Global Quality Mid Cap - June 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 May, the Guinness Global Quality Mid Cap Fund provided a total return of +4.8% (USD) against the MSCI World Mid Cap Index net total return of +5.5% (USD). Hence, the Fund underperformed the benchmark by 0.7 percentage points. Further performance data is shown below.

Equity markets continued to rebound in May, buoyed by a significant easing in global trade tensions and US-UK trade agreement and progress with US and EU talks. Since the market bottom on 8th April, the MSCI World returned 19.2%, meaning the index is down just 1% since its prior market peak on the 18th February. This has been led by more cyclically orientated sectors as ‘risk-on’ sentiment has prevailed.

While this rebound may have been US-led, the Magnificent Seven accounted for the vast majority (if not all) of the US's performance versus the rest of the world. Without the impact of the Magnificent Seven, there was limited divergence across regions. The rebound to previous levels suggests markets have almost fully dismissed the potential risk of a worst-case scenario.

Source: Guinness Global Investors, MSCI as of May 2025

On a total return basis, Asia, Europe, and Emerging markets have all performed positively since the market peak on the 18th February, whilst the US remains c.3% below. Positive performance from non-US regions may reflect anticipated better-than-expected outcomes from the trade war, whereas negative US performance suggests market concern over the implications of protectionist policies, including rising input costs and reduced export competitiveness, self-inflicted economic drags. The implications of the significant developments seen year-to-date are unlikely to be fully understood, and further divergence is likely.

Whilst equities are again near all-time highs, uncertainty in the outlook is prevalent. Trump’s looming trade deal deadlines present clear risks, and the ‘Big Beautiful Budget Bill’ is driving concerns of fiscal irresponsibility.

In an extremely fast-moving market landscape, with the capacity for developments in each of these events to reverse, we are ultimately viewing each of these risks as short-term noise. Given our bottom-up process, we are instead focusing on company-specific fundamentals with a particular emphasis on quality. We believe our high-quality companies have the best chance of performing strongly relative to peers across various macroeconomic environments, given strong balance sheets, above-average margins, and a consistent ability to deliver economic profit.

In this commentary, we discuss the market rebound this past month, future macroeconomic risks, and developments in our 30-stock portfolio.

Past performance does not predict future returns

Fund launch: 15.12.2020

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 0.89%. 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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