The International Growth Fund was up +0.9%, vs the benchmark (S&P Global LargeMidCap Index, 50% hedged into NZD) which was up +2.4%. Companies that meaningfully influenced portfolio returns were: 

Alphabet (+11%) and Tencent (+8%) continue to see benefits from AI in their respective businesses. Google continued its strong performance post July’s earnings report. During the month it was reported that Apple is in early discussions to integrate Google Gemini into a revamped Siri. Additionally,  Alphabet also won a $10 billion cloud contract from Meta, adding to its Open AI contract win in June. Tencent reported another good earnings result during the month as AI continues to drive performance in advertising and improve player experience in the gaming segment. Tencent’s short-video product, Video Accounts, grew +50% as AI content and algorithms drove higher engagement from users; and a higher return on ad spend for its customers. 

Gartner (-26%) was the worst performer for the month. Gartner’s negative earnings result elevated fears that AI is disrupting the research and consulting industry, despite management’s commentary that it was more macro-driven and that customers were not citing AI as a reason for reducing spend. We had reduced a third of our position coming into results as we felt the AI risks had heightened. We now hold it at a very small weight post the sell-off. Whilst we acknowledge the risks of AI, we do think Gartner proprietary data and independence provides some defence, and the business is not standing still, with Gartner recently launching its own AI search product “AskGartner”. 

Dexcom (-7%) continues to execute well after several self-enforced missteps last year.  In the latest quarter, the company reported over +20% growth in continuous-glucose monitors (CGMs) sales, gaining market share beyond its core US market. It also saw early traction in the Type 2 non-insulin diabetic market, which is the largest and most underpenetrated population of diabetics. Long-time CEO Kevin Sayer announced his retirement, with Chief Operating Officer Jake Leach taking the reins next year. With over twenty years’ experience at Dexcom across a range of roles, we believe the company is in capable hands under Jack. Despite what we considered positive results the market was disappointed by the size of the guidance raise given the strong first half to the year. Coupled with the CEO announcement, the stock was sold off post earnings, and we used the sell-off to buy shares during the month.