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.
During the first half of 2025, our focus remained on maintaining a concentrated portfolio of high-quality companies exposed to idiosyncratic mega-trends, with the aim of maximising outperformance. Over the period, the Blue Whale Growth Fund delivered strong performance across all currency share classes, with the T Acc USD shares returning +14.8%, the T Acc EUR shares +2.0%, and the T Acc GBP shares +5.1%, each outperforming the IA Global sector average of +0.7%.
Markets were unsettled by the return of tariff-related uncertainty, with headlines dominated by Donald Trump’s proposed trade policy. This introduced significant volatility as investors attempted to discern the potential winners and losers of such measures. As ever, while remaining alert to macroeconomic developments, we focused on identifying companies with robust fundamentals and business models capable of enduring external shocks. Although there were notable daily selloffs, these were often followed by sharp recoveries. Staying disciplined and holding our conviction served the portfolio well. The sections below highlight the themes and positions that supported performance over the period.
The generative AI revolution continued to be a dominant theme driving returns. Key contributors included Nvidia, Broadcom, and new entrant Hynix, all of which benefitted from the ongoing buildout of AI infrastructure. This was despite a brief bout of volatility triggered by news that DeepSeek had defied previous assumptions about the level of computing power required to deliver generative AI, suggesting such capabilities could be achieved far more economically than previously believed.
Philip Morris maintained its strong performance from the end of 2024, as the business continued to lead the transition to a smoke-free future. Meanwhile, Italian aerospace and defence firm Leonardo was another key contributor, supported by a renewed focus on European defence spending following comments from Donald Trump on the need for NATO partners to contribute more meaningfully.
Oracle also delivered strong returns, underpinned by robust bookings guidance that reinforced its position as a leading cloud services provider for AI workloads. The outlook remains compelling, with revenue growth expected to accelerate into the high teens over the coming years. Notably, current forecasts do not yet reflect the full potential of major developments such as OpenAI’s Stargate initiative.
Two further notable contributors were Nintendo and Uber. The long-anticipated announcement of the Switch 2 console in April drove a sharp rally in Nintendo’s share price, providing an attractive exit point. Uber, a new addition to the portfolio, performed strongly. Now a more mature business, Uber displays the quality growth characteristics we seek and has made a pleasing start as a portfolio holding.
Not all holdings contributed positively, however. Danaher and Repligen, both leaders in the biologics space, continued to lag. While the inventory destocking that weighed on 2024 performance has now largely been resolved, investor sentiment in H1 was dampened by concerns around potential FDA regulatory changes, US drug pricing pressures, and uncertainty around NIH funding. Nevertheless, with order growth of 20–30%, we believe the long-term fundamentals remain intact and supportive of future performance.
We made several portfolio adjustments in response to evolving structural challenges. Positions in Microsoft and Meta were exited during the period. Microsoft, a core holding since the Fund’s inception, was sold on valuation grounds, alongside concerns that its significant AI investment (estimated at $80 billion this fiscal year) would weigh on free cash flow. Meta was sold for similar reasons, despite the success of a well-timed re-entry in late 2023, as we became increasingly cautious around the scale of its AI-related expenditure.
Proceeds from these disposals were redeployed into new high-conviction opportunities. As noted, Uber and Hynix have already made a positive impact, while we remain optimistic about Repligen’s contribution once regulatory and pricing uncertainties subside.
As we look ahead to the second half of 2025, we remain confident in the quality and positioning of the portfolio. Our holdings are exposed to transformational trends that we believe will continue to shape the global economy. However, we remain agile and prepared to adapt the portfolio as new opportunities emerge and existing themes evolve.
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.
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.
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