Global stock markets demonstrated significant strength during the second quarter of 2025, extending the positive trends observed in the first quarter. This sustained growth was underpinned by several key drivers, including more attractive valuations for international assets, a continued decline in the value of the U.S. Dollar, and other supportive economic conditions. The Shelton Capital International Select Fund, in particular, achieved an impressive return, outperforming its benchmark, the MSCI All-Country World ex-USA Index. This success underscores the importance of a meticulous stock selection approach, especially as the broad international market rally matures and individual company fundamentals become increasingly critical.
The second quarter of 2025 witnessed a remarkable surge in international equity markets, propelled by a convergence of factors. One of the primary catalysts was the more favorable valuation landscape of global stocks compared to their U.S. counterparts. This relative attractiveness drew significant investor interest, contributing to the strong performance. Additionally, the U.S. Dollar Index experienced a notable decline throughout Q2, falling by an additional 7% during the quarter and registering a year-to-date decrease exceeding 10%. A weaker dollar typically benefits international investments by making their returns more valuable when converted back into the U.S. currency, and by enhancing the competitiveness of non-U.S. companies. These macro trends, identified as consistent tailwinds, provided a fertile ground for growth in overseas markets.
In this buoyant environment, the Shelton Capital International Select Fund delivered a compelling performance, achieving a return of 13.7% in the second quarter. This significantly surpassed the MSCI All-Country World ex-USA Index, which returned 12.0%, marking an outperformance of 1.7%. The fund's ability to exceed its benchmark is attributed to its strategic focus on quality stock selection. This approach emphasizes identifying companies with strong fundamentals, robust balance sheets, and sustainable growth prospects, positioning the fund advantageously in a market that increasingly values individual company strength over broad market momentum. As the theme of generalized international outperformance evolves, the capacity to pinpoint high-quality companies is expected to become even more crucial for sustained success.
Overall, the second quarter of 2025 solidified the positive trajectory for international equity markets, driven by a combination of appealing valuations, a depreciating U.S. Dollar, and a favorable market sentiment. The Shelton Capital International Select Fund's impressive outperformance against its benchmark highlights the efficacy of its selective investment philosophy in navigating these dynamic market conditions. This period signals a shift where discerning investors, focusing on intrinsic company value, are well-positioned to capitalize on ongoing global economic shifts.