European equity markets were lower over May. There was little in the way of major news to drive the lacklustre performance of indices generally, though much of the broader market commentary now seems to be assuming a recession in Europe in the coming months.
The fund was also lower over the month, though ahead of broader indices and also smaller companies, which continue to lag their larger peers in terms of performance.
There were strong performances from the fund’s semiconductor equipment manufacturers, benefitting from the expected demand for microchips driven by AI. AMG Critical materials (lithium assets) also performed well, following the signing of a significant lithium processing contract. Francais Energie (mine gas converter and net zero emission player) also performed well over the month. Also noteworthy were a number of our software and IT service holdings which performed well over the month, including EQS (regulation-driven software), TXT E-Solutions and Visiativ (both IT services).
Ox2, which develops onshore and offshore wind farms was weak over the month as it digested a placing of stock from a pre-IPO investor. Signify (lighting solutions) warned that trading was likely to remain subdued in the short term, causing the shares to decline over the month. Elsewhere, profit taking after strong share price performances was apparent with Zaptec (electric vehicle charging), Rheinmetall (Defence) and TGS (oil and gas services).
Over the month, the fund exited Signup Software, following the successful takeover of the company by private equity specialist Insight Partners. Signup was replaced in the fund by Pagero, a business-to-business software provider, specialising in digital transaction communications. We also took advantage of weakness in the share price of Ox2 to promote the holding, and the company is currently one of the largest positions in the fund.