The portfolio outperformed its benchmark index this quarter, making it top decile in the Lipper peer group over the last 6 months and 1st quartile over one year*. This was partly a result of some of the changes we made to the portfolio and partly due to better performance from our mid-caps relative to the mega-caps we do not own. We expect this new trend to continue.

Q1 winners included Viking, Zealand, Nu Holdings, Eli Lilly and CRH all due to positive news -we took profits and trimmed them back to model weight. Q1 losers included GXO Logistics, B3, AP Memory, Globant and Dynatrace, all due to disappointing news. We sold GXO Logistics due to deteriorating earnings outlook; the rest are currently under review.

Year-to-date transactions and themes:

1. Weed out the losers quicker: sold Adobe, Danone, GXO and United Health as their earnings outlook and price momentum deteriorated.
2. New bull market in Japan: bought NEC and Recruit as their earnings outlook and price momentum improved.
3. New bull market in small-mid cap biotechnology: bought next-generation anti-obesity company Viking Therapeutics with positive drug results.
4. Obesity drug success is bad news for the consumer staples sector (ie less snacking): consumer staples is our biggest underweight relative to the index.
5. European companies with majority US revenues relisting in US creates significant value: holdings CRH and Linde continue to outperform since they moved their listing from Europe to US last year.
6. Emerging Markets growth stocks (avoid the value traps): holdings Mercadolibre and Nu Holdings (Latin American digital retail and finance).
7. Growth stocks in the financial sector are working again now the rate shock is over: holdings TPG and Ares(US private equity/debt).
8. Broadening bull market into mid-caps away from mega-caps: we increased our exposure to mid-caps, and will probably continue in this direction.
9. Our momentum stocks, such as semiconductors & anti-obesity are due a pause after a big run: we trimmed our biggest winners back to model weight.
10. What’s next? Lead indicators are improving, the global industrial/manufacturing recession looks like it is ending. We expect a broadening bull market with better performance from more cyclical stocks/sectors/regions.

We are positioned for 2024 probably being a vice versa of 2023 in several ways, with better performance from 2023’s laggards such as small and mid-caps, select emerging markets, and Japanese equities as earnings recover in these areas.

Our scenario analysis and outlook is 80% bullish and 20% bearish:
Scenario 1 = 10% probability US Magnificent Seven leadership continues. The Magnificent 7 is now down to the Magnificent 4, as Tesla and Apple earnings disappointed, and Alphabet (Google) earnings are now being questioned.
Scenario 2 = 70% probability of broadening bull market. Inflation & interest rates stabilising, and China (the world’s second largest economy) stabilising are catalysts for this positive outcome.
Scenario 3 = 20% probability of bear market or zig-zag. Resurgent inflation and interest rates rising, or geopolitics/Middle-East escalating, are catalysts for this negative outcome. 

After the significant rally in Q1 2024, we would not be surprised by a momentum reversal or a shallow correction in Q2 2024. The momentum signals we’ve seen recently suggest that small and mid-caps will see strong gains and outperform over the next 6 to 12 months. However, just because small and mid-caps look poised to outperform doesn’t mean there isn’t a place for some mega-caps with positive earnings revisions in the portfolio, particularly those exposed to the mega-trends of AI and obesity drugs.

Our top-down scorecard shows several important changes. The technology sector has become significantly overvalued but still has good fundamentals and trend. We expect other cyclical sectors’ fundamentals and trend to improve next. The success of the new anti-obesity drugs is becoming bad news for both the health care and consumer staples sectors (i.e. less comorbidities and less food & beverage consumption).

*Source: Lipper

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI All Country World Index (ACWI) is a market-capitalization-weighted index composed of over 2,000 companies, and is representative of the market structure of 48 developed and emerging market countries in North and South American, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars. Indexes mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.

Fund holdings, sector allocation, regional allocation and top 10 countries are subject to change without notification.

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI All Country World Index (ACWI) is a market-capitalization-weighted index composed of over 2,000 companies, and is representative of the market structure of 48 developed and emerging market countries in North and South American, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars. Indexes mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.