetary Policy Fed Policy Interest Rates | |
Small CapsSmall-cap stocks rallied sharply in anticipation of the Fed's rate cut, with the Russell 2000 surpassing its previous high from 2021 and returning nearly 12% in Q3. Small caps posted their biggest quarter of outperformance over the S&P 500 since Q1 2021 as investors bet that rate cuts would benefit smaller companies. |
Russell 2000 Rate Sensitivity Outperformance | |
| 2025 Q1 |
Trade PolicyTrade policy uncertainty dominated the first half of 2025, with escalating tariffs in Q1 followed by de-escalation in Q2. The administration moved from targeted tariffs on China, Canada, and Mexico to sweeping global tariffs, then shifted toward trade agreements and exemptions. Policy uncertainty remains fluid with court challenges and upcoming deadlines on tariff exemptions. |
Tariffs China Trade War Policy Uncertainty |
InflationTariff uncertainty caused inflation expectations to rise sharply despite actual inflation remaining subdued. Consumer expectations diverged significantly from trailing inflation data, with the University of Michigan survey showing rising expectations while Core CPI continued drifting lower. The debate continues whether companies will pass through tariff costs or absorb them to remain competitive. |
Expectations CPI Tariffs Consumer Pricing | |
VolatilityMarkets experienced dramatic sentiment shifts between Q1 and Q2, creating two distinctly different environments. The S&P 500 fell over 15% in Q1 due to policy uncertainty, then rebounded strongly in Q2 as tensions eased. Factor performance reversed completely, with low volatility outperforming high beta by 20% in Q1, then high beta reversing all underperformance in Q2. |
Sentiment Reversal Factor Beta Swings | |
RatesThe Federal Reserve held rates steady at 4.25%-4.50% due to trade policy uncertainty, adopting a wait-and-see approach. Markets expect gradual rate cuts beginning in September, with approximately 1.25% of cuts anticipated over the next 18 months. The 30-year Treasury yield ranged from 4.40% to 5.10% but ended the half unchanged near 4.80%. |
Fed Cuts Treasury Yield Policy |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 15, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | FTNT | Fortinet | Software - Infrastructure | Systems Software | Bull | NASDAQ | AI-driven Threats, cybersecurity, Enterprise security, Firewall, growth, Network Security, Platform Security, Software | Login |
| Jul 15, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | CRWD | CrowdStrike | Software - Infrastructure | Systems Software | Bull | NASDAQ | AI Security, cloud security, cybersecurity, Endpoint Security, Enterprise security, growth, Platform Security, SaaS | Login |
| Jul 15, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | 6857.T | Advantest | Semiconductor Equipment & Materials | Semiconductor Equipment | Bull | Japan Exchange Group (Tokyo Stock Exchange) | Advanced Semiconductors, AI chips, duopoly, growth, HBM Memory, Japan, semiconductor equipment, Testing Equipment | Login |
| Jul 15, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | NOW | ServiceNow | Software - Application | Application Software | Bull | New York Stock Exchange | AI platform, Digital transformation, Enterprise software, growth, IT Service Management, productivity, SaaS, workflow automation | Login |
| Mar 31, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | FTNT | Fortinet | Software - Infrastructure | Systems Software | Bull | NASDAQ | AI-Enhanced, compounder, cybersecurity, enterprise, network effects, platform, SMB, switching costs | Login |
| Mar 31, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | AVGO | Broadcom | Semiconductors | Semiconductors | Bull | NASDAQ | AI, Asic, Enterprise software, hyperscalers, IT infrastructure, Margins, semiconductors | Login |
| Mar 31, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | NOW | ServiceNow | Software - Application | Application Software | Bull | New York Stock Exchange | Acquisitions, AI agents, cybersecurity, Enterprise software, IT Systems, platform, Vertical Expansion | Login |
| Mar 31, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | ORCL | Oracle | Software - Infrastructure | Systems Software | Bull | New York Stock Exchange | AI training, data centers, hyperscalers, Non-Cancelable Contracts, OpenAI, Rpo, Sublease | Login |
| Mar 31, 2026 | Fund Letters | Emerald Wealth Partners - Growth Equity Strategy | SAP | SAP | Software - Application | Application Software | Bull | New York Stock Exchange | AI agents, cloud migration, Enterprise software, Integrated Solution, Mission-Critical, S/4 Database, supply chain management | Login |
| TICKER | COMMENTARY |
|---|---|
| AMAT | Applied Materials was one of the best performers, up between 88% and 113% in Q2 alone. |
| 8035.T | Tokyo Electron was one of the best performers, up between 88% and 113% in Q2 alone. |
| FTNT | Fortinet was one of the best performers, up between 88% and 113% in Q2 alone. Fortinet beat expectations handily on results and outlook, calling out 'an increasingly complex threat environment that is being intensified by AI' as a driving force that is likely to remain in place for some time. The tailwinds highlighted by Fortinet management have been major drivers of our investment case for the company and cybersecurity leaders in general. |
| SAP | In Q2 we increased our position in SAP as we continued to concentrate our software holdings on companies and market segments that we consider long-term winners from AI. |
| BKNG | We added to Booking.com whose management team seems to be leveraging their existing business successfully using AI. As a result, Booking.com offers a clear path to double digit growth at a moderate multiple. Particularly the switch from BYD into Booking.com added significant value in Q2. |
| ZS | We bought back part of the share of Zscaler sold last year after their large drop since then. We will maintain our overweight in Cyber Security. |
| NOW | At their 2026 Financial Analyst Day ServiceNow positioned itself not as a traditional Software as a Service (SaaS) vendor at risk of being disintermediated by foundation models, but as the orchestration, governance, and action layer on top of which enterprise AI is operationalized. CEO Bill McDermott described the company as moving from being the 'platform of platforms' to being the 'AI of the AIs'. We fully buy into this thesis, which has been at the core of our investment case for some time already. ServiceNow's own internal AI deployment is generating real, measurable productivity savings that fund both growth investment and margin expansion. Management raised internal cost savings to USD 300 million annualized in 2026 and, as a result, expects headcount to be flat year-on-year on 19% higher sales. Also, management raised the bar in their FY2030 projections: doubling subscription revenue by 2030. |
| SNPS | In Q2 we increased our position in Synopsys as we continued to concentrate our software holdings on companies and market segments that we consider long-term winners from AI. |
| CRWD | We met with Michael Sentonas, President CrowdStrike, early July. The discussion centered around the current demand environment, the future role of cyber security incumbents in the age of AI and AI agents and CrowdStrike's market position. As far as demand is concerned Mr. Sentonas stressed that he had never seen such a strong demand environment. The launch of Mythos from Anthropic changed everything. Since then, every CEO and Chief Information Security Officer (CISO) is worried about how to protect their companies. As a result, meeting requests from clients have risen sharply since. In terms of market position Mr. Sentonas mentioned that CRWD had been involved in Mythos for 12 months prior to launch as Anthropic (OpenAI as well) see leading incumbents such as CrowdStrike as mission critical partners that leverage their work. While Mythos focuses on detecting vulnerabilities, patching the holes, dealing with security incidents, and managing cyber security day to day will be done by leading cyber security players. |
| 6857.T | Advantest is one of the most prominent beneficiaries of the surge in demand not only for AI-chips, but high-end semis in general. Advanced chips for AI will use 2-nanometer and 3nm technology that requires high-quality testers. New DRAM chips known as high-bandwidth-memory (HBM) chips are set to be widely adopted due to generative AI, fueling revenue growth for memory testers and the mechatronics division in the years to come. As importantly, there are only two major testing companies left (Advantest and Teradyne), but Advantest dominates AI-testing while innovating at a rapid pace. Based on our two on-site visits and developments since, we believe that Advantest is also the innovation leader among the two. Even though the stock has gone up 6-fold since our initial purchase two years ago and valuation is demanding, the fundamental outlook remains highly promising. What's more, since testing is only a small percentage of semi-spend (1%) and the need for more intense and advanced testing is likely to continue to grow, estimates are likely to continue rising as a consequence. Hence, despite the high valuation, we stay the course. |
| ASML | ASML HOLDING is the top holding at 9.77% of the portfolio. |
| GOOGL | ALPHABET INC-CL A is the second largest holding at 6.65% of the portfolio. |
| NVDA | NVIDIA CORP is the third largest holding at 6.49% of the portfolio. |
| AVGO | BROADCOM INC is the fourth largest holding at 5.64% of the portfolio. |
| MSFT | MICROSOFT CORP is the sixth largest holding at 5.16% of the portfolio. |
| AMZN | AMAZON.COM INC is the seventh largest holding at 4.90% of the portfolio. |
| TMO | THERMO FISHER SCIENTIFIC INC is the eighth largest holding at 4.43% of the portfolio. |
| META | META PLATFORMS INC is the ninth largest holding at 3.80% of the portfolio. |
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