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The Global Security Fund followed up a strong 2024 with a return of 7.74% in January. Over the past 36 months, the fund has returned 71%, demonstrating the importance of considering geopolitical risk.
The stock markets have provided good returns but also higher volatility and Trump's entry has left its mark on the markets. Geopolitics and geoeconomics will continue to be relevant for the economy and the markets in both the short and long term. Trump is pressuring allies with trade tariffs and access to critical territory such as Greenland and Panama. We have ongoing reglobalization and, alongside military conflicts, increasingly tangible competition between trading blocs, most clearly between the BRICS+ and the G7 countries. This affects growth conditions, the risk of inflation and ultimately the conditions for profit growth for companies.
The Global Security Fund focuses on structurally strong growth markets and in January the fund increased its positioning in South Korea, which is an important ally for Western democracies in the crucial Pacific region. This region, like Europe, will grow strongly and later overtake in growth rate, after which the fund's exposure in the region will continuously increase. At the same time, we continue to invest responsibly and choose companies and countries that meet our sustainability criteria.
| January 2025 – Highest Development | January 2025 – Lowest Development | ||
| Cloudflare | 28,53 % | Clavister | -12,18 % |
| Rheinmetall | 24,73 % | Lockheed Martin | -4,73 % |
| Invisio | 23,36 % | CACI International | -4,41 % |
| AeroVironment | 17,06 % | SAIC | -3,13 % |
| Crowdstrike | 16,34 % | General Dynamics | -2,47 % |
Company-specific news
During the month, both European defense stocks and US technology stocks in the portfolio rose. Cybersecurity continued to develop strongly, apart from a brief decline at the launch of China's AI model DeepSeek. Our increased allocation to cyber has yielded good returns.
Rheinmetall stood out and was one of the strongest positions of the month. The company has won several large contracts during the year, including a €3.22 billion contract for the digitalization of the German army, a €330 million contract for the supply of transport vehicles to the same army, and a €280 million contract from the Italian army for the Skynex Air Defense System.
On the downside, some US companies fell after quarterly reports. Lockheed Martin reported a sharp decline in net profit for Q4 as the company was forced to take billions in write-downs related to classified military projects. General Dynamics beat market expectations for Q4, but the stock fell due to a more cautious outlook for 2025.
US C4ISR companies continued to decline in January as the subsector faces cuts from the US government. Companies are responding by clearly emphasizing that they are streamlining and reinvesting in technology rather than implementing broad cost savings. CACI highlighted its role in the transformation through agile software development and DevSecOps.
Follow Fund reporting about geopolitical developments and also comments on defense companies' reports.