Global markets experienced heightened volatility in the final quarter, driven by a confluence of disruptive factors including, but not limited to, the US government shutdown, conflicting signals from the Federal Open Market Committee (FOMC) members, an unprecedented surge in Japanese sovereign bond yields and geopolitical shocks such as the resignation of France’s Prime Minister.

Despite these events, global equity markets extended their gains as the MSCI All Country World Index climbed 3.4% over the fourth quarter. This translated into a 22.9% gain in 2025. Earnings’ releases displayed an unwavering level of resilience and were the primary contributor to total return. Conversely, the P/E multiple contracted over the quarter amid tightening liquidity dynamics due to the government shutdown, Fed balance sheet runoff and dwindling reserve levels. This was also exacerbated by divergence among FOMC member views which clouded the outlook for an eventual 25 basis point rate cut at the December meeting on the back of a weaker labour market and softer inflation levels. In response to liquidity concerns, the FOMC announced plans to purchase $40 billion in Treasury bills per month through April 2026.     

Fixed income returns were subdued as the Bloomberg Global Aggregate Index delivered a modest gain of just 0.2% over the quarter. The asset class was weighed down by a rising term premium, reflecting growing fiscal concerns - particularly across developed markets - where elevated debt levels and persistent deficits exerted upward pressure on long-end yields. Japanese government bond yields climbed to multi-decade highs during the quarter, driven by heightened fiscal optimism following the historic election of the nation’s first female prime minister and her commitment to aggressive stimulus measures. In the UK, the fiscal budget dominated headlines, ultimately imposing an even heavier tax burden on households and businesses.

Interestingly, European equities posted solid gains over the quarter, led by defensive sectors such as Healthcare and Utilities. This defensive tilt was not unique to Europe as Healthcare, in particular outperformed globally, likely reflecting a cautious risk posture amid lingering macroeconomic uncertainty.

Emerging Markets demonstrated resilience, advancing 4.8% over the quarter, driven by robust gains in key regions such as South Korea, Taiwan, and India. In contrast, Chinese equities lagged despite a reduction in the effective US import tariff burden on Chinese goods. The underperformance was concentrated in cyclical sectors - most notably Information Technology - as high-frequency economic indicators consistently fell short of expectations, amplifying concerns over subdued domestic demand.

As we move into 2026, we expect several factors to continue supporting positive market performance. These include the passage of the ‘One Big Beautiful Bill,’ the potential for a more accommodative Federal Reserve chair, ongoing deregulation and a pronounced increase in capital expenditure - particularly in technology-related developments. That said, we acknowledge that meaningful left-tail risks persist, including possible hawkishness from certain FOMC members, renewed escalation in global trade tensions, persistently elevated term premiums in developed sovereign bond markets, as well as earnings disappointments in artificial intelligence and adjacent sectors.

Fund Strategy

The Ashburton SICAV Multi-Asset Fund range is managed using a core-satellite approach, underpinned by a detailed look-through analysis of the underlying building blocks to ensure optimal diversification. The equity allocation is primarily anchored by two flagship strategies: the Ashburton Global Equity Growth Fund, which targets companies with robust free cash flow potential, and the Ashburton Global Leaders Fund, now managed by Morgan Stanley Investment Management, which focuses on high-quality businesses with the ability to compound intrinsic value over time.

The primary driver of returns has largely stemmed from the asset allocation decision to remain overweight equities. We see risks skewed to the upside, supported by resilient corporate earnings, more accommodative US monetary policy and tailwinds from corporate tax cuts and deregulation measures expected to take effect in 2026.

On the fixed income front, we remain cautious about rising term premiums in developed markets, driven by widening fiscal deficits. Accordingly, we continue to limit duration risk while favouring selective exposures that benefit from the global risk-on sentiment, including:

• UK and Emerging Market local currency government bonds, to capture higher yields and dollar softness
• Short-term TIPS, to capture short-term inflation carry

We also maintain a meaningful allocation to strategic hedges, with gold serving as a core diversifier amid elevated geopolitical tensions and ongoing macroeconomic policy uncertainty.

In addition, we continue to favour alternative exposure through a market‑neutral long/short strategy, which has delivered strong results over extended periods and consistently outperformed relative to fixed income.

Fund Performance:

The USD Global Growth Fund and Global Balanced Fund both advanced 3.1%[1] over the quarter, outperforming their respective Morningstar peer groups, which rose 2.7% and 2.2%. This outperformance was largely driven by our decision to maintain a sizeable equity beta, capitalising on the resilience evident during earnings season. This was achieved despite the Global Equity Growth building block declining over the period, as certain stock selections underperformed relative to expectations.

The iShares Physical Gold ETC continued to make a meaningful contribution, surging 12.2% in Q4 2025 and reinforcing its critical role as a diversifier in the current environment. Alongside this, our other strategic hedge - the market‑neutral long/short strategy - delivered a 6.2% gain, adding solidly to the strength of our alternatives positioning.

Disclaimer:

Waystone Management Company (Lux) S.A. is regulated by the Commission de Surveillance du Secteur Financier (CSSF) (ref A00000395 & S00000734), Waystone Management Company (Lux) S.A. is a company located in Luxembourg, L-1273 Luxembourg at 19, Rue de Bitbourg. This document is Issued by Ashburton Fund Managers (Pty) Limited (The Investment Manager) (Reg number 2002/013187/07), which has its registered office at 3 Merchant Place, 1 Fredman Drive, Sandton, 2196, South Africa and is an authorised financial services provider (FSP number 40169), registered with the Financial Sector Conduct Authority (FSCA). The funds are authorised in Luxembourg and regulated by the Commission de Surveillance du Secteur Financier (CSSF).

In South Africa, the Fund(s) is/are approved for promotion under section 65 of the Collective Investment Schemes Control Act 2002. The Fund Prospectus, and further information including pricing and charges, may be viewed at the Fund’s representative office in South Africa: Ashburton Management Company (RF) Proprietary Limited (“Ashburton CIS”), of the same address. Ashburton CIS is an approved collective investment schemes manager regulated by the Financial Sector Conduct Authority and a full member of the Association of Saving and Investments South Africa. In the event a potential investor requires material risks disclosures for the foreign securities included in a portfolio, the manager will upon request provide such potential investor with a document, outlining potential constraints on liquidity & repatriation of funds; Macroeconomics risk; Political risk; Foreign Exchange risk; Tax risk; Settlement risk; and Potential limitations on the availability of market information. The value of participatory interests and the income from them may go down as well as up and is not guaranteed. Past performance is not necessarily a guide to the future performance. Where an investment involves exposure to a currency other than that in which it is denominated, changes in rates of exchange may cause the value of the investment to go up or down. CIS portfolios are traded at ruling prices and can engage in borrowing and scrip lending. A full detailed schedule of fees, charges and commissions is available from Ashburton on request and incentives may be paid and if so, would be included in the overall costs. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The manager has a right to close the portfolio to new investors in order to manage the portfolio more efficiently in accordance with its mandate. This document does not constitute an offer or solicitation to any person in any jurisdiction in which Ashburton Fund Managers (Pty) Limited is not authorised or permitted to communicate with potential investors, or to anyone who would be an unlawful recipient. The original recipient is solely responsible for any actions in further distribution of this document and should be satisfied in doing so that there is no breach of local legislation or regulations. This is a marketing communication. The Management company has the right to terminate the arrangements made for Marketing. Additional information about this product, including brochures, prices, application forms, Prospectus, KIID and annual or half-yearly reports, can be obtained from the Manager, free of charge, and from the website: www.ashburtoninvestments.com.