Global Quality Equity - March 2025 Monthly Update
- chirlen
- Apr 20
- 2 min read
The Insync Global Quality Equity Fund returned 0.97% in the three months to March 2025, outperforming the benchmark by 2.91%.
Key contributors to performance included our overweight position in Tencent and a zero allocation to NVIDIA. NVIDIA’s share price declined 20% following the release of the DeepSeek model, which demonstrated strong performance with seemingly lower hardware requirements. This raised concerns among investors that demand for NVIDIA’s high-end chips may be overstated if future AI models can be trained and deployed more efficiently.
On the other hand, Alphabet continued to disappoint in March, making it the biggest detractor from Fund performance for the March quarter. The broader “Magnificent 7” cohort faced significant selling pressure in March, as investors rotated out of richly valued stocks in anticipation of tariff announcements and amid rising market volatility. Pleasingly, Alphabet remains focused on strengthening its Cloud business, announcing a deal in March to acquire Wiz, a fast-growing cybersecurity firm, to bolster its enterprise offerings.
The start of 2025 proved to be more volatile than many had anticipated, with policy uncertainty quickly becoming the dominant force behind market movements. In the U.S., a wave of tariff-related announcements weighed on market returns, while consumer sentiment declined for three consecutive months. U.S. equities, as measured by the S&P 500, dropped 5.6% in March alone, driven by growing concerns that tariffs could exacerbate inflationary pressures and weigh on growth by driving up costs and constraining consumption.
Uncertainty surrounding U.S. trade policy also reverberated across global markets, with the MSCI AC World ex Australia Index (AUD) falling -4.16% in the month. For investors closely tracking global developments, the relatively subdued first quarter was quickly overshadowed in early April by President Trump’s announcement of sweeping reciprocal tariffs. If anything, it validated investor caution heading into April 2nd, as the Trump administration unveiled the most significant tariff hike since the 1930 Smoot-Hawley Act — legislation widely remembered for igniting a global trade war and exacerbating the Great Depression.
Looking ahead, the upcoming U.S. reporting season will be critical in helping investors assess how companies are navigating the evolving macro environment, including the potential impact of trade disruptions, margin pressures, and shifting consumer behaviour. With volatility likely to persist, earnings guidance and management commentary will play a key role in shaping market expectations for the remainder of the year.
We continue to anticipate heightened market volatility, as the imposition of tariffs presents significant challenges to the global economy. During the March quarter, we proactively reduced our exposure to U.S. equities, selectively adding to positions we believe are more attractively valued. We also modestly increased our cash holdings to manage ongoing uncertainty, and will look to deploy capital opportunistically as greater clarity emerges around trade policy developments.
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