Date:

Marketing Communication

Executive Summary

Key events in market

Equity markets were lower in September as persistent tensions in the Middle East, stubborn inflation, and rising yields pressured more cyclical areas of the market. Against this backdrop, the S&P 500 fell 0.5%, the tech-heavy NASDAQ composite gained 1.9%, the Dow Jones Industrial Average fell 4.3%, and the Russell 2000 fell 5.3%.

Key performance & positioning updates

The US Future Leaders Fund gained 2.1% in September, outperforming the Russell Mid Cap Growth Index by nearly 400 basis points. Performance in the month was driven by positive contributions from Technology, Consumer Discretionary, Health Care, Industrials, Consumer Staples, and Materials; Financials was the lone detractor from performance.

Market Update

September saw a continuation of the "soft patch" that has characterised global equity markets since late spring. The MSCI All Countries World Index fell 1.1% during the month, trimming its year-to-date gain to 13.4%. The month saw a rotation towards technology stocks, with the Nasdaq gaining over 3%, at the expense of small caps, as the Russell 2000 Index dropped more than 4%. Geographically, Japan was the top performer among developed markets, while European markets posted widespread losses, weighed down by renewed geopolitical tensions and the resulting rise in energy prices.

Nevertheless, global equity markets demonstrated resilience despite a half-percentage-point surge in bond yields during the month. Yields on 10-year and 30-year US Treasuries climbed well above 5%—levels not seen since the early 2000s. In Europe, German government bond yields rose by a more modest 0.25 percentage points, but the move coincided with a significant widening of government bond spreads, particularly in France and Italy. Bond market weakness reflects a combination of factors. First, inflation concerns driven by high energy prices, coupled with resilient economic growth, prompted investors to revise their expectations for policy rates upward. Second, concerns about the trajectory of US public debt persist. Finally, in Europe, apprehension about the general elections scheduled for 2027 in France, Italy, and Spain appears to have weighed on sentiment.

Rising bond yields and expectations of a less accommodative Federal Reserve, even after the September interest rate increase, have contributed to the recovery in the US dollar, a trend also supported by rising energy prices. Dollar appreciation and high real bond yields have weighed on the price of gold, which has surrendered almost all of its August gains. Although hopes for a quick resolution to the conflict in the Middle East are slim, a further escalation appears to have been averted, at least until the US midterm elections on 3 November. Some sources also indicate that oil transit through the Strait of Hormuz has rebounded to two-thirds of pre-conflict levels. Nevertheless, global refining capacity remains constrained, and prices for refined products, particularly diesel, remain very high and pose a risk to the inflation outlook.

Fund Performance & Positioning

The US Future Leaders Fund gained 2.1% in September, outperforming the Russell Mid Cap Growth Index by nearly 400 basis points (bps). Performance in the month was driven by positive contributions from Technology, Consumer Discretionary, Health Care, Industrials, Consumer Staples, Materials, and to a lesser extent, our lack of exposure to Energy. Financials was the lone detractor from performance, while Communication Services, Utilities, Cash, and our lack of exposure to Real Estate had a de minimis impact on performance.

The strongest contributors to relative performance were Everpure, Natera and Astera Labs. Everpure shares rose strongly following the company’s September Analyst Day, where management provided guidance that was materially above consensus expectations. Natera also performed well after the molecular diagnostics company secured key product approvals in Japan and favourable reimbursement in the United States. Astera Labs outperformed following positive commentary around the ramp-up of its Scorpio switch products, increasing investor confidence in the potential for this business to provide an additional source of growth beyond the company’s established retimer offering.

The largest detractors from the Fund's relative performance were Axon Enterprise, LPL Financial Holdings and Robinhood Markets. Axon Enterprise detracted following a convertible note offering, which increased scrutiny of the company’s near-term cash flow generation and resulted in dilution for existing shareholders. LPL Financial Holdings declined as investors became increasingly concerned about the potential impact of artificial intelligence (AI) on cash deposit levels and, consequently, the company’s ability to expand margins. Robinhood Markets was also a relative detractor, as the portfolio did not hold the stock, which represented a significant benchmark weight and outperformed during the quarter.

Exiting September, the Fund’s largest areas of absolute exposure are Technology (31%), Industrials (19%), Health Care (16%), Consumer Discretionary (14%), Financials (10%), Communication Services (5%), Materials (2%), Consumer Staples (2%), and Utilities (1%). On a relative basis, our largest areas of exposure are Financials, Consumer Discretionary, and Health Care. We are underweight Technology and Utilities, with an approximate equal weight in Industrials, Consumer Staples, Materials, and Communication Services. We have no exposure to Real Estate or Energy and exited the month with approximately 1.3% in cash.

Outlook

Equity markets were lower in September as persistent tensions in the Middle East, stubborn inflation, and rising yields pressured more cyclical areas of the market. The Federal Reserve raised its policy rate by 25bps – the first increase in three years – reflecting the need for tighter monetary policy amidst these lingering economic pressures. The 10-year Treasury yield climbed sharply, nearing the highest level in two decades, bringing with it broad-based price to earnings (P/E) compression.

In favor sectors included Technology and Communication Services. Notable out of favor stocks included rate or economically sensitive industries within Financials, Materials, Real Estate, Utilities, Consumer Discretionary, and Industrials. Against this backdrop, the S&P 500 fell 0.5%, the tech-heavy NASDAQ composite gained 1.9%, the Dow Jones Industrial Average fell 4.3%, and the Russell 2000 fell 5.3%.

We remain cautiously optimistic that multiple compression driven by surging yields can be absorbed by earnings growth and idiosyncratic execution. Additive to our confidence is our belief that escalating CapEx programs at domestic hyperscalers is likely to catalyse a broadening of growth across the market capitalization spectrum, with small- and mid-cap companies poised to disproportionately benefit from this incremental spend. We are also encouraged by the widening availability of artificial intelligence (AI), and the productivity gains it could herald for individual consumers and small businesses.

As we look ahead to the final quarter of 2026, we anticipate a modest uptick in near-term volatility as we navigate the uncertainty of Congressional Elections. Historically speaking, incumbent parties tend to face distinct headwinds in the midterm cycle, with the President ceding seats in 20 of the last 23 midterm cycles. Considering the crisis in the Middle East, current gas prices, and inflationary pressures on the US consumer, a wholesale shift in both the House and Senate is now considered the most likely outcome in November. Regardless of the end result, we believe that getting to and through these elections will serve as a catalyst for equities, which would also be supported by historical seasonal strength in December.

In closing, we believe our emphasis on quality management teams, best in class products and services, and expanding addressable markets should allow us to identify those companies best suited for alpha generation amidst this dynamic macroeconomic environment, and as ever remain poised to take advantage of opportunities generated by tumultuous market conditions as they arise.

We remain cautiously optimistic that multiple compression driven by surging yields can be absorbed by earnings growth and idiosyncratic execution.

Disclaimer

MARKETING COMMUNICATION

For professional clients, qualified investors and accredited investors only. The value of investments and the income derived from them can fall as well as rise, your capital is at risk. Note: Past performance is not a guide to the future. Returns may increase or decrease as a result of currency fluctuations.

All sources: EFG Asset Management (UK) Limited ("EFGAM"), Factset, Bloomberg, Morningstar as at end of the month.  Any other sources as applicable. 

This document has been produced by EFG Asset Management (UK) Limited for use by the EFG International  ("EFG Group" or "EFG") worldwide subsidiaries and affiliates within the EFG Group. EFG Asset Management (UK) Limited is authorised and regulated by the UK Financial Conduct Authority, registered no. 7389736. Registered address: EFG Asset Management (UK) Limited, Park House, 116 Park Street, London W1K 6AP, United Kingdom, telephone +44 (0)20 7491 9111. 

This document has been prepared solely for information purposes. The information contained herein constitutes a marketing communication and should not be construed as financial research or analysis, an offer, a public offer, an investment advice, a recommendation or solicitation to buy, sell or subscribe to financial instruments and/or to the provision of a financial service. It is not intended to be a final representation of the terms and conditions of any investment, security, other financial instrument or other product or service. The content of this document is intended only for persons who understand and are capable of assuming all risks involved. Further, this document is not intended to provide any financial, legal, accounting or tax advice and should not be relied upon in this regard. The information in this document does not take into account the specific investment objectives, financial situation or particular needs of the recipient. You should seek your own professional advice (including tax advice) suitable to your particular circumstances prior to making any investment or if you are in doubt as to the information in this document. 

Performance results shown are net of applicable fees and expenses. The value of investments and the income derived from them can fall as well as rise, and you may not get back the amount originally invested. Past performance is no indicator of future performance. Investment products may be subject to investment risks, involving but not limited to, currency exchange and market risks, fluctuations in value, liquidity risk and, where applicable, possible loss of principal invested. Some funds may have high volatility owing to portfolio composition or the portfolio management techniques utilised or be subject to various other risk factors. Such risks are set out in the Prospectus and KIID/KID.

A copy of the English version of the prospectus of the Fund and the key investor information document relating to the Fund is available on www.newcapital.com and may also be obtained from EFG Asset Management (UK) Limited. Where required under national rules, the key investor information document/the key information document will also be available in the local language of the relevant EEA Member State. 

The information provided in this document is not the result of financial research conducted by EFGAM’s research department. Therefore, it does not constitute investment or independent research as defined in EU regulation (such as “MIFID II” or “MIFIR”) nor under the Swiss “Directive on the Independence of Financial Research” issued by the Swiss Banking Association or any other equivalent local rules. Investors should carefully read the Prospectus and the Key Investor Information Document (KIID) and review such documents prior to taking any investment decisions.  This information can be obtained on request and free of charge from your client relationship officer.

Waystone Management Company (IE) Limited is the appointed Management Company and is regulated by the CBI. The Manager is a private limited company incorporated in Ireland under the company registration number C123529 with its registered office at 4th Floor, 35 Shelbourne Road, Ballsbridge, Dublin, D04 A4E0, Ireland.
 
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The information and views expressed herein at the time of writing are subject to change at any time without notice and there is no obligation to update or remove outdated information.
 
Risks associated with debt instruments with loss-absorption features – the Fund/Note/Account may invest in debt instruments with loss-absorption features, for example, contingent convertible debt securities (“CoCos”), senior non-preferred debts and subordinated debts issued by financial institutions. These debt instruments are subject to greater risks when compared to traditional debt instruments as such instruments typically include terms and conditions which may result in them being partly or wholly written off, written down, or converted to ordinary shares of the issuer upon the occurrence of a pre-defined trigger event (e.g. when the issuer is near or at the point of non-viability or when the issuer’s capital ratio falls to a specified level). Such trigger events are likely to be outside of the issuer’s control and are complex and difficult to predict and can result in a significant or total reduction in the value of such instruments.
 
Country of origin of the collective investment scheme:  Ireland.  The information contained in this document is merely a brief summary of key aspects of the fund.

More complete information on the fund can be found in the relevant memorandum and articles of association, prospectus, key information document, the addenda, the supplements and the most recent audited annual report and the most recent semi-annual report. These documents constitute the sole binding basis for the purchase of fund units. Copies of these documents are available free of charge and may be obtained upon request from www.newcapital.com and also as follows:

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United Kingdom:  from the UK facilities agent, EFG Asset Management (UK) Limited, Park House, 116 Park Street, London W1K 6AF, United Kingdom

Switzerland: from the Swiss representative, CACEIS (Switzerland) SA, Route de Signy 35, CH-1260 Nyon 2 and the paying agent, EFG Bank SA, 24 Quai du Seujet, CH-1211, Geneva 2, Switzerland.

Italy: from the Italian paying agent, All funds Bank S.A.U., Milan Branch, Via Santa Margherita, 7 – 20121, Milan, Italy

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Austria, France, Luxembourg, the Netherlands, Portugal, Spain and Sweden: from the European Facility Service provider, FE fundinfo with registered address 6 Boulevard des Lumières, Belvaux, 4369 Luxembourg

Cyprus: from the Cypriot Paying Agent Eurobank Cyprus Ltd, 41 Makariou Avenue, 1065, Nicosia, Cyprus

Greece: from the Greek Paying Agent, Eurobank S.A., 8 Othonos Street, 10557 Athens, Greece

A summary of investor rights associated with an investment in the Fund shall be available in English from www.newcapital.com.

Termination of marketing arrangements: Waystone Management Company (IE) Limited have the right to terminate the arrangements made for marketing the Fund in certain jurisdictions and to certain investors. In such circumstances, Shareholders in the affected EEA Member State will be notified of this decision and will be provided with the opportunity to redeem their shareholding in the Fund free of any charges or deductions for at least 30 working days from the date of such notification. 

European Union: Waystone Investment Management (IE) Limited is the European investment distributor and is authorized in Ireland as an investment firm under the Markets in Financial Instruments Directive. Waystone Investment Management (IE) Limited acts as a distributor
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The Fund has not been authorised or recognised by the Monetary Authority of Singapore (“MAS”), and the units in the Fund (the "Units") are not allowed to be offered to the retail public. Moreover, the Information Memorandum is not a prospectus as defined in the Securities and Futures Act 2001 of Singapore, as amended or modified from time to time (“SFA”), and statutory liability under the SFA in relation to the content of prospectuses would not apply. The Information Memorandum has not been and will not be registered as a prospectus with the MAS. Accordingly, the Information Memorandum, this document and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Units may not be circulated or distributed, nor may the Units be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public, any member of the public or any person in Singapore, other than under an exemption provided in the SFA for offers made (a) to an institutional investor (as defined in Section 4A of the SFA) pursuant to Section 304 of the SFA, (b) to a relevant person (as defined in Section 305(5) of the SFA), or any person pursuant to an offer referred to in Section 305(2) of the SFA, and in accordance with the conditions specified in Section 305 of the SFA, or (c) otherwise pursuant to, and in accordance with, the conditions of any other applicable provision of the SFA. The Units are classified as "capital markets products other than prescribed capital markets products" (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018 and Specified Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).

Information for investors in Australia: 
For Professional, Institutional and Wholesale Investors Only. This document has been prepared and issued by EFG Asset Management (UK) Limited, a private limited company with registered number 7389736 and with its registered office address at Park House, Park Street, London W1K 6AP (telephone number +44 (0)20 7491 9111). EFG Asset Management (UK) Limited is regulated and authorized by the Financial Conduct Authority No. 536771. EFG Asset Management (UK) Limited is exempt from the requirement to hold an Australian financial services licence in respect of the financial services it provides to wholesale clients in Australia and is authorised and regulated by the Financial Conduct Authority of the United Kingdom (FCA Registration No. 536771) under the laws of the United Kingdom which differ from Australian laws.  This document is personnal and intended solely for the use of the person to whom it is given or sent and may not be reproduced, in whole or in part, to any other person.
 ASIC Class Order CO 03/1099 EFG Asset Management (UK) Limited notifies you that it is relying on the Australian Securities & Investments Commission (ASIC) Class Order CO 03/1099 (Class Order) exemption (as extended in operation by ASIC Corporations (Repeal and Transitional Instrument 2016/396) for UK Financial Conduct Authority (FCA) regulated firms which exempts it from the requirement to hold an Australian financial services licence (AFSL) under the Corporations Act 2001 (Cth) (Corporations Act) in respect of the financial services we provide to you. 

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The financial services that we provide to you are regulated by the FCA under the laws and regulatory requirements of the United Kingdom which are different to Australia. Consequently any offer or other documentation that you receive from us in the course of us providing financial services to you will be prepared in accordance with those laws and regulatory requirements. The UK regulatory requirements refer to legislation, rules enacted pursuant to the legislation and any other relevant policies or documents issued by the FCA.  Your Status as a Wholesale Client. In order that we may provide financial services to you, and for us to comply with the Class Order, you must be a 'wholesale client' within the meaning given by section 761G of the Corporations Act. Accordingly, by accepting any documentation from us prior to the commencement of or in the course of us providing financial services to you, you warrant to us that you are a ‘wholesale client’; agree to provide such information or evidence that we may request from time to time to confirm your status as a wholesale client; agree that we may cease providing financial services to you if you are no longer a wholesale client or do not provide us with information or evidence satisfactory to us to confirm your status as a wholesale client; 
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IMPORTANT NOTE: FOR PUBLICATIONS WITH CONTENT RELATED TO FUNDS

Offering Documents 

Neither this document nor any document under which Interests in the New Capital UCITS Fund plc (the “Fund”) are offered is a prospectus, product disclosure statement or other formal disclosure document under the Corporations Act.  Interests in the Fund may not be offered, issued, sold or distributed in Australia other than by way of or pursuant to an offer or invitation that does not need disclosure to investors either under Part 7.9 or Part 6D.2 of the Corporations Act, whether by reason of the investor being a wholesale client (as defined in section 761G of the Corporations Act and applicable regulations) or otherwise. Nothing in this document nor any document under which interests in the Fund are offered constitutes an offer of interests in a financial product or financial product advice to a 'retail client' (as defined in section 761G of the Corporations Act and applicable regulations).

The issuer of the interests in the Fund relies on exemptions available under Australian law from the need to hold an AFSL for the provision of financial services to Australian wholesale clients. Note that as all investors must be wholesale clients, no cooling off rights are available in relation to an investment in the Fund.

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