The year has started off with strong performance for our World Stars Global Equity strategy. As stock market valuations have increased, our selection of globally leading quality companies and our discipline on valuation have allowed us to benefit from the strong performance of companies in a wide range of sectors, including consumer, industrial and healthcare companies that are among the cheapest stocks we hold and offer great prospects for value generation.
President Trump’s second term has started with a large number of executive orders announcing or enacting policy changes that will have a significant impact on US politics, economics and society. The full impact will depend on when and how the changes are implemented over time. For now we note that the tariff announcements, among the most widely anticipated measures that are also among the ones most immediately within the power of the executive, appear to have been used for negotiating leverage with Canada and Mexico to achieve policy aims, as had been our expectations, and have had limited impact on the US economy so far.
The president’s foreign policy announcements are signalling a significant shift from prior policies and are opening both opportunities and risks for the resolution of global conflicts. They highlight the need for the United States, Europe and other countries to focus on their own competitiveness and ability to deliver stability, security, growth, prosperity and sustainability for their populations in a multipolar world. The US, Europe and other countries all need to invest in digital transformation, public infrastructure, capacity, education and healthcare, and improve the efficiency, costs and outcomes of public services. Much of this progress will be enabled and delivered by the companies we hold and we think it is a significant opportunity for them going forward.
One of the key developments for markets and for our strategy during the month of January were the announcements around DeepSeek and the potential implications for AI and computing capacity. We wrote in an Investment Insight that we thought that DeepSeek validated the potential of AI and the innovation that is taking place by industry participants to develop apps that are more efficient and provide targeted outcomes at potentially lower costs. We also said that the development was a normal part of technological innovation and that we thought it validated the need for the increased computing capacity led by Nvidia’s GPUs and enabled by many of the companies we hold which provide equipment, power management, software and other products and services to it.
