In the second quarter of 2025, the First Eagle Global Fund's A Shares demonstrated a robust performance, yielding a 7.23% return, propelled by broad-based contributions from various regions. This period was characterized by both notable gains from key portfolio holdings and persistent market uncertainties, particularly concerning trade relations and the specter of inflationary pressures. The intricate interplay of global economic forces, including shifting fiscal policies and evolving geopolitical landscapes, significantly influenced investment outcomes and market sentiment. Despite the overall positive trajectory, investors navigated a complex environment marked by fluctuating indices and commodity prices, underscoring the importance of strategic asset allocation and resilience in investment portfolios.
The second quarter of 2025 witnessed a dynamic global financial environment. Major market indices showcased varied performances: the MSCI World Index climbed by 11.47%, the S&P 500 Index rose by 10.94%, and the Nikkei 225 Index posted a significant 13.87% increase. Meanwhile, European markets like the German DAX Index and French CAC 40 Index recorded more modest gains of 7.88% and 0.96%, respectively. Commodity markets also saw fluctuations, with Brent Crude Oil experiencing a 9.54% decline, closing at $67.61 per barrel, while gold surged by 5.75% to $3,303.14 per ounce. Currency movements further impacted the landscape, as the US Dollar weakened against both the Japanese Yen and the Euro by 3.41% and 7.98%, respectively. These diverse shifts highlighted a period of pronounced market volatility and rebalancing.
The quarter's leading contributors to the First Eagle Global Fund's performance were a diverse group of companies and assets. Oracle Corporation emerged as a strong performer, benefiting from the rapid expansion of its cloud services and strategic collaborations, including those with Microsoft and Alphabet. Its robust growth in remaining performance obligations signals continued revenue strength. Gold bullion also proved to be a valuable asset, its price buoyed by a weakening US dollar, declining interest rates, and heightened geopolitical risks, especially the deterioration in global trade relations. Central bank demand and increased inflows into gold exchange-traded funds provided additional support for the precious metal. Meta Platforms, Inc., the parent company of social media giants Facebook and Instagram, reported impressive revenue and earnings growth, driven by an increase in advertising impressions and pricing. The company's aggressive investments in artificial intelligence and continued focus on its core advertising business demonstrated its ability to balance profitability with innovation. Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC), as the world's largest semiconductor foundry, capitalized on the burgeoning demand for advanced chips used in generative AI. Its strong sales, particularly from AI-related contributions, and efforts to diversify manufacturing geographically, including in the US, solidified its market leadership. Finally, BAE Systems plc, a prominent UK defense contractor, was well-positioned to benefit from anticipated increases in European defense spending, underpinned by long-term government contracts that ensure stable revenues and strong backlogs, providing cyclical resilience.
Conversely, several holdings acted as notable detractors from the fund's performance during the quarter. Becton, Dickinson and Company, a global medical technology firm, reported lower-than-expected revenue. This shortfall was primarily attributed to a downturn in its research instrument and diagnostics sectors, stemming from reduced global research expenditures and the adverse effects of trade tariffs. Despite these challenges, the company's robust cash generation and its commitment to shareholder value through stock buybacks and dividends remain positive aspects. SLB, the world's largest oilfield service company, saw its share performance decline amidst broader commodity price weakness and market apprehensions regarding the negative impact of tariffs and trade uncertainty on oilfield service providers. Although rig counts and drilling activities decreased in North America, SLB's significant revenue derived from international and offshore markets, coupled with increased OPEC+ production, suggests a potential for future recovery. Elevance Health, Inc., a major health insurer, experienced a dip in share value due to concerns over the potential negative effects of a proposed budget reconciliation bill on Medicaid spending. Despite these legislative uncertainties, the company's strategy of increasing premiums is expected to stabilize margins. Alibaba Group Holding Ltd., the Chinese technology behemoth, saw its shares trade down after a strong first quarter. While reporting growth in revenue and profit, the results narrowly missed consensus expectations, prompting a slight market correction. Nevertheless, Alibaba's strong positioning to leverage Chinese investments in generative AI, its continued focus on business growth and operational efficiencies, and its commitment to returning cash to shareholders through dividends and share repurchases suggest long-term potential. Willis Towers Watson Public Limited Company, a global insurance brokerage and consulting firm, faced headwinds as the divestiture of its direct-to-consumer insurance distribution business impacted its cash flows. Despite this, the company's high customer retention rates, its ability to benefit from nominal economic growth, and an ongoing turnaround plan aimed at boosting growth and improving returns underscore its fundamental strengths.
The financial markets continue to navigate a complex environment shaped by global trade dynamics, fiscal policies, and inflationary pressures. Persistent trade uncertainties, coupled with a shrinking US labor force and significant government spending, suggest ongoing volatility. Despite these challenges, the First Eagle Global Fund maintains a diversified approach, investing in assets believed to offer resilience across various economic conditions. This strategy, highlighted by the continued inclusion of gold as a hedge against adverse outcomes, seeks to mitigate risk and capture value in an ever-evolving market landscape.