As 2025 draws to a close, SKAGEN Global is looking ahead to realising the potential building within its portfolio. After generating significant outperformance at the start of the year, the fund has lagged the AI-driven market rally since April and entered December down 2% year-to-date in EUR, around 10% behind the MSCI All Country World Index.
Despite these relative headwinds, Knut Gezeius, Lead Portfolio Manager, is reassured by the portfolio companies’ performance: “We haven’t had any big losses this year but several of our largest holdings have been treading water or fallen slightly. The financial reports have generally been solid with holdings meeting their financial guidance and so the underperformance has been frustrating but adds to our conviction that there is significant latent value building in our largest positions.”
Much of the market’s strength this year has come from a small number of large technology companies as investors’ appetite for artificial intelligence has continued to grow. This has also helped SKAGEN Global with AI-related stocks representing its top three contributors in the form of Samsung Electronics, Microsoft and Alphabet (Google). Conversely, industrial companies, Waste Management and Canadian Pacific Kansas City, have provided the biggest drag on returns.
Climbing concentration
The popularity of technology stocks means that market concentration – particularly in the US – has now reached record levels (see figure 1) and the top ten companies in the global index currently have an aggregate weight of 27%, up from 22% in July 2024[1]. “All bar one are US companies and all ten are linked to AI – they are not only getting bigger but are also related to each other, which creates a substantial concentration risk,” explain Gezelius. “History shows that when you have a lot of value creation in a narrow slice of the market, big drawdowns can follow.”
SKAGEN Global has tech exposure in different areas of the market via holdings that are cutting-edge but often underappreciated. “As well as owning Alphabet, Samsung Electronics, Microsoft and Amazon, the portfolio contains stocks like Mastercard, ICE, MSCI and Thomson Reuters – all companies that have a long history of adopting technology and using it to deliver better products and services for their customers,” Gezelius adds.
The fund also holds a number of more traditional businesses with significant physical assets and strong networks like Waste Management and Canadian Pacific, Gezelius explains: “These companies and others like Moody’s and Munich Re may be considered ‘boring giants’ but they are also leaders in their respective markets – none will be outcompeted by AI any time soon.”
Upside potential, downside protection
Global currently holds 33 companies with weighted upside of nearly 50% over the next two-to-three years based on current price targets. The holdings generally have strong balance sheets and cash flow generation with highly competent management teams whose interests are aligned with shareholders. The portfolio is valued in line with the broader market but offers superior profitability with more conservative leverage (see figure 2).
Equally important – arguably more so given the risks created by an increasingly concentrated market – is the downside protection provided by Global’s portfolio. “Strong balance sheets, corporate governance and market positions are a feature of our holdings which can help them to navigate any market wobbles,” Gezelius concludes. “During COVID and the last major drawdown our fund significantly outperformed most indices, including the MSCI ACWI, and this gives us comfort that we are well-positioned on both the upside and downside for whatever the market brings in the next weeks, months and years.”
To watch a recording of the SKAGEN Global Webinar with Knut Gezelius, click here.
To view the presentation, click here.
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All information as at 31/10/2025 unless stated.
[1] Source: MSCI, Bloomberg.