| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Renaissance's International Small Cap Equity strategy delivered positive absolute returns and outperformed its benchmark in Q1 2026, despite March volatility from the Iran war. The portfolio benefited from Energy sector overweight as geopolitical tensions drove energy prices higher, while Consumer Discretionary overweight detracted. Key contributors included Tower Semiconductor, which gained from accelerating AI demand in RF infrastructure and silicon photonics, and Enerflex, an energy services company benefiting from natural gas demand growth. Commercial real estate services firm Cushman & Wakefield was the largest detractor due to AI disruption fears. Regionally, China lowered its GDP growth target to 4.5-5% as the government transitions to higher-quality growth, while Europe signed significant trade deals including a Mercosur agreement. Japan's ruling party secured a supermajority, enabling constitutional reform and increased spending. Looking ahead, international equities remain attractive with 2026 EPS growth expected above 20%, higher than US peers, despite risks from sustained energy price elevation.
International small cap equities remain compelling due to strong earnings growth expectations exceeding US peers and attractive valuations, despite geopolitical risks from Iran war and mixed regional economic conditions.
Strong growth and discounted valuations continue to make international equities a compelling investment despite potential headwinds from sustained high energy prices weighing on global growth.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 21 2026 | 2026 Q1 | CWK, EFXT, FELTY, PTXKY, SMSMY, TSEM, WBRBY | AI, China, Commercial real estate, energy, international, small cap, Trade Policy | - | Renaissance's international small cap strategy outperformed in Q1 2026 despite Iran war volatility. Energy overweight and AI beneficiary Tower Semiconductor drove gains while commercial real estate faced disruption fears. China lowered growth targets amid economic transition, Europe advanced trade deals, and Japan's ruling party won supermajority. Strong earnings growth expectations and attractive valuations support continued international equity appeal. |
| 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 |
Renaissance's international small cap strategy outperformed in Q4 2025, driven by AI beneficiary Tower Semiconductor and strategic positioning in gold mining through Aris Mining addition. Despite tariff uncertainties for 2026, international small caps offer compelling value at 33% discount to U.S. peers with double-digit earnings growth expected. |
| Oct 21 2025 | 2025 Q3 | CLS, CWK, FELTY, KOF, MRX, NOMD, RDWR, TIGO, TSEM, WBRBY | AI, China, emerging markets, Europe, international, semiconductors, small cap, Trade Policy |
TSEM TSEM |
International small caps delivered strong third quarter returns, outperforming U.S. equities by 12% year-to-date. Portfolio benefited from AI-driven semiconductor demand and Chinese stimulus while managing French political risk. Despite trade tensions and elevated tariffs, global growth forecasts improved. International equities offer attractive valuations at 35% discount to U.S. markets with strong earnings growth potential. |
| Jul 21 2025 | 2025 Q2 | 8252.T, ATAT, BBY.L, CLS, FINV, IFS, MITFY, NOMD, OMAB, PLYA, PSFE, SIMO, TIGO, TMVWY, VLRS | AI, China, Dollar, Europe, infrastructure, international, small cap, Trade Policy |
CLS CN BBY LN |
International small caps posted strong returns despite trade volatility, benefiting from dollar weakness and AI infrastructure demand. The strategy added UK infrastructure exposure while exiting Chinese positions due to delisting risks. European defense and infrastructure spending provides multi-year tailwinds, though trade uncertainty may pressure global growth in the second half. |
| Mar 31 2025 | 2025 Q1 | FINV, ITRN, KOF, MEOH, MTLS, NOMD, TGLS, TIGO, TSEM, VLRS, WBRBY, YUEIY | China, Europe, international, Manufacturing, small cap, tariffs, valuation | - | International small caps face tariff headwinds but benefit from structural shifts as Europe increases defense and infrastructure spending while China boosts stimulus. Despite negative Q1 returns, diverging manufacturing trends favor international markets over the U.S. The 34% valuation discount versus U.S. equities creates compelling opportunities as positive structural changes support normalization. |
| Dec 31 2024 | 2024 Q4 | 6481.T, 6849.T, ATAT, BB.PA, CLS, CSTM, CWK, ERO, FINV, IMAX, MRX.L, MTLS, NEXNY, OSW, PLYA, PRMB, RDWR, SPNS, STNG, TPK.L, UBI.PA, WNS | China, Europe, international, small cap, tariffs, Trade Policy | - | International small caps delivered negative Q4 returns but outperformed benchmarks through strong stock selection. Despite trade policy headwinds and political uncertainty, the asset class offers compelling value at 40% discount to U.S. peers with 9% earnings growth expected in 2025 and supportive monetary policy from ECB and China providing recovery catalysts. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
EnergyEnergy sector overweight helped portfolio returns during the quarter. Iran war sparked market selloff and pushed energy prices higher, causing investors to weigh impact on inflation and interest rates. Natural gas demand increasing due to electricity demand growth. |
Natural Gas Energy Infrastructure Oil Iran |
AITower Semiconductor benefited from accelerating AI demand with strong momentum in RF infrastructure and silicon photonics businesses. Customer demand far outpacing current supply, prompting capacity expansion. AI disruption fears hit commercial real estate industry. |
Semiconductors Data Centers Infrastructure | |
ChinaChinese government set 2026 GDP growth target at 4.5-5%, lowest on record, reflecting transition to higher-quality growth model. Government reducing industrial overcapacity and price wars. Chinese equities weakened over past two quarters due to lower growth targets and lack of stimulus. |
GDP Growth Industrial Policy Stimulus | |
Trade PolicyEuropean Union signed significant trade deals including free-trade agreement with Mercosur after twenty-five years of negotiations, plus agreements with India and Australia. These deals should help future growth by opening new markets and decreasing EU dependence on volatile US trade policy. |
European Union Trade Deals Mercosur | |
Commercial Real EstateCushman & Wakefield shares under pressure due to AI disruption fears hitting the entire commercial real estate industry. Despite fears, company reported solid quarter and remains well positioned for growth as activity improves. |
Real Estate Services AI Disruption | |
| 2025 Q4 |
Behavioral FinanceManager discusses behavioral biases in investing, comparing rational Morning Investor mode versus impulsive Nighttime Investor decisions. Emphasizes the importance of overcoming psychological biases like avoiding action that could cause regret, and building habits to make better investment decisions. |
Behavioral Biases Psychology Decision Making |
ValueMature (Value) businesses led performance in Q4 and were the strongest contributors for the full year, reflecting durable execution in companies generating healthy free cash flow and returning capital. |
Free Cash Flow Capital Returns Mature Businesses | |
GrowthEmerging (Growth) businesses reversed substantial gains in Q4 but delivered strong year overall with significant alpha relative to benchmark. Despite weak Q4 performance, the full-year results were positive. |
Alpha Generation Emerging Businesses | |
| 2025 Q3 |
AIThe emergence of an arms race in artificial intelligence has aligned China's government and its technology stocks with the goal of producing Chinese-made artificial intelligence infrastructure that can compete with American-made technology. Tower Semiconductor is capitalizing on high demand for data centers and artificial intelligence through increased capacity in Silicon Photonics and Silicon Germanium. |
Data Centers Semiconductors China Technology Infrastructure |
ChinaChinese stocks helped emerging markets outperform developed markets by 6% during the third quarter. While Chinese stocks have not fully recovered from the 2021-2023 sell-off following regulatory crackdown, stimulus announcements in 2024 helped propel an initial stock market surge. China's economy continues to face headwinds from trade tensions and a continued weak property market. |
Emerging Markets Stimulus Property Market Trade Tensions Technology | |
Trade PolicyMarkets have been surprisingly resilient in the face of continued tariff headlines. The effective tariff rate in the United States has risen from an estimated 2% at the beginning of the year to an estimated 19% at the end of August, its highest level since the 1930s. The full negative impact of tariffs has likely not been felt due to a short-term boost in growth from front-loading ahead of tariff enactment deadlines. |
Tariffs Global Trade Economic Growth Policy Resilience | |
EuropePolitical turmoil in France continues with no end in sight, resulting in a hung parliament and repeated collapse of minority governments. France's heavy debt burden and political impasse have triggered credit downgrades, while southern European nations including Italy, Spain, and Greece have received credit upgrades. Europe continues to see an improved outlook, with the eurozone manufacturing PMI rising into expansionary territory for the first time in over three years. |
Political Risk Credit Ratings Manufacturing Debt Recovery | |
| 2025 Q2 |
Trade PolicyInternational markets navigated significant trade tensions between the US and China, including Liberation Day tariffs followed by a ninety-day pause. Trade uncertainty may cause businesses to delay investments and capex, weighing on global growth in the second half of the year. |
Tariffs Trade War China Uncertainty Investment |
DollarThe US Dollar Index fell nearly 11% in the first half of the year, the worst start in over thirty years. Dollar weakness helped international equities outperform US peers, with the American exceptionalism trade appearing to fade after over a decade. |
Dollar Weakness Currency International Outperformance Reserve Currency | |
Infrastructure SpendingEuropean governments are prioritizing infrastructure investment, power grid upgrades, and defense spending. This multi-year fiscal stimulus should provide sustained benefits across various industries, with companies like Balfour Beatty positioned to benefit. |
Infrastructure Defense Fiscal Stimulus Europe Multi-year | |
AICelestica benefited from continued robust demand from hyperscaler customers for 400G and 800G networking switches, driven by secular growth trends in cloud infrastructure and AI networking that pushed operating margins to record highs. |
Hyperscalers Networking Cloud Infrastructure Secular Growth Margins | |
| 2025 Q1 |
Trade PolicyTrump implemented universal 10% tariffs and reciprocal tariffs on sixty nations, creating economic uncertainty that may slow global growth as companies hold back on investment plans. The rapid-fire conflicting statements from the administration have increased uncertainty about future trade policies. |
Tariffs Trade Uncertainty Global Policy |
Infrastructure SpendingGermany reformed its debt brake allowing one trillion euros for defense and infrastructure spending, while the EU proposed the Security Action for Europe package providing funding for member states to scale up defense investments. This should boost European economic growth after years of underinvestment. |
Defense Infrastructure Europe Spending Growth | |
ChinaChina is boosting spending with target deficit spending at 4% of GDP, the highest in fifteen years. Prior stimulus measures appear to be stabilizing the economy with the Caixin Manufacturing PMI remaining in expansionary territory for six consecutive months. |
Stimulus Manufacturing PMI Deficit Economy | |
| 2024 Q4 |
Trade PolicyTrade tensions are front of mind for investors and likely to ratchet higher in 2025 after Trump takes office. Trump has floated ideas such as a 10% tariff on all imports and 60% tariff on Chinese imports. Countries running large trade deficits with the US are most at risk. |
Tariffs China Trade War Exports Imports |
ChinaChina decreased its dependence on the US following the first trade war, with exports to US falling from 19% to 15%. Stimulus measures in H2 2024 are having positive impact with December PMI rising to highest since March. Government signaled more moderately loose monetary policy for first time since 2011. |
Stimulus PMI Yuan Monetary Policy Domestic Demand | |
EuropeEurope saw strong initial recovery post-pandemic but war in Ukraine and energy prices caused low growth period. Eurozone reported highest GDP growth in two years in Q3 but still lagged US. European consumers reverted to saving instead of spending, contrasting with US behavior. |
GDP Growth Consumer Spending Energy Prices ECB Interest Rates |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
| 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 |
| TICKER | COMMENTARY |
|---|---|
| TSEM | The top contributor to our performance during the quarter was Tower Semiconductor (Israel), as investors rewarded its stronger-than-expected results and growing recognition as a key beneficiary of accelerating AI demand. Momentum in its RF infrastructure and silicon photonics businesses remains strong, with customer demand far outpacing current supply, prompting the company to accelerate capacity expansion that should materially lift margins over time. |
| EFXT | Another strong performer during the quarter was Enerflex (Canada), an energy infrastructure and services company. Increased demand for electricity is helping drive demand for natural gas as a reliable power solution and keeping utilization rates of Enerflex's natural gas processing units and compression fleets high. The company is also diversifying its end markets, having recently announced an order to supply power generation units for a large data center project. |
| CWK | The largest detractor from performance was Cushman & Wakefield (Bermuda). Shares of the global commercial real estate services firm were under pressure due to AI disruption fears that hit the entire industry. Despite these fears, the company reported a largely solid quarter and remains well positioned for growth as commercial real estate activity improves and strength continues in capital markets and leasing. |
| WBRBY | Another poor performer was Wienerberger (Austria). The building materials company continues to be hurt by a weak housing market in North America while energy headwinds are likely to delay a housing recovery in Europe. |
| SMSMY | During the quarter, we purchased Sims (Australia), a recycler of metals and electronics. The company is a beneficiary of the undersupply of copper and stands to gain from its recently improved copper recovery rate from shredded scrap. Its fast-growing Lifecycle Services division, which focuses on recycling electronics, should see continued strong growth as the uptick in hyperscaler capex from several years ago enters an upgrade and retirement cycle. |
| PTXKY | Conversely, we sold PT XLSMART Telecom Sejahtera (Indonesia) during the quarter, as the macro situation in Indonesia has deteriorated following questionable political appointments by Indonesia's president and a sharp sell-off of the rupiah due to the potential loss of independence for the country's central bank. |
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