Performance update

Global equity markets were mixed in November. The MSCI World Index fell about 3.7% in euro terms mid-month as renewed concerns over AI valuations weighed on sentiment but recovered to end the month down just 0.3%, supported by growing expectations of Federal Reserve “The Fed” rate cuts. Emerging markets declined roughly 1.7%, driven by weakness in technology-related stocks.

Year-to-date, global equities have returned approximately 7.2% in euro terms, though much of this gain has been driven by lower-quality, unprofitable segments of the market. In contrast, Quality stocks—companies with strong margins, competitive advantages, and robust balance sheets—have significantly lagged broader equities. This trend has also acted as a headwind for responsible investment strategies, which typically exhibit a strong quality bias due to their emphasis on sound corporate governance. (See Figure 1)

Figure 1: Global Equity Returns

Source: MSCI, Bloomberg, Portfolio Management Group.

Global Aggregate fixed income posted a modest gain of 0.1% in November, supported by early equity market volatility and anticipation of a December rate cut. The asset class has returned 3.1% year-to-date. Meanwhile, in a reversal of its recent trend, the US dollar depreciated by 0.5% against the euro during the month. Year-to-date, the euro has strengthened by more than 11% versus the US dollar.

Within the Social Focus Core portfolio range, monthly returns varied from 0.0% in Cautious Growth to -0.4% in Long-Term Growth. Across the Social Focus GPS range, returns were -0.1% for Cautious Growth, -0.5% for Moderate Growth, and -0.9% for Long-Term Growth.

As we enter the final month of the year, Social Focus Core portfolios have delivered positive year-to-date returns: Cautious Growth +4.6%, while both Moderate Growth and Long-Term Growth portfolios have achieved +4.7%. For the Social Focus GPS range, year-to-date returns are: Cautious Growth +4.3%, Moderate Growth +3.9%, and Long-Term Growth +4.0%.

Portfolio commentary

Despite the headlines around the US stock market, including the artificial intelligence theme, and hyperscaler dominance, it’s worth noting that diversification outside of the US has paid off in 2025. U.S. equities have underperformed all major regions in local currency terms, and this gap is even wider in euro terms due to dollar weakness (see Figure 2).

Figure 2: Regional equity returns in local currency and in euro

Source: Bloomberg, Portfolio Management Group as at 30-Nov-2025.

Our tactical equity positioning has focused on reducing exposure to the concentrated and expensive U.S. market. Social Focus solutions maintain tactical allocations to Euro-Hedged Global SRI Equity, Equal Weight ESG S&P 500, and an overweight position in European SRI Equity. Within U.S. equities, we have tilted away from mega caps through an equal-weight approach and reduced dollar exposure via currency-hedged equity positions. The equal weight and global hedged equity worked particularly well in November and year-to-date tactical allocations have generated meaningful alpha versus benchmarks.

Alternatives also delivered another strong month, with gold, hedge funds, and real estate outperforming bonds. The only detractor was our structured note on the Japanese yen, as the currency weakened against the euro. Year-to-date, the alternatives sleeve has returned 12.7% in aggregate, significantly outperforming both bonds and equities. Our strategic decision to allocate to liquid diversifying strategies (+6.4%) and gold (+44.1%) has been a key driver of this outperformance.

As noted in previous letters, active management in U.S. equities has been challenged this year. Mega-cap dominance, AI-driven momentum, narrow market breadth, and a low-quality rally created a difficult backdrop for fundamental, quality-focused stock pickers. However, there have been positives within our active global and active emerging market equity allocations.

Maj Invest Global Value Equities

Maj Invest Global Value Equities has been a notable performer year to date, returning c.+14.4%. The fund is value focused in its approach and invests in stocks that are characterised as being undervalued relative to the companies' underlying fundamental and business value. The fund's objective is to generate returns that, over time, exceed market returns as measured by the broad global index and follows a highly focused investment approach, holding 25-35 stocks.

Notable contributors to this performance year to date (in euro terms) include Samsung Electronics (+70.2%), Applied Materials Inc (+35.8%) and Lasertec Corporation (+67.1%) who each have exposure to the dominant AI theme.

Vontobel EM Sustainable Leaders

Vontobel EM Sustainable Leaders, held within the Emerging Markets equity allocation, has delivered a strong year-to-date return of approximately +17.2%.

The fund’s investment philosophy is rooted in the belief that selecting the right companies drives long-term performance. It combines systematic screening with fundamental research to identify portfolio candidates that exhibit:

• Above-average quality in terms of ROIC, industry positioning, and ESG practices

• Above-average growth potential

• Below-average valuation

Vontobel believes that profitable companies with superior industry positions are best placed to reinvest in future growth—and that their stock prices often reflect this strength. The portfolio management team employs a bottom-up approach, using a rigorous investment framework to identify attractively valued industry leaders. These companies consistently deliver high returns on invested capital, maintain strong competitive positions, and effectively address ESG considerations. Vontobel’s conviction is that such leaders tend to remain leaders over time.

Notable contributors to the fund’s performance year to date (in euro terms) include Samsung Electronics (+70.2%), Taiwan Semiconductor Manufacturing (+29.9%), Wiwynn Corporation (+65.2%), benefiting from exposure to AI.

Another notable contributor comes from the materials sector with Gold Fields Ltd (+180.7%) benefitting from the strong performance of Gold.

Portfolio changes

There were no changes to the Social Focus offering during November.