Political developments dominated headlines and was the key driver of market volatility in the first quarter of 2026. Operation Absolute Resolve, which resulted in the capture of Maduro, took place just days after the New Year. Tensions persisted throughout the quarter with the ongoing conflict in the Middle East and renewed trade uncertainty following the SCOTUS ruling that struck down the administration's use of IEEPA tariffs.

1Q2026, the fund delivered a return of negative return of -11.20. Although corporates’ (S&P 500) 4Q2025 earnings results have cleared relatively high expectation and demonstrated robust topline and EPS YoY growth, the market has clearly been more focused on the macro uncertainties.

Looking back at our 2026 thesis that we shared end of last year, we still think that the triumvirate of: fiscal thrust from One Big Beautiful Bill (OBBB), sustained datacentre capex spending, and potential Fed rate cuts, broadly still stands although the probability of a rate cut has greatly diminished.  The fiscal thrust is taking place because OBBB is kicking off. Datacentre capex expectations for FY2026 were significantly upgraded following 4Q2025 results, rising to ~$700B from the previous ~$500B estimate. Expectations for rate cuts, however, has been pushed back as a result of the higher energy prices.

Some notable adjustments to the portfolio are as follow. We exited Costco Wholesale Corp after holding it for several years locking in some handsome gain (we still like Costco and may come back when opportunity presents itself). We also trimmed our position in semiconductor sector (TSMC and Micron), taking some gain off the table. We continue to be firmly positioned in the semiconductor sector to capture the growth in the datacentre economy and AI.

We gradually added into our cybersecurity holdings as we think that the market concerns over the disruption from AI is misplaced. Cybersecurity is an enabler of AI rather than a victim of its disruption. We initiated a new position in Netflix during the Warner Bros M&A drama. We think Netflix has a higher growth and profitability potential than the market is giving it credit for and the M&A drama presented us with a good entry point.

In this period of market volatility, our portfolio is positioned to prosper in a world that is increasingly shaped by the adoption of Artificial Intelligence and geopolitical shifts. Indeed, many of our holdings reported expanding business visibility—a strong indicator that these businesses are better-insulated against broader political and macroeconomic risks.

Mar 2026