| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.5% | -11% | -11% |
Magellan Global Opportunities Fund underperformed in Q1 2026, declining 11.0% versus the benchmark's 6.1% fall, amid significant market volatility driven by AI disruption fears and geopolitical tensions. The quarter began with renewed US-EU trade tensions and AI concerns after Anthropic's Claude tools triggered software sector rotation. Late-quarter military action involving the US, Israel, and Iran created energy supply disruptions, with oil prices surging 70% and the Strait of Hormuz becoming a critical chokepoint. This shifted markets from modest growth expectations to a stagflationary environment. Top contributors included Taiwan Semiconductor, which raised revenue guidance on strong AI chip demand, US Bancorp benefiting from yield curve steepening, and ASML with exceptional bookings. Key detractors were Microsoft, SAP, and Universal Music Group, all affected by AI disruption concerns. The portfolio manager views the correction as creating compelling opportunities in high-quality companies, with expected returns now at post-COVID levels, and is selectively increasing positions while remaining mindful of elevated risks.
The fund invests in outstanding companies at attractive prices while exercising deep understanding of the macroeconomic environment to manage investment risk, focusing on companies with sustainable competitive advantages that can deliver returns on capital in excess of their cost of capital.
The manager views the elevated risk environment as creating opportunities to invest in high-quality stocks with strong long-term earnings growth prospects at compelling valuations, while remaining mindful of the elevated risk environment.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 17 2026 | 2026 Q1 | ASML, MSFT, SAP, TSM, USB | AI, energy, Geopolitical, semiconductors, software, technology | SAP | Magellan Global Opportunities Fund fell 11.0% in Q1 2026 as AI disruption fears and Middle East conflict drove energy prices up 70% and created stagflationary pressures. Semiconductor names like TSMC and ASML outperformed on AI chip demand while software stocks struggled. The manager sees compelling opportunities emerging from the correction in high-quality names. |
| Jan 18 2026 | 2025 Q4 | AMT, AMZN, DEO, DG, ES, GOOGL, LLOY.L, MA, META, MSFT, NESN.SW, SAP, TSM, UNH, ZBH | AI, Cloud, Consumer Staples, global, large cap, Quality, technology | - | Magellan Global Opportunities delivered 13.0% in 2025, outperforming benchmarks through selective positioning in quality companies. AI leaders like Alphabet drove performance while defensive positioning in consumer staples like Nestlé provides stability. Despite positive fiscal and monetary catalysts for 2026, elevated valuations and geopolitical risks support continued defensive approach focused on sustainable competitive advantages. |
| Sep 30 2025 | 2025 Q3 | ADS.DE, AMT, AMZN, AVGO, DEO, ES, GOOGL, MA, META, MSFT, NESN.SW, NKE, NVDA, ORCL, PUM.DE, RKT.L, SAP, T, TSM, UMG.AS, UNH, YUM | AI, consumer, global, growth, Quality, semiconductors, technology | - | Magellan delivered solid Q3 returns despite lagging benchmark in risk-on environment. Portfolio emphasizes quality companies with competitive moats across technology and consumer sectors. Manager maintains cautious stance on full market valuations while identifying individual stock opportunities. Recent AI rally viewed as increasingly speculative, though constructive on US economic activity supported by Fed easing. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI disruption concerns affected software stocks during the quarter, with fears over earnings durability after Anthropic's new Claude tools. However, the manager views AI as an opportunity for well-positioned companies like SAP, which can leverage rich proprietary data flowing through ERP systems to deliver AI solutions. |
Software Disruption ERP Enterprise |
EnergyThe US-Israel-Iran conflict triggered a sharp escalation in energy costs, with oil prices surging as much as 70% at their peak. The Energy sector outperformed significantly during the quarter, rising 37.7% as the Strait of Hormuz became a global economic chokepoint. |
Oil Geopolitical Inflation Supply Chain | |
SemiconductorsStrong AI chip demand drove TSMC's outperformance, with the company raising 5-year revenue growth guidance by 5 percentage points to 25% CAGR. ASML also benefited from exceptional bookings as customers expanded manufacturing capacity plans in response to strong demand for AI chips. |
TSMC ASML Manufacturing Capacity | |
| 2025 Q4 |
AIAI continues to drive market leadership with mixed performance across mega-cap stocks. Google demonstrated strong AI integration across search and cloud, while Microsoft faced moderating optimism on AI positioning. Meta's AI investments show uncertain returns but management is becoming more agile with capital allocation. |
Artificial Intelligence Cloud Computing Search Advertising Infrastructure |
CloudCloud computing showed acceleration with Amazon's AWS delivering strong Q3 growth as increased capex began generating returns. Microsoft's Azure growth moderated but all incumbent cloud providers are viewed as long-term winners in the AI transition. |
AWS Azure Infrastructure Computing Growth | |
Consumer DefensiveNestlé represents an opportune investment in world-leading consumer brands with favorable long-term growth outlook. The company faces near-term challenges from commodity inflation and leadership changes but possesses strong competitive positioning in coffee, pet care, and confectionery categories. |
Brands Coffee Pet Care Pricing Power Scale | |
| 2025 Q3 |
AIRenewed enthusiasm in the AI trade has driven markets to fresh highs, with large deals announced by OpenAI with Nvidia, Broadcom, Oracle and AMD. However, these deals are somewhat circular and heavily dependent on OpenAI growing and monetising its user base given its limited current revenue. While positive on GenAI's long-term potential, considerable uncertainty remains on the pace and degree of monetisation, resulting in increasing risks to the market. |
OpenAI Monetisation Chips Data Centers GenAI |
SemiconductorsSemiconductor demand sentiment was lifted by announcements of several OpenAI partnerships with Oracle, Nvidia and Broadcom. These were positive developments in their potential to drive incremental demand for AI-related chips and manufacturing capacity. However, focus remains on end-market demand dynamics necessary to support these capacity plans, particularly given single-customer concentration. |
TSMC Nvidia Broadcom Manufacturing Capacity | |
AthleisureAdidas represents a compelling long-term opportunity as the world's #2 player in athletic footwear and apparel. The brand benefits from strong economic moats including brand equity, marketing reach, R&D capabilities and global distribution networks. Adidas consistently reinvests around €3 billion annually in marketing to defend competitive advantages, supporting partnerships with athletes, teams and sporting events. |
Adidas Nike Sportswear Brand Marketing |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 17, 2026 | Fund Letters | Magellan Global Opportunities Fund No. 1 | SAP | SAP SE | Software - Application | Application Software | Bull | - | AI integration, Cloud transformation, Enterprise software, ERP, market leader, Mission-Critical, Predictive analytics, proprietary data, SaaS, workflow automation | Login |
| TICKER | COMMENTARY |
|---|---|
| TSM | TSMC performed strongly in response to strong AI chip demand. This saw TSMC raise their 5-year (2024-29) revenue growth guidance by 5 percentage points to a CAGR of 25% p.a. While the growth will be supported by a large increase in FY26 capex, TSMC also raised its long-term gross margin guidance, signalling confidence in its ability to drive productivity, cost efficiencies and pricing power. Topping this off, TSMC also reported a strong 4Q25 result that beat their guidance, driven by exceptionally strong gross margins. |
| USB | US Bancorp delivered a solid earnings update in the quarter and was expected to benefit from higher Net Interest Income due to a potential steepening in the US yield curve. |
| ASML | ASML reported an exceptional bookings quarter in 4Q25 as customers expanded manufacturing capacity plans in response to strong demand for AI chips and the global shortage in memory chips. Both of these drivers are expected to remain tailwinds over the next two years. Consequently, ASML raised their FY26 growth guidance, which has since been bolstered by supportive announcements by memory customers. |
| MSFT | After performing strongly earlier in the year on accelerating growth in Azure, Microsoft gave back some of the strong performance. This was driven primarily by moderating optimism on Microsoft's AI positioning via its close relationship with OpenAI due to strong execution at Google and Anthropic. While short-term relative performance will continue to be affected by shifting views on AI positioning, taking a longer-term perspective we view all of the incumbent cloud providers as winners. |
| SAP | SAP underperformed on a combination of sector-wide concerns regarding AI disruption and delays in customer upgrades due to the uncertainty created by US tariffs. We consider AI concerns as they relate to SAP as misplaced, and view near-term delays to customer upgrades as irrelevant to its medium-term earnings potential. |
| UMG.AS | Universal Music's share price came under pressure due to concerns about the disruption by AI of the value of music due to music generation capabilities, the role of labels in the music industry, and UMG's business quality given poor free cash flow conversion in 2025, which is expected to continue in 2026. We view AI disruption concerns as overblown. Music has been cheap to create for a long time. The challenge for artists is breaking through to music fans, maintaining momentum or becoming part of pop culture, and maximising the economic value of their music. This is the role labels play and we do not expect AI to meaningfully change this. |
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