Mirabaud - Global Dividend A dist. USD

Performance update

Markets continued April's strong rebound into May, with the MSCI AC World Index finishing the month only slightly behind the February highs. Growth and quality outperformed, whereas high dividend and value strategies lagged. Returns in the US were stronger than Europe. From a sector perspective, technology, communication services and industrials led, whereas healthcare, energy, staples and real estate lagged.

The biggest contributors to relative performance were Broadcom and Microsoft. Broadcom bounced back strongly post the sell-off, with DeepSeek fears also being assuaged by continued high levels of AI infrastructure capex from hyperscalers, including Microsoft. The latter's earnings signalled a return to form, with accelerating revenue growth, significant contributions from AI, and margin expansion.

Unheld names accounted for four out of five of the worst relative contributions to performance (Nvidia, Meta, Amazon, Tesla), leaving Clorox as the only held name in the list. Clorox maintained full-year guide but organic growth was weak during the quarter, suggesting that their fiscal Q4 will have to be strong – and so-far, the market is not convinced. Longer term, we still see a path towards significant margin accretion.

Portfolio activity

We bought a new position in Analog Devices, a leading semiconductor name that focuses on consumer and industrial end-markets. We have had limited exposure to these markets for the last two years, preferring AI-focused semiconductor names, such as Broadcom. The consumer and industrial end-markets have been in decline for eight quarters, but green shoots have started to emerge. Analog Devices have said that their revenues bottomed in 2024, inventories are lean, and that they are in a cyclical upturn. The company has guided to 7–11% through cycle revenue growth (from c.5% prior) with peer-leading financial returns.

We sold Coloplast after a profit warning in May and a subsequent change in CEO. The thesis was that Coloplast had reinvigorated its top line growth through Atos and Kericis, and subsequent to this would rebuild its margin profile. Unfortunately, there has been very little sign of this, with a continuous flow of one-off negative issues pushing out returns. Without a CEO at the helm, it's hard to see how these short-term issues will be resolved, let alone how the margin can be rebuilt.