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April was dominated by the tariff news feed – and at times we experienced volatility not seen in decades. At the beginning of the month, Trump tariffs were announced that were much higher than we or the market expected, and the market understandably attributed a much higher probability to the worst-case stagflation/recession scenario.
The 90-day pause in reciprocal tariffs (although tariffs on China were raised at the same time) subsequently caused a significant rally in the market and in technology stocks. Volatility eased somewhat towards the end of the month, and the market seemed to focus more on earnings and corporate fundamentals, although tariff debates and uncertainty clearly remain, and the world wonders if and when trade deals will be struck.
For us, April kicked off the first quarter tech earnings season. Results so far have been solid. TSMC (owned and an important read for broader tech) beat market expectations and maintained its guidance for the year – impressive given the potential for tariffs and macroeconomic disruptions. TSMC makes chips for all the leading AI semiconductor players, making them a key part of the broader sector. We therefore see this as a positive interpretation, particularly for Nvidia, AMD and Broadcom (all owned).
ServiceNow (owned) reported solid results that beat expectations. While the market had been worried about Fed budget cuts (IT services firms like Accenture have pointed out the impact of DOGE), its public sector business remained strong, with bookings up 30% year-over-year. We continue to believe it is one of the best software names in its class, growing profitably at scale, and one of the best positioned for AI monetization.
We continue to believe that market reactions and negative share price performance so far this year are at odds with the company's fundamentals, where macro flows appear to dominate. We continue to focus on fundamentals and on owning strong and resilient companies with long-term structural growth drivers.
The portfolio declined by 1.6 % in April (but increased by 2 % in USD). The biggest drivers of the outperformance were Broadcom and ServiceNow.