The greatest trick the investment devil ever pulled was distracting the world with tariffs. Diverting attention towards trade wars has led to an opportunity cost for many investors that far exceeds the direct impact of those trade wars themselves. Amidst the tariff chaos, the investment capex revolution continues to go unnoticed by many commentators. The markets, however, have taken note, and many of the world’s leading indices are sitting at or near all-time highs as we enter the second half of 2025.

The AI-led capex boom is deepening within technology, broadening into industries, and spreading further across the globe than even the most optimistic forecasts from six months ago. This generational investment cycle, which has underpinned much of the strength of the US economy and markets over the last three years, is now gaining momentum globally. An AI infrastructure arms race has begun, with positive investment implications across multiple sectors and regions.

Against a backdrop of falling inflation, a record number of global interest rate cuts, and a deeper cutting cycle from the Federal Reserve, it is hard for us to reconcile the persistent cynicism in markets regarding risk assets. Accelerating earnings growth into 2026, stable margins, and over a trillion dollars in share buybacks should not be overlooked. The tariff war has fizzled out, and even the more concerning elements of the emerging tax war have eased following the removal of Section 899.

The funds have had a strong 2025 to date, substantially outperforming all relevant peers and passive benchmarks. Our active, style-agnostic, and pragmatic approach has once again delivered for investors. The second quarter of 2025 produced the largest ever relative outperformance versus the benchmark in the long history of the funds.

The year-to-date outperformance can be attributed to five key drivers:

1. Style Agnosticism
   2025 has brought a dramatic reversal in the stocks, sectors, regions, and factors that led markets in 2023 and 2024. The funds have outperformed across all three years as they are not tied to any single investment style.
2. Stock Selection
   At the heart of what we do is running no benchmark positions. Over 25 individual stocks have contributed significantly to performance this year, including UK banks, European defence, US stablecoins, global subscription services, and Irish airlines.
3. Proactive Asset Allocation
   Following the post-US election day euphoria and a collapse in volatility, we reduced exposure to the lower end of our investment range. After Liberation Day’s capitulation and the subsequent surge in volatility, we moved back towards the higher end.
4. Tactical Opportunities
   Our decision-making around the so-called “Deepseek Monday”, which saw key power and energy holdings fall by seven standard deviations, added to returns. Our investment culture is built to exploit rapid, unexpected market events.
5. Risk Management
   Our top 20 contributors have delivered almost twice the return relative to our top 20 detractors. We consistently cut underperforming positions early, meaning our mistakes typically cost half as much as our successful investments deliver.

As we enter the second half of the year, the funds are fully invested, with notable overweight positions in the following areas:

• Technology: AI infrastructure, analogue semiconductors
• Industrials: Electrical engineering, US defence, reshoring, US agriculture
• Energy: Global LNG ecosystem, European power demand
• Consumer Discretionary: Quality and luxury brands, e-commerce 2.0
• Materials: Copper
• Consumer Internet: Subscription services
• Medtech: Robotic surgery

This marks quite the turnaround from the start of the year, when we were overweight cash, energy, defence, and global banks in particular. We remain overweight in US dollars, while the duration in the fixed income portfolio is relatively neutral. We are mindful of geopolitical risks, especially as we approach the latest tariff deadlines over the summer. However, as we view markets and economies through our investment lens of a tried and trusted three-pillar process, we continue to see solid earnings and economic growth, both now and into 2026.

Written by Philip Byrne, Cantor Fitzgerald Asset Management CIO