| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14.12% | 15.99% | 10.38% |
The Royal London Global Equity Diversified Fund outperformed its benchmark in Q2 2026, returning 15.87% net versus 13.03% for the MSCI World Index, driven primarily by positive stock selection in healthcare and information technology. The fund's holdings in semiconductor and AI-related names including Intel, SK Hynix, Micron Technology and TSMC were among the strongest contributors as investors responded positively to the semiconductor cycle and AI infrastructure demand from hyperscalers. The manager continued upgrading the portfolio, adding to AI infrastructure exposure through Nebius Group and Arm Holdings while trimming TSMC after strong performance. Energy holdings Shell and EQT Corp gave back gains as Middle East tensions eased. Key risks include elevated valuations among large AI-related technology stocks, with investors increasingly concerned about market concentration. The outlook hinges on whether Q2 earnings can justify current valuations and whether energy-driven inflation pressures persist. The fund maintains 192 holdings with 57.7% active share.
The fund aims to outperform the MSCI World Index by upgrading the portfolio toward areas with stronger long-term wealth creation opportunities and more attractive risk-reward characteristics, with particular focus on AI infrastructure and semiconductor cycle beneficiaries while managing valuation risk in large-cap technology.
The next couple of months will test whether markets can look past a complicated macroeconomic backdrop. Investor focus will be on the second quarter earnings season to see if corporate profits can justify elevated valuations among AI-related stocks. Concurrently, markets will monitor whether energy-driven price hikes are bleeding into core inflation. While markets currently favour resilient earnings over geopolitical risks, this balance remains fragile. Any reversal in diplomatic progress could quickly affect oil prices, inflation expectations, and equity valuations.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jun 30 2026 | 2026 Q2 | AMZN, ARM, CSCO, DTG.DE, GS, INTC, LITE, MU, SHEL, TSM, TTE | active management, AI, energy, Global Equity, semiconductors, technology, Valuations | - | Royal London Global Equity Diversified outperformed in Q2 2026 on strong semiconductor and AI infrastructure holdings including Intel, Micron, and TSMC. The manager actively upgraded the portfolio, adding AI exposure via Nebius and Arm while trimming after strong runs. Energy positions weakened as Middle East tensions eased. Key risk is whether elevated AI stock valuations can be justified by upcoming earnings. |
| Apr 22 2026 | 2026 Q1 | 005930 KS, AMD, BWA, CCO, CRM, CSU.TO, GLEN.L, GOOGL, HUBG, JPM, LMT, MSFT, NOW, RELX.L, RPRX, SHEL.L, STLD, TSM, VRT | defense, Diversified, energy, Geopolitical, global, infrastructure, technology | - | Royal London Global Equity Diversified Fund underperformed in Q1 2026 as geopolitical escalation drove rotation from technology growth stocks to defensive sectors. The fund repositioned toward structural themes including energy security, defense spending, and infrastructure investment while trimming technology exposure. Energy and materials holdings provided positive contributions while mega-cap technology stocks detracted from performance. |
| 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 |
Royal London Global Equity Diversified Fund outperformed in Q4 2025 through strong stock selection in AI leaders like Alphabet and healthcare giant Eli Lilly. The fund added Ferrari, Illinois Tool Work, and defense electronics firm Hensoldt while trimming positions. Management sees opportunity in quality companies trading at low relative valuations as AI concentration dominates markets. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe fund increased exposure to AI infrastructure through purchases of Nebius Group and Arm Holdings. Nebius is emerging as a beneficiary of growing AI infrastructure demand through its neocloud platform. Arm has an expanding addressable market in data centre and AI workloads that is not fully reflected in current consensus expectations. |
AI Infrastructure Data Centers Cloud Semiconductors Arm |
Semiconductor CycleHoldings in Intel, SK Hynix, Micron Technology and TSMC were among the fund's strongest contributors, benefiting from investors' increasingly positive view on the semiconductor cycle and AI-related demand. Demand for advanced microchips and increased memory to boost AI infrastructure is coming from hyperscalers such as Microsoft, Google and Amazon. The fund trimmed TSMC following strong share price performance but it remains a significant active position. |
Memory Semiconductors AI Hyperscalers TSMC | |
EnergyHoldings in late Life Cycle energy positions, Shell and EQT Corp, gave back some gains from the previous quarter after agreement appeared to have been struck to end the US conflict with Iran and the 'war premium' in commodity prices faded. The Middle East conflict disrupted oil supply via the Strait of Hormuz, pushing oil prices to levels last seen following the Russian invasion of Ukraine in 2022, but a ceasefire announcement caused prices to fall back towards pre-crisis levels. |
Oil Natural Gas Geopolitical Risk Iran Energy Trading | |
ValuationsInvestors have become increasingly concerned about the narrow nature of the rally and that valuations among large AI-related technology stocks could have risen too far. The fund continues to upgrade the portfolio, increasing exposure to areas where they see stronger long-term wealth creation opportunities and more attractive risk-reward characteristics. |
Risk Appetite Technology AI Market Concentration | |
| 2026 Q1 |
AIAI infrastructure demand drove strong performance for data center provider Vertiv and memory chip demand benefited Samsung. However, concerns about AI valuations and sustainability of earnings growth led to rotation away from highly valued US mega-cap growth stocks including Microsoft. |
Data Centers Memory Semiconductors Valuations |
Energy TransitionCapital was redeployed into energy security themes including nuclear energy via Cameco for uranium supply and renewables through solar power company NextPower. The fund views diversified energy systems as increasingly strategic assets amid current geopolitical trends. |
Nuclear Solar Uranium Energy Security | |
Defense SpendingThe fund continued to add to defense exposure via Lockheed Martin, reflecting the structural uplift in defense spending now evident across developed markets. Defense stocks provided pockets of relative strength during March market volatility. |
Defense Geopolitical Structural | |
GeopoliticalRising geopolitical risk and escalation in the Middle East led to deteriorating risk sentiment, higher energy prices, and renewed inflation concerns. Markets became highly dependent on geopolitical developments with elevated volatility expected to continue. |
Middle East Energy Inflation Volatility | |
Infrastructure SpendingThe fund built exposure to US industrials including Hubbell and BorgWarner where they see longer-cycle support from electrification, infrastructure spend and supply chain reconfiguration trends. |
Electrification Supply Chain Industrials | |
| 2025 Q4 |
AIAI continues to drive significant market performance with Alphabet benefiting from its differentiated positioning and Gemini 3 model release. The fund maintains bullish outlook on long-term AI opportunities despite some valuation concerns in parts of the market. |
Artificial Intelligence Gemini Technology Innovation |
GLP1Eli Lilly's dominant position in the fast-growing GLP-1 drug market drove exceptional performance with over $10 billion in quarterly sales from metabolic franchise. The company captured leading US market share in diabetes and obesity treatments. |
Pharmaceuticals Diabetes Obesity Healthcare | |
SemiconductorsMicron Technology continued positive contribution as memory market shows transformation due to AI workloads and tight supply. DRAM pricing rising sharply creates favorable environment enabling improved profitability. |
Memory DRAM Technology Supply | |
DefenseInitiated position in Hensoldt, a European defense electronics company, benefiting from heightened demand amid increased European defense spending. Strong positioning in sensor solutions and electronic warfare with robust order book. |
Defense Electronics European Defense Sensors Warfare |
| 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 |
|---|---|
| INTC | Holdings in Intel, SK Hynix, Micron Technology and TSMC were among the fund's strongest contributors. |
| MU | Holdings in Intel, SK Hynix, Micron Technology and TSMC were among the fund's strongest contributors. |
| TSM | Holdings in Intel, SK Hynix, Micron Technology and TSMC were among the fund's strongest contributors. We also trimmed TSMC following a period of strong share price performance, although it remains a significant active position within the portfolio. |
| SHEL | The holdings in late Life Cycle energy positions, Shell and EQT Corp, gave back some gains from the previous quarter, after agreement appeared to have been struck to end the US conflict with Iran and the 'war premium' in commodity prices faded. |
| CSCO | We added to Cisco Systems, Lumentum Holdings and Hannover Re, reflecting improving conviction in their respective wealth creation outlooks and attractive valuation support. |
| LITE | We added to Cisco Systems, Lumentum Holdings and Hannover Re, reflecting improving conviction in their respective wealth creation outlooks and attractive valuation support. |
| DTG.DE | Within industrials, we switched part of our position from Volvo into Daimler Truck. While both companies score similarly within our framework, we believe Daimler Truck offers the more attractive valuation opportunity. The company is executing a significant operational turnaround, and current earnings expectations appear overly conservative given improving freight market conditions and the potential benefits from ongoing cost reduction initiatives. |
| ARM | We increased the portfolio's exposure to specific parts of the AI infrastructure theme through purchases of Nebius Group and Arm Holdings. Arm, meanwhile, remains a high-quality accelerator within our framework, with an expanding addressable market in data centre and AI workloads that we believe is not fully reflected in current consensus expectations. |
| TTE | We engaged TotalEnergies SE, an integrated energy company, as part of Royal London Asset Management's Net Zero Stewardship Programme to understand management's views on the Middle East conflict and its implications for oil, gas and liquefied natural gas (LNG) markets, alongside updates on capital allocation, upstream growth and transition strategy. The meeting provided an update on the implications of the ongoing conflict in the Middle East, with management highlighting disruption to energy markets and broader uncertainty across the sector. TotalEnergies expressed confidence in the resilience of its business and long-term strategy. We also discussed the company's transition strategy and recent changes to climate-related terminology. TotalEnergies clarified that the reframing of its 'net zero' target to a 'neutrality' target reflects regulatory considerations rather than a change in strategic direction. The company reaffirmed its long-term decarbonisation strategy and confirmed that its two-pillar growth model across oil and gas and electricity remains unchanged. |
| AMZN | We voted against as the nominee serves as incumbent Chair of the E&S Committee. Our primary concern this year relates to Amazon's oversight of human rights risks associated with AWS, particularly in higher risk government and defence contexts. Amazon provides limited disclosure on how it monitors, enforces and escalates compliance with its AWS Acceptable Use Policy at a customer level, despite credible and ongoing concerns raised by external stakeholders, including the UN. |
| GS | We voted against this nominee who serves as both Chair and CEO. We would prefer to see these roles separated. We also have some concerns regarding the company's decision to downgrade its restrictions on the direct financing of Arctic oil projects, new thermal coal mines, and new coalfired power plants. We voted against as we retain our concerns over the discretionary nature of variable cash awards. Excessive one-off retention awards have been granted. |
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