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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Lyrical Asset Management 2025 Q1 Investor Letter | Buyside Digest

Back to Fund Profile (Lyrical Asset Management)

Primary Source Intelligence • Q1 2025 Letter Analysis

Lyrical Asset Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Lyrical Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+1.7%

Annualized+10%

Positioning StanceConstructive

Market CapLarge Cap

GeographyGlobal

Digest Analysis

Quick Take

"Lyrical's global value strategy delivered strong Q1 outperformance as international markets finally began reversing 15 years of underperformance versus US stocks."

Executive Summary

Lyrical's Global portfolio returned 1.7% in Q1 2025, outperforming the MSCI World by 350 basis points as international markets showed remarkable strength while US markets declined. The Magnificent Seven mega-cap growth stocks fell over 15%, contributing to a 4.3% decline in the S&P 500, while MSCI EAFE rose 6.9%. This 11.2 percentage point spread was the widest since 2002. The managers believe international stocks present massive opportunities due to valuation, not fundamental differences. Over the past decade, international markets delivered 8.7% fundamental returns versus 8.3% for the S&P 500, yet US outperformance was driven by multiple expansion adding nearly 600 basis points annually. The portfolio is well-positioned for tariff impacts with 53% of revenues from the US and focus on capital-light businesses. Only 10% of holdings face higher tariff exposure. The portfolio also demonstrates recession resilience, with companies historically showing EPS declines of only 21% versus 30% for MSCI World during the Global Financial Crisis. The managers remain excited about prospects in undervalued international markets.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

75%

CautiousHigh

High Conviction (75%)

High conviction is evident in the detailed fundamental analysis, specific positioning decisions, and strong language about international value opportunities. The managers provide extensive quantitative support for their thesis and express clear confidence in their approach despite market volatility.

Growth Outlook

65%

BearishBullish

Bullish (65%)

The managers express strong optimism about international market opportunities and the unwinding of 15 years of underperformance. They describe the valuation opportunity as 'massive' and 'enormous' and believe there is 'substantially more remaining' upside potential.

Risk Appetite

45%

DefensiveAggressive

Balanced (45%)

The portfolio maintains a balanced approach with significant international exposure to capture value opportunities, but positioning is described as defensive and well-prepared for both tariff impacts and economic weakness. The managers emphasize resilience over aggressive risk-taking.

Capital Deployment

20%

De-riskingDeploying

De-risking (20%)

The letter mentions a recent purchase of Renesas as a buying opportunity created by tariff turmoil, suggesting selective deployment. However, no major changes in cash levels or broad deployment activity are discussed, indicating measured rather than aggressive capital deployment.

Forward Guidance

70%

CautiousExpansionary

Expansionary (70%)

The managers state they 'cannot help but feel excited by our prospects' and believe the opportunity in value stocks 'remains very significant.' They express confidence in their positioning and outlook for continued international market recovery.

Language Signal

60%

BearishBullish

Balanced (60%)

Language is predominantly positive with terms like 'excited,' 'massive opportunity,' 'enormous opportunity,' and 'very significant' opportunity. However, this is balanced with acknowledgment of risks and defensive positioning considerations.

Perceived Risk

60%

Low RiskElevated

Moderate Risk (60%)

The managers acknowledge multiple risk factors including tariff impacts, potential recession, currency headwinds, and force majeure events. They dedicate significant discussion to risk analysis and defensive positioning, indicating moderate to high risk awareness.

Opportunity Density

80%

ScarceAbundant

Abundant (80%)

The managers describe the international opportunity set as 'massive' and 'enormous,' noting they had 9 high-quality non-US businesses trading for less than 10x forward earnings. They believe there is 'substantially more remaining' opportunity and that the overall opportunity 'remains very significant.'

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The investment approach emphasizes long-term fundamental value with average holding periods of 7-8 years. The analysis focuses on structural business characteristics and multi-year themes like the unwinding of 15 years of international underperformance, indicating a patient, long-term orientation.