• The portfolio outperformed its benchmark index in the fourth quarter and was 1st quartile in the Lipper peer group during the second half of 2023*
• Not owning Apple, Facebook, Nvidia and Tesla among the Magnificent Seven US mega-cap stocks was a significant contributor to our underperformance during the first half of 2023
• 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, emerging markets, and the Japanese yen

The portfolio outperformed its benchmark index in the fourth quarter, and was 1st quartile in the Lipper peer group during the second half of 2023*. This was partly a result of some of the changes we made to the portfolio and partly due to better performance from the midcaps that we own relative to the mega-caps we do not own. We remain positioned for this new trend to continue. Not owning Apple, Facebook, Nvidia and Tesla among the Magnificent Seven US mega-cap stocks was a significant contributor to our underperformance during the first half of 2023.

Purchases during the 4th quarter included AP Memory, Broadcom, Roper, and Synopsis in the technology sector, NU Holdingsin the financial sector, Eli Lilly and Zealand Pharma in healthcare – all due to positive earnings revisions and an improving outlook.

Sales during the 4th quarter included Aptiv and Unilever in the consumer sector, Henry Shein, Repligen and Thermo Fisher in healthcare, ANSYS in the technology sector, and CNH in the industrial sector – all due to our process of ‘weeding out the losers’ on the basis of negative earnings revisions and a deteriorating outlook.

After the significant rally in Q4 2023, we would not be surprised by a shallow correction in Q1 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, even if the overall indices struggle if the mega-caps that dominate these indices underperform after their exceptional outperformance in 2023. 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 2024 scenario analysis and outlook are 80% bullish and 20% bearish. Short term reasons to be bearish include the ongoing potential for a recession and geopolitical tensions. Medium term reasons to be bullish include the Fed regaining credibility with inflation and interest rates stabilising and an AI productivity boost.

Scenario 1 = 10% probability that US Magnificent Seven leadership continues. New bull market leadership is not usually the old Bull market leadership, but several things are ‘different this time,’ eg AI, Cold War 2.0 

Scenario 2 = 70% probability of broadening bull market. US interest rates stabilising or 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 geopolitical/Middle Eastern escalations are catalysts for this negative outcome

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, emerging markets and the Japanese yen. In 2023, small and mid-caps relative earnings and relative prices significantly underperformed large-caps (negatively impacting our portfolio’s performance) but showed early signs of a trend reversal in Q4 2023. We are already overweight small and mid-caps, and we think this is the beginning of a new positive trend for small and mid-caps relative to large-caps globally. In 2023, the US improved while emerging markets deteriorated, but we expect vice versa in 2024 as the US economy slows and emerging markets’ earnings improve. In 2023, the Japanese Yen significantly underperformed as the Bank of Japan (BOJ) became the last central bank with negative interest rates, but this might end in 2024, and the Fed’s recent dovish pivot and BOJ’s recent loosening of yield curve control are both Yen bullish.

*Peer group of funds includes all funds classified as Global Equity by either the Investment Association (IA) or Lipper Global. Funds included may be domiciled in the UK, Ireland, or Luxembourg. Peer group is comprised of 1870 funds as of December 31, 2023.

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.