This medium-high risk fund is ideal for investors who require long-term capital growth by investing in various asset classes. The recommended investment time horizon is 7+ years.
This medium-high risk fund is ideal for investors who require long-term capital growth by investing in various asset classes. The recommended investment horizon is 7+ years.
Returns reflected below the chart are annualised. Source: Bloomberg, MorningStar and Northstar Asset Management.
Benchmark Return
Outperformance
Benchmark Return
Outperformance
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Market Review
As we conclude the first half of 2025, it’s worth reflecting on what has been an exceptionally volatile environment for managing capital. Navigating an increasingly dynamic and uncertain world has presented both challenges and opportunities especially for active managers with a robust, disciplined investment process like ours.
Following a turbulent Q1, volatility remained elevated in Q2, driven by the announcement of the Liberation Day tariffs and ongoing geopolitical tensions in the Middle East. Unsurprisingly, gold performed strongly as investors sought safe-haven assets. Interestingly, the U.S. dollar weakened further in Q2, with its decline accelerating after early signs of softness in Q1. While this may seem counterintuitive amid rising risk aversion, the trend largely reflects growing investor concerns around U.S. exceptionalism. Political attacks on the Federal Reserve, tariff announcements, and broader policy uncertainty have weighed on consumer confidence, business sentiment, and market expectations.
Equity market performance has already been a tale of two halves. Trends that defined Q1 largely reversed in Q2. In Q1, emerging markets outperformed developed markets, European equities led U.S. markets, and defensive sectors outshone others while technology was the weakest performer. Market breadth was also notably wide. In Q2, sentiment turned more “risk-on,” and equities delivered strong gains. The MSCI World Index returned +11.30% (after -1.79% in Q1), while MSCI Emerging Markets gained +10.06% (+2.93% in Q1). The S&P 500 rebounded +11.45% (-4.37% in Q1), and the STOXX Europe 600 rose +9.88% (vs. +10.33% in Q1). There was also clear style and factor rotation. MSCI Growth surged +17.02% (vs. -7.75% in Q1), and Momentum gained +14.87% (-0.89% in Q1). While Value underperformed relative to Q1, it still posted a solid +5.63% (+4.81% in Q1).
Sector leadership shifted sharply. Information Technology, Communication Services, and Industrials led the rally, returning +22.80%, +18.88%, and +14.11% respectively. The “Magnificent 7” mega -cap stocks excluding Apple roared back, with Information Technology swinging from Q1’s worst to Q2’s best performer. Conversely, defensives underperformed. Energy and Healthcare posted negative returns of -4.36% and -3.97%, respectively. Defensive sectors in general lagged, with healthcare particularly weak due to regulatory uncertainty and tariff concerns a stark reversal from Q1, when Energy (+10.08%), Consumer Staples (+5.95%), and Healthcare (+5.10%) outperformed, while Tech declined -11.93%.
Year-to-date, emerging markets (+15.27%) have outpaced developed markets (+9.47%). European equities (+23.31%) have strongly outperformed U.S. equities (+5.99%). Defensives have generally outperformed technology YTD except for Healthcare, which remains weighed down by regulatory and tariff- related pressures. The U.S. dollar’s continued weakness (-11.41% YTD) has also influenced relative regional performance.
The Northstar Global USD Flexible Fund returned 6.84% in Q2, outperforming the Morningstar peer group mean of 5.62% by 1.22%. Year to date, the fund has delivered a return of 10.64%, ahead of the peer group mean of 5.51% by 5.13%, placing it in the 8th percentile.
On a grossed-up basis, the fund’s equity component returned 8.64% in USD for the quarter, underperforming the MSCI World Index’s 11.62%. However, year to date, the equity component has returned 12.58%, outperforming the MSCI World Index’s 9.80% by 2.78%. Stock selection remains the core driver of returns, contributing -1.54% in Q2 and +2.92% year to date. Allocation effects detracted, with -1.45% in Q2 (mainly due to an overweight in healthcare) and -0.14% YTD.
From a stock selection perspective, positive contributors in Q2 included the fund’s underweight in Apple (+0.90%), no exposure to UnitedHealth (+0.36%), and strong performance from Oracle (+0.49%), DSV (+0.28%), and ASML (+0.24%). The largest detractors during the quarter were Thermo Fisher (-0.88%), Nvidia (-0.87%), Elevance Health (-0.78%), and Zimmer Biomet (-0.65%), with most underperformance concentrated in healthcare-related names. Year-to-date, key contributors have included Philip Morris (+0.79%), Alibaba (+0.64%), Airbus (+0.58%), as well as the underweight in Apple (+1.49%) and not owning Tesla (+0.52%). The main detractors YTD have been Thermo Fisher (-0.99%), Adobe (-0.85%), LVMH (-0.70%), and Zimmer Biomet (-0.40%).
2025 has been an active and eventful year for the fund. Three months ago, our equity weighting stood at 63.5%, with the buy list’s intrinsic value discount hovering just above its long-term average. When market volatility caused that discount to widen sharply pushing expected returns above 28% we responded decisively by increasing our equity allocation. This agility reflects the strength of our investment process, which enables us to monitor the relative attractiveness of our buy list daily (i.e., how cheap or expensive it is).
Currently, the expected return on our buy list is slightly above its long-term average of 16%. However, this return is increasingly concentrated in a handful of names, signalling reduced odds of broad-based favourable returns. In this environment, flexibility across asset classes is key. Relative to the MSCI World Index, the fund remains approximately 10% underweight U.S. equities and overweight European equities by more than 20%. We continue to see compelling value in Europe, particularly in the UK, Netherlands, Denmark, and Sweden markets where we hold meaningful positions where valuations are more attractive and upside potential appears stronger in the near to medium term.
On the fixed income front, with the end of the zero interest rate policy, investors are now being adequately compensated for the risk they take. With real yields at attractive levels, fixed income has re-emerged as both a return driver and a risk diversifier.
As we enter the second half of the year, the interaction between policy uncertainty and business cycle dynamics will be critical. We believe the fund is well positioned to navigate both the challenges and opportunities ahead in what remains a volatile environment.
Latest Allocation
