Day: 24 March 2025

Blue Whale Update: 2024 – Year in Review

Posted on by rosalie.sammut@medirect.com.mt
Stephen Yiu of Blue Whale Capital LLP

Stephen Yiu is the Chief Investment Officer at Blue Whale Capital and Lead Manager of the Blue Whale Growth Fund.

Stephen co-founded Blue Whale Capital with Peter Hargreaves, co-founder of Hargreaves Lansdown, in 2016. The Blue Whale Growth Fund was launched in September 2020 and is a long-only global equity fund focusing on developed markets.

Stephen adopts a high conviction, active approach based on
bottom-up, fundamental research.

In 2024, we quietly marked the seventh anniversary of the Blue Whale Growth strategy, reflecting on both our journey so far and what lies ahead. Last year, the Fund delivered an impressive return of +24.7% (T Acc USD Class1), +32.7% (T Acc EUR Class2), and +26.8% (T Acc GBP Class3) versus the IA Global sector average4 of +12.6%. This performance placed us in the top tier of just 15% of funds in the IA Global sector that outperformed the MSCI World Index in 2024. We achieved this by staying true to our approach – maintaining a portfolio of high-quality companies positioned to capitalise on transformative mega-trends with the potential to maximise outperformance. Please note, past performance is not a guide to future returns.

Contributors
We were early to recognise the rise of AI, and this conviction continued to pay off. Our investments in companies providing the infrastructure for the generative AI revolution, such as Nvidia, delivered outstanding returns. On the application side, our decision in Q4 2023 to reinvest in Meta proved well-timed, contributing to strong growth throughout 2024. New additions to the Fund, including Broadcom, TSMC, and Vertiv, each delivered exceptional returns of roughly 100% over the year.

Beyond technology, two additional trends drove strong returns. Philip Morris, a leader in developing cutting-edge technologies for a smoke-free future, capitalised on the ongoing shift away from traditional cigarettes. Meanwhile, Flutter, the world’s largest online sports betting and gaming company, benefitted from the growing popularity of sports gaming in the US, further boosting the Fund’s performance.

Detractors
Despite a strong year overall, some holdings weighed on returns. Sartorius, a leader in biologics – a class of drugs derived from living materials – underperformed due to slower-than-expected restocking by its customers. Danaher, operating in the same space, faced similar challenges. Luxury fashion brand Moncler also struggled; however, given its attractive valuation and exceptional management team, we remain optimistic about its long-term prospects.

Mega-trends can also present challenges. The rapid advancement of AI is reshaping the creative industries, and as a result, we sold our stakes in Adobe and Universal Music Group following weaker-than-expected performance. Similarly, Dexcom, a leader in diabetes blood sugar monitoring systems, faced increasing headwinds from the adoption of GLP-1 drugs (e.g. Ozempic), prompting us to sell our stake. We also exited our position in Canadian Natural Resources on valuation grounds after its share price rose by around 50%.

The case for active investing
Another significant shift is transforming our own industry – investment itself. Passive funds have gained traction in recent years, attracting substantial inflows due to their low fees and index-tracking returns. While we recognise their role in many portfolios, there is also a place for funds that consistently outperform the index – something passive strategies cannot achieve. Well-managed active funds, such as the Blue Whale Growth Fund, offer distinct advantages over trackers.

The first key advantage is predictive insight. Indices reflect past and present successes but cannot identify the winners of tomorrow. They add companies as they grow but do not get ahead of the curve, limiting their potential upside.

For example, back in 2017, index trackers did not foresee the next trillion-dollar companies. They only bought them as their market capitalisations increased. By contrast, many of these stocks were significant holdings in our funds long before they reached trillion-dollar valuations. Over the past seven years, since the inception of the WS Blue Whale Growth Fund, our process identified and invested in six future trillion-dollar businesses before they rose to their current prominence within the index – Microsoft, Amazon, Alphabet, Meta, Nvidia, and Broadcom. A truly active fund, focused on maximising outperformance, aims to build meaningful stakes before a company’s share price takes off.

The second advantage is the ability to avoid underperformers. Passive funds are tied to the index, meaning they hold stocks regardless of their prospects. In 2024, just 25 of close to 1,500 stocks in the MSCI World Index accounted for over two-thirds of total returns. This means that the majority of stocks underperformed. While a tracker fund can only reduce its exposure to a falling stock in line with its declining share price, an active fund has the flexibility to fully exit a holding once it no longer presents an attractive opportunity, thereby avoiding prolonged losses.

What we do
Short-term market fluctuations are a distraction from what truly matters – delivering maximised outperformance over the long term. In an ideal scenario, one could buy a handful of stocks, do nothing, and deliver top-percentile performance with minimal intervention. However, the reality of the market is far more complex. To maximise outperformance, one must actively navigate the landscape – understanding geopolitics, macroeconomic trends, and the evolving fundamentals of investee companies, while also having the conviction to adjust the portfolio when necessary.

At Blue Whale, our focus remains on maximising your investment over the long term. Over the past seven years, we have built a strong track record of outperformance. While past performance is not a guarantee of future results, we remain confident in the quality of our portfolio and our ability to continue delivering strong returns.

Thank you for your continued trust and partnership as we seek out opportunities, manage risks, and strive to maximise outperformance for you.

1Blue Whale Growth T class Acc shares (USD), net of fees priced at midday UK time, source: Bloomberg. 2Blue Whale Growth T class Acc shares (EUR), net of fees priced at midday UK time, source: Bloomberg. 3Blue Whale Growth T class Acc shares (GBP), net of fees priced at midday UK time, source: Bloomberg. 4IA Global sector average, source: FE Fundinfo. Performance data for period 01/01/24 to 31/12/24.

This communication is issued by Blue Whale Capital LLP which is authorised and regulated by the Financial Conduct Authority. Your capital is at risk. If you cannot afford the potential risk of a substantial loss, you should not invest. Equity investment should be viewed as a long-term investment. Past performance is not a guide to future performance. The value of investments may fall as well as rise and you may not get back the amount of your original investment. Prospective investors should study the Fund’s Prospectus, KIID and application form which together provide a complete list of risk factors. Blue Whale does not give investment advice. If you are unsure if the Fund is suitable for you, you should contact a financial adviser. Views we express on companies do not constitute Investment Recommendations and must not be viewed as such.

Please note that any references to the WS Blue Whale Growth Fund in the article are provided for information purposes only; it is a UK UCITS that is not registered for sale in, nor promoted, to investors in the EEA. Whilst the investment objectives and charges are not identical, both funds are run on the same investment process.

Blue Whale Key Risks & Disclaimers:

The Blue Whale Growth Fund was launched in September 2020. All references to actions before this date relate to the LF Blue Whale Growth Fund.  Information on the LF Blue Whale Growth Fund is provided for comparison purposes only; it is a UK UCITS which is not registered for sale in nor is it promoted to investors in the EEA.  Whilst the investment objectives and charges are not identical, both funds are run on the same investment process.

Please note that the information provided in this article is not to be construed as advice and any views we express on holdings do not constitute investment recommendations and must not be viewed as such. If you are unsure as to the suitability of an investment for your circumstances, please seek independent financial advice. Investments can go down in value as well as up so you may get back less than you invested. Your capital is at risk. Past performance is not a guide to future performance.Blue Whale Capital LLP is authorised and regulated by the UK Financial Conduct Authority.

There are significant risks associated with investment in the Fund referred to herein. Investment in the Fund is intended for investors who understand and can accept the risks associated with such an investment including potentially a substantial or complete loss of their investment.

Past performance is not a guide to future performance. The value of investments and any income derived from them can go down as well as up and the value of your investment may be volatile and be subject to sudden and substantial falls.

Investment in a Fund with exposure to emerging markets involves risk factors and special considerations which may not be typically associated with investing in more developed markets. Political or economic change and instability may be more likely to occur and have a greater effect on the economies and markets of emerging countries. Adverse government policies, taxation, restrictions on foreign investment and on currency convertibility and repatriation, currency fluctuations and other developments in the laws and regulations of emerging countries in which investment may be made, including expropriation, nationalisation or other confiscation could result in loss to the Fund.

Income from investments may fluctuate. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. Fund charges may be applied in whole or part to capital, which may result in capital erosion. The Authorised Corporate Director may apply a dilution adjustment as detailed in the Prospectus. The Fund is not traded on an exchange or recognised market.

The foregoing list of risk factors is not complete, and reference should be made to the Fund’s Prospectus and KID.

MeDirect Disclaimers:

This information has been accurately reproduced, as received from Blue Whale Growth Fund. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document are intended for retail clients, however, it may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. The performance figures quoted are only estimates and may not be a reliable indicator of future performance of this investment. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Information Document (KID), which may be obtained from MeDirect Bank (Malta) plc.

Epic Investment Partners Views: The Week Ahead

Posted on by rosalie.sammut@medirect.com.mt

This week kicks-off with global manufacturing and services PMI data, and the Fed’s Bostic and BoE’s Bailey speak today. Germany IFO, and US new home sales and the conference Board consumer confidence prints are due on Tuesday. The Bao Forum, or “China’s Davos” takes place (Tue-Fri). Central bank chatter on Tuesday includes the Fed’s Williams and the ECB’s Vujcic and Holzmann. UK CPI and US durable goods garner interest on Wednesday. The UK Chancellor Reeves’ “Spring Statement” will be scrutinised, particularly given Reeves has warned that as many as 10,000 civil servants will be replaced with better use of tech including AI. We will also hear from the Fed’s Musalem and the ECB’s Cipollone. Revised US GDP, and initial jobless claims follow on Thursday. On a busy day for central bank speak, we will hear from the Fed’s Barkin, the BoE’s Dhingra and the ECB’s Guindos, Galhau, Wunsch, Escrivá and Schnabel. Eurozone consumer confidence, Japan CPI, UK GDP and retail sales and US income and spending, core PCE and Uni. of Michigan consumer sentiment will keep markets on their toes.  

Central banks were a key feature last week. The Fed held pat on rates, as expected while noting slightly higher inflation and weaker growth in its projections. Markets responded positively to Powell’s description of potential tariff-based inflation as “transitory,” interpreting this as flexibility to cut rates if needed despite inflation concerns. Additionally, the Fed announced it will dramatically slow its Treasury balance sheet reduction from USD25bn to USD5bn monthly.  

Later the Bank of Japan unanimously maintained its policy rate at 0.5%, with Governor Ueda providing cautious guidance without specifying the timing of the next rate hike. While emphasising uncertainties around US trade policy, the BoJ is closely monitoring inflation risks following strong preliminary Shunto wage negotiations that exceeded 5% growth, with upcoming April inflation data likely to influence the possibility of a May rate hike.  

The BoE also maintained its benchmark interest rate, at 4.5%, with an 8-1 majority vote, as the UK faces uncertainty around global trade and domestic economic stagnation. The central bank noted intensified global trade policy uncertainty and weakening economic indicators; while suggesting a “gradual and careful approach” to future monetary policy adjustments, balancing inflation concerns against growth risks in what appeared to be a more hawkish stance than expected. 

A mixed week for asset classes amid tariff rhetoric and potential 2 April reciprocal tariffs saw the yield on the 10-year UST rally 7bps to 4.25%, while the S&P Index gained 0.51%. The dollar also gained, the DXY Index closed 0.36% higher on the week. Oil enjoyed a 2.24% increase, to $72.16pb amid tighter supply. 

US data was once again largely mixed, empire manufacturing massively disappointed at -20, while retail sales were broadly softer-than-expected. The New York Fed services business activity print fell to -19.3 in March, the lowest level since early-2023. The Phili. Fed Business outlook was surprisingly strong, however, lower than the previous reading, and existing home sales also beat market expectations for a fall at +4.2%mom.  

Elsewhere, the People’s Bank of China’s Q1 monetary policy meeting emphasised reducing social financing costs, signalling intent to lower funding costs whilst favouring structural tools over broad-based easing. The PBoC plans to optimise re-lending mechanisms for technological innovation and explore new policy tools for investment, consumption, and trade stabilisation. At the start of this week’s China Development Forum, where the theme is “Unleashing Development Momentum for Stable Global Growth”, the nation’s Premier Li Qiang said China is prepared for “shocks that exceed expectations”. 

Epic Investment Partner’s Key risks & Disclaimers:

EPIC Global Equity Fund (the “Fund”) is a sub-fund of EPIC Funds p.l.c. (the “Company”), which is an open-ended umbrella fund authorised in Ireland as a UCITS fund and regulated by the Central Bank of Ireland. This marketing material has been approved in the UK by EPIC Markets (UK) LLP, trading as EPIC Investment Partners, which is a limited liability partnership incorporated and registered in England and Wales under partnership OC306260 with its registered office at Audrey House, 16-20 Ely Place, London EC1N 6SN. EPIC Markets (UK) LLP is regulated by the Financial Conduct Authority. Distribution of this material and the offer of the Fund are specifically restricted in certain jurisdictions. In particular, but without limitation, neither this material nor shares in the Fund are available to US persons.

This document is for general information purposes only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. It is not a personal recommendation and it should not be regarded as a solicitation or an offer to buy or sell any shares in the Fund. This document represents the views of EPIC Investment Partners at the time of writing. It should not be construed as investment advice. Any person interested in investing in the Fund should conduct their own investigation and analysis of the Fund and should consult their own professional tax, accounting or other advisers as to the risks involved in making such an investment. Full details of the Fund’s investment objectives, investment policy and risks are set out in the Fund’s Prospectus and Supplement which, together with the Key Information Document (“KID”), are available on request and free of charge from Maples Fund Services (Ireland) Limited, 32 Molesworth Street, Dublin 2, Ireland and, in the UK, from EPIC Markets (UK) LLP, Audrey House, 16-20 Ely Place, London EC1N 6SN. Any offering of the Fund is only made on the terms of the current Prospectus, Supplement and KID. A subscription in the Fund can only be made after the provision of the KIID and should be made solely upon the information contained in the Prospectus, Supplement and KID.

An investment in the Fund is not suitable for an investor who cannot sustain a loss on their investment. There is no guarantee of the Fund’s future performance and past performance is not a reliable indicator of future performance. The value of your investment and the income derived from it can go down as well as up, and you may not get back the money you invested. The risks associated with making an investment in the Fund are described in the Prospectus and Supplement but investors should note, in particular, the following: 1) Foreign currency denominated investments are subject to fluctuations in exchange rates that could have a positive or an adverse effect on an investor’s returns. There is also a risk that currency hedging transactions for one share class may in extreme cases adversely affect the net asset value of the other share classes within the same sub-fund since there is no legal segregation between share classes; 2) The Fund is subject to the risk of the insolvency of its counterparties; and 3) Emerging market securities are subject to greater social, political, regulatory, and currency risks than developed market securities. This may impact the liquidity and value of such securities and, consequently, the value of the Fund.

MeDirect Disclaimers:

This information has been accurately reproduced, as received from EPIC Investment Partners. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document is intended for retail clients however, it may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Information Document (KID), which may be obtained from MeDirect Bank (Malta) plc.

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