Alliance Witan PLC Fund Data

Global equity markets finished the month modestly lower in July in Sterling terms, but beneath the surface there were some dramatic moves. The strong momentum behind many artificial intelligence (AI)-related stocks went into sudden reverse, as investor bets using borrowed money were unwound. This gave rise to significant differences in returns between countries, sectors, and investment styles. The month saw a sharp rotation away from technology and semiconductor stocks, as investors questioned elevated valuations and the sustainability of AI-related spending. This hurt the US and emerging markets, which have relatively high exposure to growth stocks and the AI theme. However, value sectors such as energy and financial stocks were strong, benefitting markets where they have a heavy weighting. The UK, for example, outperformed most developed market peers. Overall, the pattern was of a broader range of returns, as even within the declining technology sector, there were some significant winners, suggesting investors are becoming more selective about where future profits from AI are likely to accrue. Our portfolio delivered a positive net asset value (NAV) return of 0.7%, versus a 1.3% decline in the MSCI All Country World Index. A widening of the discount meant that share price return was lower than the NAV return at 0.1%. The portfolio’s outperformance versus the market was mainly driven by good stock selection in the US, where relative returns were boosted by not having stakes in some of the big fallers such as Micron Technology, Intel and Tesla. We also benefitted from overweight positions in Microsoft, which gained 23%, and Mastercard, which rose 10%, as quality stocks staged something of a comeback after an extended period of underperformance.

Global equity markets finished the month modestly lower in July in Sterling terms, but beneath the surface there were some dramatic moves. The strong momentum behind many artificial intelligence (AI)-related stocks went into sudden reverse, as investor bets using borrowed money were unwound. This gave rise to significant differences in returns between countries, sectors, and investment styles. The month saw a sharp rotation away from technology and semiconductor stocks, as investors questioned elevated valuations and the sustainability of AI-related spending. This hurt the US and emerging markets, which have relatively high exposure to growth stocks and the AI theme. However, value sectors such as energy and financial stocks were strong, benefitting markets where they have a heavy weighting. The UK, for example, outperformed most developed market peers. Overall, the pattern was of a broader range of returns, as even within the declining technology sector, there were some significant winners, suggesting investors are becoming more selective about where future profits from AI are likely to accrue. Our portfolio delivered a positive net asset value (NAV) return of 0.7%, versus a 1.3% decline in the MSCI All Country World Index. A widening of the discount meant that share price return was lower than the NAV return at 0.1%. The portfolio’s outperformance versus the market was mainly driven by good stock selection in the US, where relative returns were boosted by not having stakes in some of the big fallers such as Micron Technology, Intel and Tesla. We also benefitted from overweight positions in Microsoft, which gained 23%, and Mastercard, which rose 10%, as quality stocks staged something of a comeback after an extended period of underperformance.