After months in which enthusiasm for artificial intelligence had dominated market sentiment, investors were reminded that trees do not grow to the sky. In July, sentiment shifted sharply for several of the market's most popular technology and semiconductor stocks. The backdrop was complex. Renewed tensions in the Middle East pushed oil prices above USD 100 per barrel, revived inflation concerns and lifted long-term bond yields. The yield on the US 10-year Treasury rose by 30 basis points to around 4.7%.
At the same time, doubts began to emerge within the AI segment. In South Korea, where retail investors have poured money into single-stock leveraged ETFs linked to semiconductor companies, the KOSPI index fell by more than 20% during the month. The decline triggered margin calls for more than one million retail accounts, with hundreds of thousands of accounts liquidated to cover losses. Investors rotated out of semiconductor stocks and into companies with lower valuations and solid fundamentals, precisely the type of businesses that SKAGEN's funds have long favoured. Both the Federal Reserve and the ECB left policy rates unchanged.
SKAGEN Global: benefitting as AI fears recede
SKAGEN Global outperformed its benchmark index by a wide margin in July, and the month clearly demonstrated what the fund is designed to do: deliver outperformance when the AI-driven trade begins to weaken. Read the SKAGEN Global monthly report here.
Many of the highly valued market favourites pulled back, while several of the fund's holdings, characterised by more attractive valuations and strong business fundamentals, advanced as investors rotated towards more reasonably priced quality companies.
Contributors
Thomson Reuters, Abbott Laboratories and RELX were the strongest contributors. RELX delivered an impressive half-year report with growth exceeding expectations, helping to ease concerns that artificial intelligence could disrupt its business model. The company possesses unique proprietary data sets that underpin its operations, and the fund added significantly to its position earlier this year when the share price weakened on what the managers viewed as unfounded concerns. Thomson Reuters followed a similar pattern, while Abbott Laboratories surged from depressed levels after delivering a much stronger-than-expected quarterly report. The stock recorded its best daily percentage gain in 24 years.
Challenges
DSV, Hermes and Waste Connections were the largest detractors. DSV was negatively affected by operational challenges within its Road segment, but the company has responded decisively by appointing an experienced DSV veteran to lead the business area. The managers support this move and believe the shares appear meaningfully undervalued following the decline. Hermes fell as the Chinese luxury market remained subdued and sentiment towards the sector weakened amid tensions in the Middle East, while Waste Connections reported earnings broadly in line with expectations.
Positioning
Portfolio activity was limited during July, and the managers will comment on any significant portfolio changes at quarter-end. The most important change leading into the period was the significant addition to RELX, which is now one of the fund's largest positions.
Outlook
The managers believe that the AI segment remains crowded and vulnerable, while returns on invested capital are declining noticeably among the major technology companies. Several companies currently perceived as AI losers may ultimately prove to be AI winners when the dust settles. In the managers' view, the fund remains significantly undervalued for long-term investors and provides complementary exposure to a traditional global index fund.
SKAGEN Kon-Tiki: defensive positioning paid off
SKAGEN Kon-Tiki entered July conservatively positioned and significantly outperformed the market. Read the SKAGEN Kon-Tiki monthly report here.
Emerging Markets underperformed Developed Markets as investors rotated away from the semiconductor supply chain, with sharp declines in South Korea and Taiwan. China proved a notable exception, while energy and financial stocks performed strongly.
Contributors
JD.com, Ping An and Hana Financial were the strongest performers. JD.com outperformed its Chinese internet peers, likely benefiting from a rotation within the market. Ping An benefited from the recovery in the Chinese equity market, while Hana Financial delivered in-line results and maintained its focus on shareholder-friendly capital allocation.
Challenges
TSMC, Axis Bank and Samsung Electronics were the largest detractors. Both TSMC and Samsung underperformed as part of a sharp sell-off in the semiconductor sector, despite reporting better-than-expected quarterly results. TSMC even raised its full-year guidance. Axis Bank weakened following margin compression during the quarter.
Positioning
Portfolio activity was lower than in previous months, with no new positions established and no complete exits. The elevated cash allocation allowed the managers to take advantage of market volatility. Among other transactions, the portfolio managers repurchased Samsung Electronics shares at an average price around 15% below the level at which they had sold earlier in the year and added to Axis Bank, Hyundai Motor, Ivanhoe Mines, Lojas Renner, TSMC and Tencent Music. Purchases were funded through available cash and sales of Allegro and Hana Financial following strong share-price performance.
Outlook
At month-end, the portfolio traded at less than 9x earnings and 1.3x book value, compared with 12x earnings and 2.5x book value for the benchmark. The managers therefore believe the portfolio retains attractive absolute and relative value characteristics. In their view, disciplined, price-driven rebalancing and bottom-up stock selection remain the most reliable path to long-term returns.
SKAGEN Focus: searching for the overlooked
SKAGEN Focus had a strong month, outperforming the global equity market by almost four percentage points. Market sentiment was dominated by heightened geopolitical concerns and growing questions about the future returns on the substantial capital expenditure of index-heavy hyperscalers. Read the SKAGEN Focus monthly report here.
Contributors
Methanol producer Methanex, one of the fund's top-ten holdings, was the strongest contributor as the market began to recognise the company's significantly improving free cash flow potential following capacity additions and operational normalisation. Hong Kong-based conglomerate Swire Pacific and Japanese automotive-components producer Aisan Industry also contributed positively.
Challenges
Performance was partly held back by a pullback in several South Korean holdings. The weakness reflected a broader market decline and a correction in index-heavy semiconductor names rather than company-specific developments. KCC, a deeply discounted South Korean industrial conglomerate and top-ten holding, declined despite the absence of fundamental news, alongside Samsung Fire & Marine and BNK Financial.
Positioning
Having reduced Korean exposure at higher levels earlier in the year, the managers used the pullback to add selectively to positions. The fund exited US homebuilder Beazer Homes following an increased takeover offer and initiated a position in Saint-Gobain, the French building-materials leader. The company combines improving margins, disciplined capital allocation and exposure to a recovery in European construction.
Outlook
The managers believe Saint-Gobain continues to discount a subdued cycle, creating attractive upside potential as earnings normalise and the portfolio mix improves. The fund remains focused on identifying companies trading materially below intrinsic value, particularly in areas of the market overshadowed by large technology companies.
SKAGEN m²: seeing significant value in European real estate
July was a positive month for global listed real estate, driven by encouraging sector and company news, including several large M&A transactions. Nevertheless, SKAGEN m² underperformed its benchmark. Read the SKAGEN m2 monthly report here.
The main reason was that US REITs increasingly acted as a defensive haven during weakness in technology stocks, widening the valuation gap relative to Europe and Scandinavia, where the fund has its largest exposure.
Contributors
Hong Kong-listed Swire Properties was the strongest contributor, while Hong Kong was also the best-performing listed real estate market globally during July. The shares benefited from the company's continued transition from a traditional asset-heavy ownership model towards a more active value-creation strategy. Swedish discount-retail property company Prisma Properties also contributed strongly following a solid quarterly report, supported by SEK 2.1 billion of acquisitions completed over the past year.
Challenges
Brookdale Senior Living, the largest owner and operator of senior living communities in the US, was the largest detractor. Following a year-to-date gain of almost 50%, the shares consolidated as occupancy came in somewhat below expectations. US cold-storage company Americold was the second-largest detractor, although sentiment towards the sector continued to improve.
Positioning
The fund initiated a position in Japanese real estate company Mitsui Fudosan, a former long-term holding, following a significant share-price decline that the managers believe has created an attractive valuation. At the same time, the fund exited Philippine residential developer Ayala Land due to weaker housing-market fundamentals. Exposure to the Philippines is maintained through retail-focused Robinsons Land Corporation.
Outlook
The managers expect 2026 to continue marking a gradual but meaningful recovery for global listed real estate. Many European and Scandinavian property companies continue to trade at substantial discounts to asset values despite stronger balance sheets and lower refinancing risk. The portfolio remains strategically positioned towards growth segments such as digital infrastructure, social infrastructure, residential and logistics. Key risks include persistent geopolitical uncertainty, weak economic growth and renewed volatility in inflation and interest rates.
SKAGEN Vekst: still seeing the greatest potential outside the US
SKAGEN Vekst delivered a positive return and significant outperformance versus its benchmark in July. Read the SKAGEN Vekst monthly report here.
Contributors
JD.com was the strongest contributor, benefiting from Hong Kong being one of the strongest equity markets globally as investors rotated out of AI-driven markets such as South Korea and Taiwan. Hana Financial also contributed strongly during a difficult month for the Korean market, supported by a solid earnings report and a new Value-Up programme with upgraded targets. Bakkafrost rebounded after a prolonged period of weak salmon prices as lower volumes in Chile and expectations of slower growth began to support pricing.
Challenges
DSV was the largest detractor following a disappointing quarterly report, driven by challenges within its Road division related to the integration of DB Schenker. The managers view this as a temporary issue and used the weakness to add to the position. Novo Nordisk declined following a failed Phase III trial of Ziltivekimab, although developments within its obesity franchise remained positive, including EU approval of oral Wegovy. Citigroup delivered its best quarterly result in a decade, but increased investment spending and cautious guidance for the second half of the year weighed on the shares. The managers viewed the reaction as overdone and added to the position.
Positioning
The fund continued to reduce its position in Volvo as the share price strengthened throughout the month, leaving only a small holding at the end of July.
Outlook
The managers believe the US equity market remains expensive, both relative to its own history and compared with other markets, while US growth stocks are trading at valuation levels that have historically been associated with weaker future returns. They remain particularly constructive on South Korea, where depressed valuations contrast with clear evidence of improving corporate governance. The portfolio has been repositioned away from IT and towards financials, industrials and energy. The managers also believe markets are underestimating the risk of persistently higher inflation and interest rates, particularly in the US. The fund is positioned to provide downside protection should the market's optimistic "Goldilocks" scenario fail to materialise.