The Fund will attempt to achieve over the long term a total return in excess of that of the MSCI World Index (with net dividends reinvested) through investment in a concentrated portfolio of equities of predominantly large companies, selected from all the major markets and to a lesser extent from some emerging markets, worldwide. The approach is classic contrarian value, based on bottom-up fundamental research of individual companies. The average market capitalisation of companies represented within the Fund is likely to be more than US$20 billion.
| Share class | AMC* | TER** | Bloomberg | ISIN |
|---|---|---|---|---|
| A USD | ||||
| Share Class: A USD | AMC: 0.90% | TER: 1.25% | Bloomberg: OVRGLEA ID | ISIN: IE00B0LLH007 |
| C USD | ||||
| Share Class: C USD | AMC: 1.25% | TER: 1.60% | Bloomberg: OVRGLEC ID | ISIN: IE00B0LLH114 |
| C GBP Unhedged (formerly Hedged) | ||||
| Share Class: C GBP Unhedged (formerly Hedged) | AMC: 0.90% | TER: 1.25% | Bloomberg: OVGECGH ID | ISIN: IE00BZBVQX19 |
Sam Ziff joined OP in April 2013. He was previously employed by J.P. Morgan Cazenove working in the UK Industrials Corporate Finance team for a total of 4 years. He graduated from Oxford University. He manages the global equity and global equity income portfolios, and contributes to the overall investment selection.
In Q1 2025 the fund rose 10.1% while the MSCI World Index fell 1.8% and MSCI World Value rose 4.8% in USD. The largest negative contributors to performance were Whitbread (-17%, total return in local currency), Walt Disney (-11%) and easyJet (-19%). The largest positive contributors to performance were Alibaba (+55%), Lloyds Bank (+32%), and Heineken Holding (+16%).
Winds of change
The quarter was best characterised by change. Since Monday 20th January 2025, the day President Trump took office, there have been numerous changes that have reframed perspectives about the global world order.
The first event wasn’t Trump-related. Five days after his inauguration, China’s AI model, DeepSeek, captured global attention, prompting a major rethink of AI industry prospects. Even before DeepSeek emerged, semiconductor demand was already showing signs of a slowdown in growth, causing Nvidia, the AI boom’s posterchild, to lose about 20% of its value in the first quarter.
February and March saw three Trump-linked shocks: US Vice President JD Vance stunned Europe on 14th February by criticizing its democratic values; Ukraine’s President Zelensky’s White House visit on 28th February, intended to be the start of finding a route to peace, exploded into a public shouting match; and Germany’s incoming chancellor, Merz, reacted by pledging a bold, “whatever it takes” defence policy and creating the fiscal capacity for Germany to spend an additional €1.5 trillion on defence and infrastructure.
Back at home, Trump’s economic policies form a triad of austerity (reducing deficits), tariffs (reviving manufacturing), and immigration caps (protecting American jobs). What this all means is uncertainty; something markets certainly dislike.
Performance
The portfolio has benefited from these events on both a relative and absolute basis as well as having some stock-specific benefits. During the quarter 75% of the holdings posted a positive return despite the index being flat and nearly half of the holdings rose by more than double digits.
The three worst performers were Whitbread, Disney, and easyJet. These are all consumer discretionary stocks in the US and UK. The companies themselves did not report any specifically negative news during the quarter but there is certainly evidence of a weakening consumer demand in the Anglosphere.
Whitbread is expecting to see costs increase by c.5% this year, partly due to recent tax rises but is targeting £50m in cost savings to offset this. Despite the near-term weakness, Whitbread is well positioned, with a strong value for money offering, with new hotel supply limited. It has a five-year strategy to boost pre-tax profit by £300m, 60% above this year’s forecasts. The current valuation, at only 12 times earnings, is attractive relative to recent market transactions, such as the Motel One acquisition.
Alibaba, the Chinese online retailer, was the standout performer in the quarter. The company benefited from the January launch of DeepSeek’s R1 AI chatbot showing the world that China can do AI. Alibaba’s own AI models also showed impressive results. Driven by increasing demands for AI, Alibaba’s cloud business returned to double digit growth in its most recent quarter. The company’s valuation remains attractive, trading at just eleven times price-to-earnings, excluding net cash on the balance sheet.
Lloyds performed well alongside other European banks. This has been driven by a steepening of the yield curve post the fiscal ‘bazooka’ from the German government. The company guided to a £2.7bn benefit from higher interest rates in 2025 and 2026 compared with net income of £4bn in 2024. The shares still trade at under ten times this year’s expected earnings.
Portfolio changes
Lear, the US based auto seats manufacturer, was the most recent addition to the portfolio. We have followed the company for the last couple of years. We made the decision to invest as the valuation had fallen to a multi-decade low on all three metrics of price to sales (0.2x), earnings (7x) and book (1x).
Lear’s performance has been largely driven by weaker global automotive production. This has seen the average age of a US car reach 14 years, up from 12 years prior to the pandemic. Assuming a recovery in global auto sales the shares look to be trading at under five times price to earnings with the average over the last couple of decades being around twice that, implying around 100 percent upside.
To fund the purchase of Lear, we sold the position in Middleby, the US-based food equipment manufacturer. Middleby’s valuation had risen to approximately 17 times price to earnings after an activist investor showed interest in forcing a break-up of the company. We initially acquired Middleby in December 2023 at 13 times price to earnings and held it for just over a year.
We also sold LG H&H, a Korean beauty product company. This investment was disappointing. The company had previously thrived, particularly through its successful History of Whoo brand. Covid-related travel restrictions created what we thought was an attractive opportunity to invest. Unfortunately, the post Covid recovery has been slower and more challenging than anticipated. LG H&H may eventually recover but we currently see superior investment opportunities elsewhere.
Conclusion
With the winds of change in the air one may think that the market has made huge adjustments to expectations. However, this is not yet the case. The S&P 500 still trades at 35 times the Shiller PE (98% percentile) while European stocks remain tethered to the long run average at around 20 times.
Allocations to US equities are still elevated. The MSCI World Index is still over 70% invested in the US compared with around 40% in the MSCI World Equal-Weighted Index. The power of passive has seen global investors flock to the US. Net foreign ownership of US assets has risen from $5trn to nearly $25trn over the last decade. If this money were to return home, it would have a sizeable impact on stock markets and as one FT commentator described it, “lighter allocations to Trump’s America represent basic risk management at this point.”
The absolute prospects for the portfolio remain attractive with a headline multiple of around 10 times price to earnings and a weighted average upside of over 50%, above the long-run average. As we said last quarter, we believe that the relative starting valuations of the portfolio, the attractive portfolio upside, and the relatively poor sentiment surrounding value investing set us up favourably for the long term. Sentiment may be just at the beginning of a major turn.
Investment review
During the quarter, we conducted our annual investment review, providing an opportunity to reflect on areas for improvement. Since 2005 Oldfield Partners has made over 550 investments. A thorough analysis indicates that small tweaks to our approach could significantly enhance our results.
One key insight from our review underscores the importance of investing at low absolute valuations. Approximately 25% of our investments were made at valuations below nine times historical earnings. The probability of a successful investment amongst this cohort was the same as the average investment. However, the less than nine times cohort experienced smaller losses when underperforming and greater gains when outperforming. This was consistent across all strategies. Notably, this relationship held true for historical earnings-based valuations but not for consensus forecast-based valuations – focusing on valuations rather than forecasts is an important part of our process.
The significance of low absolute valuations in generating excess returns is not surprising, though reassuring particularly during a period in which a value approach has underperformed. Maintaining this discipline becomes increasingly important as market indices rise to near-record valuations. Our analysis reinforces our commitment to focusing on attractively priced companies as a key driver of excess returns.
Additionally, we remain committed to enhancing our research and investment review processes. AI-driven tools have recently generated significant productivity gains, notably OpenAI’s Deep Research product, which has fundamentally transformed our research approach. We highly recommend exploring this tool if you haven’t already. Looking ahead, we anticipate further advancements in AI to benefit our investment processes.
| Annualised | ||||||
|---|---|---|---|---|---|---|
| 1 month | YTD | 1 year | 3 years | 5 years | Launch | |
| Fund (A shares) | +1.7 | +12.0 | +12.8 | +4.4 | +8.3 | +5.2 |
| MSCI World | +0.9 | -0.9 | +12.2 | +11.1 | +13.9 | +8.0 |
| MSCI World Value | -1.4 | +3.4 | +11.0 | +8.4 | +12.8 | +6.2 |
| Annual performance | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| Fund (A shares) | -0.1 | +11.7 | -11.6 | +9.8 | -5.3 |
| MSCI World | +18.7 | +23.8 | -18.1 | +21.8 | +15.9 |
| MSCI World Value | +11.5 | +11.5 | -6.5 | +21.9 | -1.2 |
Performance is calculated net of all fees and expenses and on a total return basis, inclusive of all distributions to unit holders. MSCI World Value index is for comparison purposes only.
The value of all investments and the income from them can go down as well as up; this may be due, in part, to exchange rate fluctuations. Past performance is not a guide to future performance
| Consumer Staples | 14.2 | |
| Consumer Discretionary | 12.1 | |
| Industrials | 11.9 | |
| Banks | 11.7 | |
| Health Care | 9.0 | |
| Information Technology | 8.8 | |
| Energy | 7.8 | |
| Communication Services | 7.6 | |
| Materials | 5.1 | |
| Financial Services | 4.8 | |
| Insurance | 4.5 | |
| Cash | 2.3 |
| United States | 23.7 | |
| United Kingdom | 19.0 | |
| Netherlands | 17.6 | |
| Germany | 9.5 | |
| China/Hong Kong | 7.9 | |
| Sweden | 6.8 | |
| South Korea | 5.6 | |
| Italy | 4.4 | |
| France | 3.2 | |
| Cash | 2.3 |
| Heineken | 7.6 |
| Handelsbanken | 6.8 |
| Fresenius | 5.7 |
| Samsung Electronics | 5.6 |
| ArcelorMittal | 5.1 |
| Lloyds | 5.0 |
| Exor | 4.8 |
| Chubb | 4.5 |
| CK Hutchison | 4.5 |
| Whitbread | 4.5 |
| Fund | Benchmark | |
|---|---|---|
| P/E ratio (fwd) | 10.1 | 18.9 |
| P/B ratio (hist) | 1.0 | 3.3 |
| Gross div. yield (fwd) | 3.4 | 1.9 |
| Active share (%)* | 99.1 |
Overstone Global Equity Fund is a constituent of Oldfield Partners Global Equity Composite.
Oldfield Partners LLP claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Oldfield Partners LLP has been independently verified for the periods 1 January 2000 to 31 December 2011 by HSBC Securities Services and from 1 January 2012 to 31 December 2023 by Ernst & Young LLP. To receive a copy of a GIPS® compliant presentation and/or a list and description of our composites, please contact us.
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