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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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L1 Capital International Fund 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (L1 Capital International Fund)

Primary Source Intelligence • Q3 2026 Letter Analysis

L1 Capital International Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, L1 Capital International Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+3.5%

YTD-7.7%

Annualized+12.2%

Positioning StanceCAUTIOUS

Market CapLarge Cap

GeographyGlobal

Digest Analysis

Quick Take

"L1 Capital International (Unhedged) Active ETF returned +3.5% net in Q3 2026, driven by strong gains in Danaher, Intercontinental Exchange, Microsoft, and Nvidia, while establishing new positions in LPL Financial and Netflix and fully divesting Marsh."

Executive Summary

L1 Capital International (Unhedged) Active ETF generated a net return of +3.5% for the September 2026 quarter, outperforming the benchmark MSCI World Net Total Return Index by 2.1 percentage points, while recording a year-to-date net return of -7.7%. The strategy maintained a fully invested posture with cash ending the period at 2.0%, well within its historical operational objective of 5.0% or less. Net equity exposure remained diversified across 22 holdings, with the ten largest positions accounting for approximately 63% of portfolio assets. Portfolio adjustments over the quarter were disciplined and moderate, affecting less than 10% of total fund capital. The manager’s macroeconomic framework stresses that markets have entered 'dark grey' territory as ten-year U.S. Treasury yields exceeded 5.0%, compressing valuation multiples across cyclical businesses and elevating financing costs. Persistent inflation above central bank mandates has spurred monetary tightening across several developed economies, while geopolitical conflict in the Middle East continues to elevate logistics expenses and fuel input prices. Amid this backdrop, the fund emphasizes that accelerating technological adoption in artificial intelligence does not automatically translate into investment success, warning that market expectations for certain infrastructure and software models may be detached from economic reality. Portfolio activity was marked by selective capital rotation rather than broad directional repositioning. The fund initiated new long stakes in wealth platform operator LPL Financial and streaming leader Netflix following steep share price declines. Concurrently, the manager fully exited its long position in insurance broker Marsh following an intra-quarter rally to redeploy capital into higher-conviction holdings. Position sizing adjustments included modest additions to Alphabet, American Express, London Stock Exchange Group, Nvidia, and Uber, paired with rebalancing trims in Danaher, HCA, and Microsoft.

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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

65%

CautiousHigh

Moderate (65%)

Market Conviction

The portfolio is moderately concentrated across 22 holdings with top 10 positions comprising 63% of assets, yet the manager relies on balanced, scenario-based frameworks rather than single-outcome conviction. Positions are actively managed against assessed fair value bands, and the manager explicitly disclaims dogmatic decade-long buy-and-hold investing during periods of rapid disruption.

35%

BearishBullish

Bearish (35%)

Growth Outlook

The manager explicitly maintains an investment caution stance, characterizing ten-year U.S. Treasury yields above 5.0% as 'dark grey' territory. Commentary highlights persistent inflation, monetary tightening across major central banks, geopolitical disruption, and weakening consumer conditions outside of select AI-related infrastructure construction.

50%

DefensiveAggressive

Balanced (50%)

Risk Appetite

Capital remains virtually fully invested with only 2.0% held in cash, avoiding defensive hoarding while strictly maintaining a long-only mandate with zero leverage or shorting. Risk is managed through diversification across distinct earnings drivers, trimming appreciated names like Danaher and Microsoft, and initiating positions in beaten-down quality businesses.

50%

De-riskingDeploying

Net Neutral (50%)

Capital Deployment

Cash levels remained essentially unchanged and steady at 2.0%, reflecting a neutral net deployment stance where new position additions in LPL Financial and Netflix were balanced by complete divestments like Marsh and trims in appreciated holdings.

50%

CautiousExpansionary

Neutral (50%)

Forward Guidance

The manager outlines no aggressive macro tilts or sweeping deployment agendas, intending to keep portfolio adjustments moderate and focused on valuation discrepancies. Activity will center on trimming names reaching fair value ranges and selectively deploying capital into quality businesses trading at attractive risk-adjusted entry points.

40%

BearishBullish

Balanced (40%)

Language Signal

The letter frequently utilizes cautious framing, pointing to 'dark grey' yields, economic drag, geopolitical escalation, and potential debt market warning signs. While constructive language appears around selective franchises like CRH and ICE, warnings regarding overly optimistic AI expectations and bubble comparisons tilt overall rhetoric toward caution.

75%

Low RiskElevated

Elevated Risk (75%)

Perceived Risk

Identifiable macro headwinds are analyzed in detail, specifically bond yields surpassing 5.0%, protracted Middle East conflict, corporate debt market credit spread widening, and the potential unravelling of speculative capital in AI datacenter buildouts.

55%

ScarceAbundant

Selective (55%)

Opportunity Density

Compelling investments are viewed as highly selective rather than broadly abundant, requiring rigorous discrimination between technological winners and attractively valued assets. While pockets of excessive optimism persist across tech, specific opportunities have emerged in beaten-down cyclicals like CRH and franchise platforms like LPL Financial and Netflix.

75%

Short-TermLong-Term

Decade+ (75%)

Time Horizon

The manager emphasizes an enduring multi-year compounding horizon, referencing twenty-five years of experience following CRH and maintaining holdings through market dislocations. The investment process distinguishes temporary cyclical earnings contractions from permanent impairment of long-term business value.