Global Innovators - July Commentary

This is a marketing communication. Please refer to the prospectus, supplement and KID/KIID for the Funds before making any final investment decisions. The value of this investment can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you invested.  

Past performance does not predict future returns. 

In the second quarter of 2025, the Guinness Global Innovators Fund returned 7.6% (in GBP), the MSCI World Index returned 5.0%, and the IA Global sector returned 5.6%. The Fund therefore outperformed the Index by 2.6 percentage points and outperformed its peer group by 2.0 percentage points.

The Fund benefited from its overweight position in the Information Technology sector as it outperformed the broader index (+23.2% vs +11.7%). This was supported by strong stock selection within the sector, such as Amphenol (+50.8% in USD). The Fund’s overweight position in Healthcare acted as a drag as the sector underperformed the broader Index (-4.0% vs +11.7%). The Fund saw a tailwind from a zero-weight allocation to some of the benchmark's weaker sectors including Energy (-4.8%) and Consumer Staples (+3.6%), as investors seemingly rotated away from more defensive stocks in an increasingly risk-on environment.

In the first half of 2025, global markets showed surprising resilience in the face of considerable geopolitical uncertainty. Equities held up well, with the S&P 500 reaching fresh record highs by the end of June, supported by improving economic sentiment. Most asset classes performed positively, and aside from April 2nd, markets reacted relatively calmly to geopolitical developments, including the conflict between Iran and Israel. However, the US dollar weakened considerably, with the DXY index falling over 10%, its steepest first-half decline since 1973.

The enactment of Trump’s ‘One Big Beautiful Bill Act’ (OBBA) has intensified concerns about the sustainability of the US fiscal trajectory. The OBBA introduces significant tax cuts and spending increases, which, although they will stimulate growth, as shown on the chart below, are likely to have a material effect on the fiscal deficit, adding almost $3tn by 2034. There is growing apprehension that the US’s fiscal path may erode confidence in its financial management, potentially leading to higher borrowing costs and reduced demand for dollar-denominated assets. Such developments could further challenge the dollar's popularity as a safe-haven asset.

Source: Guinness Global Investors, Financial Times as of 30th June 2025

As we step into a new quarter shaped by macroeconomic uncertainty, including shifting tariff policies, significant legislative changes, and ongoing geopolitical tensions, we remain firmly aligned with our investment philosophy. Our focus is on companies aligned with long-term trends and sustainable growth prospects. A distinctive aspect of our strategy is targeting companies with economic exposure to nine key 'innovation' themes. This thematic diversification helps reduce concentration risk and is reinforced by our equally weighted portfolio construction. This strategy enables us to navigate such turbulent periods in the market, positioning the portfolio for longer-term returns.

In this commentary, we examine the debate around US dollar weakness and concerns over its status as a reserve currency, and discuss the evidence of outflows, and de-globalisation that have all sharpened focus on this debate. Despite recent weakness, the structural advantages of highly liquid US financial markets, its existing dominant role and the lack of an alternative all offer comfort to these concerns.

Past performance does not predict future returns

Fund launch: 01/05/2003

Source: FE fundinfo. Net of fees. Investors should note that fees and expenses are charged to the capital of the Fund. This reduces the return on your investment by an amount equivalent to the Ongoing Charges Figure (OCF). The OCF for the calendar year 2024 for the share class used for the fund performance returns was 0.81%. Returns for share classes with a different OCF will vary accordingly. Transaction costs also apply and are incurred when a fund buys or sells holdings. The performance returns do not reflect any initial charge; any such charge will also reduce the return.

The value of this investment can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you invested.
 

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