| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 13.9% | 4.8% | 12.5% |
| 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|
| 12.5% | 20.3% | 20.0% | -6.9% | 26.7% |
The Royal London Global Equity Diversified Fund outperformed its benchmark in Q4 2025, delivering 4.77% net returns versus 3.21% for the MSCI World Index. The fund benefited from strong stock selection amid investor rotation toward companies with defensive qualities and reliable revenues. Key contributors included Alphabet, which gained from positive AI results and the market-leading Gemini 3 model release, and Eli Lilly, driven by explosive demand for its GLP-1 diabetes and obesity drugs generating over $10 billion in quarterly sales. Semiconductor manufacturer Micron Technology continued benefiting from AI-driven DRAM pricing increases. The fund initiated positions in Ferrari, Illinois Tool Work, and European defense electronics company Hensoldt while exiting Daito Trust Construction. Detractors included Wolters Kluwer due to AI disruption concerns and Lamb Weston following disappointing results. The manager notes extreme market concentration in AI companies has left many quality businesses trading at historically low relative valuations, positioning for potential rotation as AI productivity gains reach the broader economy.
The fund focuses on identifying quality companies with durable competitive advantages while navigating a market dominated by AI concentration, seeking opportunities in fundamentally sound businesses trading at attractive relative valuations.
The portfolio continues to navigate a complex and momentum-driven market with a disciplined yet adaptive approach. Strategic research prioritisation, risk-aware positioning, and a focus on long-term value creation remain central to the investment philosophy. The team is committed to refining its responsiveness to market signals and maintaining competitive performance.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Dec 31 2025 | 2025 Q4 | 7741.T, AAPL, AMZN, AVGO, BHP.AX, BRO, CPRT, GOOGL, HEIA.L, ITW, JPM, LLOY.L, LLY, LW, META, MSFT, MU, NVDA, RACE, V | AI, defense, Global Equity, healthcare, Quality, semiconductors, technology, Valuations |
GOOG LLY MU LW RACE ITW HAG GR |
The fund benefited from strong positioning in AI-related companies, particularly Alphabet which saw positive results following the release of the Gemini 3 model that was widely accepted as market leading. The generative AI supercycle has driven extreme market concentration in the magnificent few companies, leaving huge parts of the equity universe ignored. Eli Lilly was a key contributor due to its dominant position in the fast-growing GLP-1 drug market. Third-quarter results were exceptional due to explosive demand for its metabolic franchise with Mounjaro for diabetes and Zepbound for obesity generating more than $10 billion in quarterly sales. Micron Technology continued to provide positive contribution as a semiconductor manufacturer benefiting from the AI boom. DRAM pricing has continued to rise sharply, creating a favorable environment for Micron and enabling improved profitability from rising AI workloads and tight semiconductor supply. The fund initiated a position in Hensoldt, a European defense electronics company, classified as an Accelerator. The investment case is underpinned by strong positioning in sensor solutions and electronic warfare, seeing heightened demand amid increased European defense spending with robust order book and technological edge in radar and optronics. The fund benefited from investors beginning to appreciate companies with more defensive qualities such as relatively reliable revenues. Many fundamentally sound, profitable, and dependable businesses are currently trading on the lowest relative valuations seen for years when compared to the broader index. |
| 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 |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines | |
GLP1Eli Lilly represents the fund's exposure to the GLP-1 obesity and diabetes treatment market, which continues to show exceptional growth. Mounjaro and Zepbound sales more than doubled year-over-year, with demand continuing to outpace supply. The fund sees this as a multi-decade growth opportunity with expanding indications and sustained competitive advantages. |
Obesity Diabetes Pharmaceuticals Growth Innovation | |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
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 |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | Fund Letters | Paul Schofield | GOOG | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cloud, compounder, platform | Login |
| Dec 31, 2025 | Fund Letters | Paul Schofield | LLY | Eli Lilly and Company | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | Diabetes, Glp1, growth, Obesity, pharmaceuticals | Login |
| Dec 31, 2025 | Fund Letters | Paul Schofield | MU | Micron Technology, Inc. | Information Technology | Semiconductors | Bull | NASDAQ | AI, Cyclicality, DRAM, Memory, semiconductors | Login |
| Dec 31, 2025 | Fund Letters | Paul Schofield | LW | Lamb Weston Holdings, Inc. | Consumer Staples | Packaged Foods & Meats | Bear | New York Stock Exchange | Food, inflation, Margins, Staples, Volumes | Login |
| Dec 31, 2025 | Fund Letters | Paul Schofield | RACE | Ferrari N.V. | Consumer Discretionary | Automobile Manufacturers | Bull | New York Stock Exchange | Brand, Luxury, Margins, Pricing, Scarcity | Login |
| Dec 31, 2025 | Fund Letters | Paul Schofield | ITW | Illinois Tool Works Inc. | Industrials | Industrial Machinery | Bull | New York Stock Exchange | capital allocation, Cyclicality, Industrials, Margins, Pricing | Login |
| Dec 31, 2025 | Fund Letters | Paul Schofield | HAG GR | HENSOLDT AG | Industrials | Aerospace & Defense | Bull | Xetra | backlog, Defence, Geopolitics, Radar, Sensors | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | Apple Inc. represents 1.6% of company owned with cost basis of $6,255 million and market value of $61,962 million, providing $280 million in 2025 dividends. |
| AMZN | One company we own that we think has unique positioning to benefit from both the infrastructure and application layers is Amazon. Amazon's logistical prowess is one of the foremost moats in business today and it can and will be enhanced with AI. The company will do this in multiple ways, with better orchestration of its logistics assets and underlying cargo, as well as the buildout of more capable, sophisticated and robust robotics. Amazon is singularly well positioned to dominate the coordination layer, with AI's help, across its entire logistics network. |
| AVGO | The primary contributors to its performance were our exposures to Broadcom |
| BHP.AX | BHP delivered +7% performance as copper and gold positions continued to make a meaningful contribution to performance, supported by higher commodity prices. |
| BRO | In 2026, we plan to publish deep dives on Brown & Brown |
| CPRT | we recently trimmed some of our mega-cap tech holdings and other outperformers and used the proceeds to buy more of our underperforming holdings such as Copart, Inc. |
| 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. |
| ITW | Names like Berkshire Hathaway, Johnson Controls, ITW, GE or United Technologies pale in comparison. |
| JPM | JPMorgan (JPM) has identified 42 AI-related stocks in the S&P 500, which today represent 45% of the index's market cap. They estimate that these stocks have accounted for 78% of S&P 500 returns, 66% of earnings growth, and 71% of capital spending growth since ChatGPT launched in November 2022. As it relates to the impact on the U.S. economy, JPM estimates tech sector capital spending contributed 40%-45% of U.S. GDP growth through the first 9 months of the year, up from less than 5% during the same period in 2023. |
| LLOY.L | Lloyds Banking Group was among the rate-sensitive majors leading European banking sector outperformance. Sector returns have been underpinned by the stabilisation of short-term interest rates and a subsequent steepening of the European yield curve. |
| LLY | Eli Lilly shares were a top performer in 4Q25 after delivering strong Q3 2025 earnings in October. Revenue rose 54% year-over-year to $17.6 billion, and adjusted EPS of $7.02 beat consensus of $6.02. Growth was driven by its GLP-1 franchises, Mounjaro and Zepbound, where sales more than doubled year-over-year, alongside strength in other therapeutic areas. Management raised full-year guidance for both revenue and earnings, reinforcing investor confidence in the company's growth outlook. |
| LW | LW was a weaker name after reporting ongoing pricing pressure and industry headwinds, including softer QSR traffic. Management has executed on controllable operational issues but lingering issues have made a recovery more challenging. While these seem to be short-term headwinds, the long-term industry drivers remain attractive. We remain attracted to LW's flexible balance sheet, leading market share, and capital allocation strategy. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| MU | Core gains were led by investments in the Technology sector including Micron |
| NVDA | AI bellwether NVIDIA's very strong set of earnings in late November helped the AI theme re-assert its dominance when investors breathed a sigh of relief following the results. |
| RACE | Our largest common stock holding is Ferrari. Over the last three years we have purchased 543,800 shares. At year-end, our investment in Ferrari was valued at $202.3 million. When we started purchasing shares in 2022, we were thinking about what the company would look like in two decades. Ferrari's vehicles will, of course, continue to change over the coming years, but we think the reasons people will choose the brand in the 2040s will be nearly the same as they are today. We believe Ferrari is one such company that has sustained its competitive edge. |
| V | There were companies there such as Visa, which we own, as well as many we do not, and which would not likely be appropriate for this mandate. |
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