Equity markets rallied in the fourth quarter 2024 in response to rising hopes for rate cuts during. In the first quarter 2024, those hopes receded somewhat, not least because progress back to 2% inflation appears to be stalling, but equity markets continued to rally and volatility continued to fall. The VIX volatility index is back to pre-Covid levels.

The market continued to be led by the technology and media sectors, nor was it purely a US rally - semiconductors outside the US were also very strong; for example, both TSMC and ASML were up 31%, and it is worth noting that the Japanese market outperformed the US, helped by further yen weakness and improving macro sentiment. Nevertheless, the rising cyclical optimism was certainly, with strength in industrials and materials reflecting a variety of lead indicators turning upwards, including housing starts, rail volumes and the manufacturing PMI index, which ended the quarter above 50 for the first time since October 2022. The trough last year, if it turns out to be a trough, has been very mild. One explanation is the unusual lack of coordination between different cycles since Covid. For example, light vehicle sales were weak in 2020 to 2022 and recovered quite strongly last year, whereas housing starts were strong until mid-2022 before weakening due to rising interest rates. Most recently, we have seen various post-Covid destocking cycles affecting diverse sectors such as transport/logistics, beverages and healthcare.

We don’t have much direct exposure to cyclicals or the semiconductor sector, so we underperformed during the quarter, but it was pleasing to see good performance from the names we do have with exposure to these areas. The thesis of a renewed cycle of capital expenditure and infrastructure renewal is coming through nicely.

Drags on absolute performance came from a few names in sectors affected by the destocking cycle mentioned above. We are monitoring both valuation and fundamental execution to assess whether these situations are buying opportunities. Our exposure to the health care sector continues to grow. It is probably the best place to find ‘forgotten middle’ names at present, with valuations looking increasingly attractive as a few temporary headwinds have masked the structural tailwinds from demographics, innovation and outsourcing.

It has been unrewarding in recent months to be invested in stocks with poor relative earnings momentum in a market which, in the short term, is as much an extrapolating machine as a voting machine. We will continue to ensure the portfolio has a good balance between companies with strong execution trading at reasonable valuations and companies on much more compelling valuations but with weaker current execution, which we believe is leading investors to ignore a strong longer-term outlook.

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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

*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.

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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

*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.