This medium-high risk fund is ideal for investors who require long-term capital growth by investing in various asset classes, predominantly in equity. The recommended investment time horizon is 7+ years.
This moderate to high risk fund is ideal for investors seeking meaningful growth of capital from a diversified portfolio of global equities and other assets. The fund’s aim is to outperform global flexible fund peers. An investment time horizon of at least 7 to 10 years is recommended.
Returns reflected below the chart are annualised. Source: Bloomberg, MorningStar and Northstar Asset Management.
Benchmark Return
Outperformance
Benchmark Return
Outperformance
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Our Northstar SCI Global Flexible Fund is only available directly. Please consult your financial advisor for further information.
Available: Direct
M A R K E T R E V I E W :
After a volatile start to the year, Q3 presented a stable continuation of the AI-led theme that has governed market performance since the launch of ChatGPT. AI technologies and adjacent sectors delivered robust results, driving further earnings upgrades and mounting expectations of long-term growth prospects. Optimistic outlooks by the likes of Oracle, and a web of deal announcements centered around OpenAI fueled the rally.
US exceptionalism returned, sustained by improving sentiment as tariff uncertainty eased, tax cuts were permanently extended, and the widely anticipated rate cut was delivered. The dollar was mixed, consolidating against most currencies following a weak start to the year. The US bond market stabilized, shaking off budgetary and policy concerns as signs of a weaker labour market and dovish Fed supported lower yields. Despite these moves, strong performance in gold signaled ongoing diversification away from US Treasuries and the dollar.
Q3 equity performance was led by cyclicals, offsetting weak performance in defensive sectors. Narrowing breadth and concentrated returns in growth stocks, largely skewed to the AI trade, created a tough environment for valuation focused active managers. Beyond tech, US Small Caps and Emerging Markets led Q3 performance driven by favourable policy, reduced uncertainty, lower rates, and a surge in Chinese equities.
The MSCI World Index returned +7.3% while the MSCI Emerging Market Index delivered +10.6%, led by MSCI China +20.8%. The Russel 2000 gained +12.4%, outperforming the S&P500 +8.1%. Europe had a relatively weak quarter after a rampant start to the year, with the STOXX Europe 600 +3.6%. From a style perspective, Growth led +8.6%, followed by Momentum +5.8% and Value +5.8%. Quality continues to face pressure on a relative basis, up +5.5%.
Narrow sector leadership persisted with returns concentrated in large cap tech and adjacent names. Information Technology +12.3% driven by a recovery in Apple and ongoing strength in the semiconductor trade, notably Nvidia, partially offset by ongoing weakness in Software. Communication Services +10.8%, purely driven by Google as regulatory headwinds faded. Consumer Discretionary +8.3% led by a recovery in Tesla. Materials +8.5% also stood out with performance supported by precious metal miners. On the downside, defensive sectors lagged. Consumer Staples delivered -2.0% in the quarter, while Health Care +3.0% continued to be weighed down by policy and tariff uncertainty. Real Estate +1.7% continues to face rate related headwinds to growth.
F U N D R E V I E W :
The Northstar Global Flexible A USD Fund returned 2.5% in Q3, behind the EEA Fund USD Flexible Allocation median of 4.2%. Year-to-date, the fund has delivered a return of 13.4%, ahead of the 9.7% delivered by the median peer, placing the fund in the top quartile.
Gross of fees, the equity component of the fund returned 3.8%, behind the MSCI World Index +7.3%. Year- to-date, the equity component is up +16.8% against the MSCI World Index +17.4%. The year-to-date performance relative to a blend of Value +16.9% and Quality +12.0% remains favourable, in line with our quality at a reasonable price philosophy. Relative to the MSCI World, stock selection detracted -2.4% from performance in the quarter, while allocation detracted -1.2% – mainly due to overweight positions in Staples and Healthcare. Considering stock selection, positive attributors in Q3 include Google (+0.6%), Alibaba (+0.5%), ASML (+0.5%), Tencent (+0.4%), and ThermoFisher (+0.4%). Chipotle (-1.2%), Elevance (-0.8%), DSV (-0.7%), Adobe (-0.6%), and an underweight position in Apple (-0.6%) detracted from performance.
The Fixed Income component of the fund delivered strong performance relative to the GLAG in the quarter, benefitting from well-timed increases to duration through the first half of the year. In Q3, portfolio bond holdings delivered +1.1% against the GLAG +0.6%. Year-to-date, portfolio bonds have returned +6.2% relative to the GLAG +7.9%, with underperformance largely due to USD weakness.
F U N D P O S I T I O N I N G :
Our disciplined bottom-up process consistently skews the portfolio to businesses and assets that we view as high quality and reasonably valued. While this may fall on the wrong side of the market over short periods, it has proven to deliver favourable long-term returns. The agility of our process enables us to identify and take advantage of opportunities as they arise. In 2025, this included increasing equity exposure and fixed income duration in Q1 and Q2, and tilting the equity holdings towards a less def ensive mix as valuations improved across the market.
The subsequent recovery has pushed valuations in several of these areas above our view of fair value. In Q3, we reduced equity exposure as the discount on the buy list narrowed, primarily through reductions in certain IT ‘AI winners’, Industrials, and Communication Services. This was partially offset by opportunities in high quality, undervalued businesses in Consumer Discretionary, Health Care, and IT ‘AI losers’ in the software and services space. As a result, the portfolio shifted back toward a more defensive tilt, and ended the quarter with 67% equity exposure. Relative to the MSCI World, the equity component remains overweight Health Care and Staples, and underweight IT. Regionally, the fund is underweight the US and overweight Europe, where valuations are more attractive.
Despite strong market performance in Q3, several risks remain. US tariffs are at their highest in over 50 years, political pressure on the Fed and other government institutions continues, inflation remains above target, and early signs of slowing economic growth and a weaker labour market are emerging. Going into Q4 and beyond, the fund is well placed to navigate euphoric expectations and valuations within this dynamic policy and macroeconomic environment.
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