In November, the Evenlode Global Equity fund slightly outperformed its benchmark, the MSCI World Index, which finished the month marginally lower. The headline performance, however, masked a volatile period: markets fell almost 5% at one stage mid-month before recovering. It remains too early to call time on the current wave of AI enthusiasm, but it was notable that the technology sector was a major drag on the benchmark. Weakness was particularly acute in companies with heavy AI exposure combined with weak cash generation or more leveraged balance sheets. Several high-profile names, including Oracle, Super Micro, and Nvidia, ended the month sharply down. Such swings are not uncommon in the technology sector and may simply echo the transient sell-offs which have happened recurrently in the last two years. What has changed, however, is that while cashflow from AI investments is still not coming through at scale, the incremental investor in AI capacity is increasingly levered, meaning AI spend is more correlated than before with broader financial market conditions. Other speculative assets, such as Bitcoin, also reversed sharply, while traditional safe havens like precious metals continued to climb. Looking ahead, there are additional factors that could unsettle markets, including December’s US interest rate decision (to be made despite limited economic data following the government shutdown) and concerns that a pressured consumer may rein in Christmas spending.
Against this backdrop, the fund’s holdings continue to deliver solid underlying results. With the Q3 reporting season now complete, the companies held in Evenlode Global Equity generated average organic revenue growth of nearly 9%, with most also seeing further margin expansion. Two businesses stood out: Nintendo and Alphabet. Nintendo raised its full-year expectations for Switch 2 hardware and software sales as the new console launch builds momentum. Alphabet, meanwhile, continues to confound predictions that AI competition will erode its dominance, reporting an acceleration in Search and stronger cash flows, even as it continues to invest in its cloud offering.
While share price performance across the Information Services holdings has lagged, their fundamentals remain robust. We have been steadily increasing our exposure to these underappreciated assets, which we believe offer attractive long-term prospects. Overall, the portfolio still trades at a discount to the broader market on both price-to-earnings and free cash flow measures. In our view, this presents a compelling opportunity to invest in high-quality businesses with strong fundamentals and durable competitive advantages.
In November, the Evenlode Global Equity fund slightly outperformed its benchmark, the MSCI World Index, which finished the month marginally lower. The headline performance, however, masked a volatile period: markets fell almost 5% at one stage mid-month before recovering. It remains too early to call time on the current wave of AI enthusiasm, but it was notable that the technology sector was a major drag on the benchmark. Weakness was particularly acute in companies with heavy AI exposure combined with weak cash generation or more leveraged balance sheets. Several high-profile names, including Oracle, Super Micro, and Nvidia, ended the month sharply down. Such swings are not uncommon in the technology sector and may simply echo the transient sell-offs which have happened recurrently in the last two years. What has changed, however, is that while cashflow from AI investments is still not coming through at scale, the incremental investor in AI capacity is increasingly levered, meaning AI spend is more correlated than before with broader financial market conditions. Other speculative assets, such as Bitcoin, also reversed sharply, while traditional safe havens like precious metals continued to climb. Looking ahead, there are additional factors that could unsettle markets, including December’s US interest rate decision (to be made despite limited economic data following the government shutdown) and concerns that a pressured consumer may rein in Christmas spending.
Against this backdrop, the fund’s holdings continue to deliver solid underlying results. With the Q3 reporting season now complete, the companies held in Evenlode Global Equity generated average organic revenue growth of nearly 9%, with most also seeing further margin expansion. Two businesses stood out: Nintendo and Alphabet. Nintendo raised its full-year expectations for Switch 2 hardware and software sales as the new console launch builds momentum. Alphabet, meanwhile, continues to confound predictions that AI competition will erode its dominance, reporting an acceleration in Search and stronger cash flows, even as it continues to invest in its cloud offering.
While share price performance across the Information Services holdings has lagged, their fundamentals remain robust. We have been steadily increasing our exposure to these underappreciated assets, which we believe offer attractive long-term prospects. Overall, the portfolio still trades at a discount to the broader market on both price-to-earnings and free cash flow measures. In our view, this presents a compelling opportunity to invest in high-quality businesses with strong fundamentals and durable competitive advantages.