International Equity Commentary | 4Q 2025

Author

John DeVita, CFA

Analyst & Portfolio Manager

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Author

John Hock, CFA

Founder & Chief Investment Officer

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Author

Rich McCormick, CFA

Analyst, Portfolio Manager, & Co-Chief Investment Officer

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01-26-2026

Dear Investor,

AI optimism, supportive fiscal and monetary policies, and resilient economic growth contributed to strong equity market performance in 2025. Full-year results, however, obscure a far more volatile path. Markets suffered steep declines leading up to “Liberation Day” in April before rallying sharply as tariff concerns eased and investor confidence returned. The Altrinsic International Equity portfolio gained 3.2% gross of fees (3.0% net) in the fourth quarter and 26.4% (25.4% net) for the full year. By comparison, the MSCI EAFE (Net) Index gained 4.9% and 31.2%, respectively.ⁱ

Perspectives

2025 was a challenging year. While absolute gains of over 26% exceeded our expectations, our outperformance during the early-year drawdown was more than offset by underperformance later in the year. As shown in Chart 1, high-beta and cyclical businesses led market performance in 2025, while higher-quality companies lagged. Chart 2 illustrates the extent to which valuations in MSCI’s EAFE Quality Index (which comprises companies with strong returns on equity, low profit volatility, and low financial leverage) have fallen to historically low levels relative to the broader market. In contrast, valuation premiums for companies with more aggressive and uncertain growth expectations are increasingly stretched.

Although AI growth narratives and cyclicality fueled market leadership in 2025, we believe quality, value, and differentiation will be key themes in the coming years.

We enter 2026 with a portfolio heavily exposed to quality businesses featuring durable earnings growth prospects, strong balance sheets, and attractive valuations. These investments are complemented by undervalued companies undertaking strategic initiatives to further improve financial productivity from depressed levels. While these companies lack the lofty “growth” narratives associated with AI-enablers or stimulus-driven revenue spikes, they are supported by sound fundamentals, attractive long-term return potential, and greater margin of safety.

Most of our investments are “AI-adopters,” embracing AI to enhance productivity, efficiency, customer experience, and competitive positioning. Chubb, one of our largest investments and arguably the world’s premier non-life insurance company, is a good example. The company has compounded shareholder value for years and is embracing AI to boost efficiency, underwriting capabilities, customer experience, and long-term profitability. Over the next few years, Chubb plans to use AI to automate 85% of major underwriting and claims processes, while reducing headcount by 20%.¹ We believe that AI adopters such as Chubb will deliver strong long-term performance while offering a more compelling risk-return trade-off compared to popular AI enablers.

More broadly, we expect M&A activity to be among the many catalysts to unlock value in our investments, given the meaningful valuation gaps between share prices and their intrinsic value. Growing confidence among corporate executives, reduced tariff uncertainty, and an abundance of dry powder held by private equity firms should support demand from both strategic and financial buyers for well-capitalized businesses with durable cash-flow dynamics. Global M&A rose 36% in 2025 to $4.8T² and is poised to accelerate further in 2026.

As shown below in Table 1 (in the ‘Portfolio Positioning’ section), our portfolio is materially different from any benchmark index. From a long-term perspective, it is as important as ever to be different, considering historically high levels of market concentration, near extreme valuations and elevated expectations in the largest benchmark constituents, the procyclical market dynamics fueled by non-fundamental buyers (i.e., passive), and increased participation by retail and short-term investors. However, in the short term, many investors face strong disincentives to deviate from the crowd due to career risk and pressure to meet near‑term relative performance expectations. This dynamic is reflected in a recent Merrill Lynch survey showing institutional investors view AI disappointment as among the greatest risks in markets – yet they are almost universally overweight AI enablers. As large investors in our own funds and believers in time-tested processes, our thinking is clear and long-term, and our interests are aligned with our clients.

Risks and Disruptive Forces

Among the many prevailing risk considerations – from micro to macro – it is important to account for well-documented issues (e.g., elevated geopolitical risks) while searching for those not adequately reflected in market discourse. Two that warrant particular attention are: 1) potential disappointments in the AI narrative and 2) implications of rising long-term interest rates – most notably in Japan, a key source of global liquidity.

Given the significant impact of AI enthusiasm on equity markets and the global economy more broadly (through wealth effects and fixed investment), any disruption to the prevailing AI narrative could have far-reaching consequences. AI enablers and hyperscalers comprise approximately 32% of the S&P 500 and 23% of the MSCI World Index.³ Yet, numerous uncertainties remain, including the pace of end-market demand, supply-side constraints (energy and semiconductors), the timeline for translating investment into economic returns, capital intensity, borrowing capacity, and potential social and political disruption. Regarding this latter point, we believe social and labor implications of AI will be a surprisingly large issue during the US mid-term elections and those in the coming years. Without a doubt, AI is a generational, transformative technology, but there is also little room for disappointment in any aspect of its captivating narrative.

As for rates, media attention has focused on short-term policy rates – most notably at the US Fed and the corresponding political tensions. However, in the long term, market-determined interest rates are ultimately more consequential. These rates reflect sovereign conditions, underpin the cost of capital, and significantly influence asset prices. Global bond markets are exhibiting signs of stress. In the US, elevated debt levels, persistent fiscal deficits, heavy issuance, and questions surrounding Federal Reserve independence could place upward pressure on long-term yields (not to mention dollar instability). Similar dynamics are emerging in Europe, as governments embark on expanded deficit spending to support both defense and social priorities.

Japan warrants special attention at both the short- and long-end of the yield curve. During its multi-decade period of low interest rates and aggressive quantitative easing, Japan was a major source of global liquidity. According to Deutsche Bank, Japanese investors have accumulated more than $3T in foreign assets, including an estimated $1.1T in US Treasuries. As domestic yields become more attractive, a reversal of these flows could reduce demand for non-Japanese bonds and other global assets. At the short end, rising rates also increase the risk of an unwinding of yen-funded carry trades, which could destabilize global markets.

Performance Review and Fourth-Quarter Activity

High-beta and cyclical businesses led market performance in 2025, especially during the post-Liberation Day rally. Keeping up proved difficult. In international markets, European banks and defense-related equities dominated performance during the remainder of the year, as higher-beta exposures attracted strong thematic inflows. Our portfolio has favored steady compounding businesses or those with idiosyncratic drivers and lower overall risk (beta) over deep cyclicals and highly valued market leaders driven by optimistic growth narratives. This positioning was valuable leading up to Liberation Day and during other market disruptions, but has weighed on our relative results during this late-cycle high-beta rally.

In the fourth quarter, our largest sources of negative attribution were consumer discretionary (Alibaba, Sony Group) and financials (Everest Group, Willis Towers Watson). Importantly, we maintain high conviction in these businesses. Positive attribution came primarily from industrials (Deutsche Post), information technology (Samsung), and our underweight positioning in communication services.

Despite strong operational execution, Alibaba shares declined following reports of weak holiday-season sales in China. While the company is not immune to broader macroeconomic headwinds, it continues to make meaningful progress toward becoming China’s leading AI-driven cloud provider and strengthening its core e-commerce franchise. Investor sentiment for Sony was pressured by near-term concerns about rising memory prices impacting PS5 hardware margins. However, Sony’s profitability is increasingly being driven by software and network subscriptions. Shares remain attractive, with ongoing simplification and efficiency initiatives underpinning a multi-year improvement in Sony’s margins and cash flow. Everest Group and Willis Towers Watson lagged more cyclical financials amid concerns about softening insurance growth; however, both companies operate resilient businesses that benefit from rising insurance demand and an improved competitive backdrop, which will help them sustain attractive profit growth over the medium-term.

Strength among our industrial holdings was led by Deutsche Post, which continued to improve cost efficiency through initiatives to simplify its corporate structure and enhance accountability. These changes are driving higher returns on invested capital and improved earnings power despite a subdued transport environment. Among our technology investments, Samsung outperformed, as it improved its high-bandwidth memory (HBM) positioning more rapidly than investors anticipated while maintaining supply discipline in conventional DRAM within a three-player oligopoly.

During the quarter, we initiated two new investments (Euronext, FinecoBank) and exited four positions (Henkel, MinebeaMitsumi, Sands China, Sony Financial). Euronext has invested significantly to strengthen its pan-European exchange platform, which we believe will enhance competitive positioning and earnings durability. FinecoBank combines a leading Italian digital banking franchise with a differentiated financial-advisor network, offering best-in-class service and attractive long-term market share potential.

We exited MinebeaMitsumi and Sands China as their shares approached our estimates of intrinsic value, limiting further upside. We sold Henkel due to persistent challenges in achieving volume growth in its consumer division and a reassessment of the structural advantages of its adhesives business. Finally, we exited Sony Financial following its spin-out from Sony Group, as it has higher balance sheet risk and limited share liquidity relative to our standards.

Portfolio Positioning

Table 1 illustrates our core underlying industry exposures and where our portfolio differs most meaningfully from benchmark indices.

Overweight: Non-bank financials (property & casualty insurers, insurance brokers, exchanges); select emerging-market banks; health care equipment; food and beverage franchises; and consumer discretionary companies operating in structurally attractive markets.

Underweight: Cyclical industrials and developed-market banks; pharmaceutical companies; utilities; communication services; and select technology segments.

From a risk perspective, the portfolio exhibits meaningfully lower systematic risk than the broader market and positioning that differs substantially from benchmark indices. We believe this stance is prudent and positions us well to deliver superior risk-adjusted returns over time.

Closing Thoughts

AI-driven innovation is reshaping industries and creating remarkable long-term potential. At the same time, the pace of investment and elevated expectations around the AI theme, paired with the implications of rising long-term interest rates, introduce meaningful risk for markets. Against this backdrop, many high-quality international businesses with durable earnings, strong balance sheets, and reasonable valuations remain underappreciated. Our focus on fundamentals and margin of safety helps us to uncover opportunities beyond crowded parts of the market. We believe our disciplined approach and positioning – while challenging to be different now – provide a strong foundation for long‑term value creation and an attractive client experience through various market environments.

Please contact us if you would like to discuss these or other matters in greater detail. Thank you for your interest in Altrinsic.

Sincerely,

John Hock
John DeVita
Rich McCormick

¹Source: Chubb, Investor Presentation, December 2025.
²In USD. Source: Bain & Company; https://www.bain.com/about/media-center/press-releases/20252/global-ma-stages-great-rebound-in-2025-with-%244.8-trillion-deal-value-to-mark-second-highest-total-on-record.
³As of 12/31/25; Source: FactSet, Altrinsic Research. Companies included in the analysis: Alphabet (Class A & Class C), Amazon, Broadcom, Meta (Class A), Microsoft, NVIDIA, Oracle, Palantir (Class A), Tesla, Advanced Micro Devices.

ⁱPerformance is presented gross and net of management fees for the composite and includes the reinvestment of all income. Gross returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. Net of fee performance was calculated using the highest applicable annual management fee in effect, applied monthly: 0.75% applied since July 1, 2025 and 0.85% applied for the period between January 1, 2025 and June 30, 2025. All performance and attribution in this letter is in USD terms, unless otherwise specified. Policies for valuing investments, calculating performance, and preparing GIPS reports are available upon request. Past performance is not indicative of future results. The outlook and opportunities noted throughout this letter are the opinions of Altrinsic as of the date of this letter. There is no guarantee that we will be successful in implementing investment strategies that take advantage of such perceived opportunities or that any investment in the securities discussed will be profitable. Please see Important Considerations and Assumptions at the end of this letter for additional disclosures. Data sourced from FactSet, MSCI, and Altrinsic research.

GIPS Report – Altrinsic International Equity Composite

N.A. – Information is not statistically meaningful due to an insufficient period of time.
N.A.¹ – Information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year.

*Results shown for the year 2000 represent partial period performance from July 1, 2000 through December 31, 2000. The composite inception date is 1 July 2000.

Altrinsic International Equity Composite is a diversified (60–100 holdings), bottom-up, fundamental, value-oriented, Global-ex US, all cap portfolio, benchmarked to the MSCI EAFE (Net) Index. The MSCI EAFE is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. & Canada. Portfolios in the composite may invest in countries that are not in the MSCI EAFE (Net) Index. Additional information is available upon request. The minimum account size for this composite is $5 million. Prior to January 1, 2004, the minimum account size for this composite was $10 million. Returns include the effect of foreign currency exchange rates. Prior to April 1, 2006, the exchange rate source of the composite was Bloomberg 4pm New York close and the exchange rate source of the benchmark was WM Reuters 4pm London close.

Altrinsic Global Advisors, LLC claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS Standards. Altrinsic Global Advisors, LLC has been independently verified for the periods from December 8, 2000 through December 31, 2024.

A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. The Altrinsic International Equity Composite has had a performance examination for the periods beginning December 8, 2000 through December 31, 2024. The verification and performance examination reports are available upon request.

Altrinsic Global Advisors, LLC is a registered investment adviser. A list of all composite and pooled fund investment strategies offered by the firm, with a description of each strategy, is available upon request. The type of portfolios in which each strategy is available (segregated account, limited distribution pooled fund, or broad distribution pooled fund) is indicated in the description of each strategy.

Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. Beginning July 1, 2005, composite policy requires the temporary removal of any portfolio incurring a client-initiated significant cash inflow or outflow of at least 40% of portfolio assets. The temporary removal of such an account occurs at the beginning of the month in which the significant cash flow occurs and the account re-enters the composite after the first full month under management if fully invested. Additional information regarding the treatment of significant cash flows is available upon request. Composite performance is presented net of foreign withholding taxes on dividends, interest income, and capital gains. Withholding taxes may vary according to the investor’s domicile. The MSCI EAFE (Net) Index deducts withholding tax by applying the maximum rate of the company’s country of incorporation applicable to non-resident institutional investors. Past performance is not indicative of future results.

The US dollar is the currency used to express performance. Returns are presented gross and net of management fees and include the reinvestment of all income. Gross returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. Net of fee performance was calculated using the highest applicable annual management fee of 0.75% applied monthly. Prior to July 1, 2025 the highest management fee applied was 0.85%. Prior to January 1, 2005, the highest management fee applied was 0.75%. The annual composite dispersion is an asset-weighted standard deviation calculated for the accounts in the composite the entire year. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request.

The investment management fee schedule is 0.75% on the first $40 million, 0.60% on the next $35 million, and 0.50% on the remainder. Some accounts may pay incentive fees. Actual investment advisory fees incurred by clients may vary.

The Altrinsic International Equity Composite was created January 1, 2004. Performance presented prior to December 8, 2000 occurred while the Portfolio Manager was affiliated with a prior firm, and the Portfolio Manager was the only individual responsible for selecting the securities to buy and sell. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

Important Considerations and Assumptions

This presentation has been prepared solely for informational purposes and nothing in this material may be relied on in any manner as investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you.

All information is to be treated as confidential and may not be reproduced or redistributed in whole or in part in any manner without the prior written consent of Altrinsic Global Advisors, LLC (“Altrinsic”). The information contained herein shall not be relied upon as a primary basis for any investment decision, including, without limitation, the purchase of any Altrinsic products or engagement of Altrinsic investment management services; there is no and will be no agreement, arrangement, or understanding to the contrary.

This material has been prepared by Altrinsic on the basis of publicly available information, internally developed data and other third party sources believed to be reliable. However, no assurances or representations are provided regarding the reliability, accuracy or completeness of such information and Altrinsic has not sought to independently verify information taken from public and third party sources. Altrinsic does not accept liability for any loss arising from the use hereof. Any projections, market outlooks or estimates in this document are forward-looking statements and are based upon certain assumptions. Due to various risks and uncertainties, actual events or results, or the actual performance of any investment or strategy may differ materially from those reflected or contemplated in such forward-looking statements. Except where otherwise indicated, the information provided, including any investment views and market opinions/analyses expressed, constitute judgments as of the date of this document and not as of any future date. This information will not be updated or otherwise revised to reflect information that subsequently becomes available, or changes in circumstances or events occurring after the date hereof.

The data and information presented is based on representative accounts and is for informational and illustrative purposes only. Individual client data and information may vary based on different objectives for different clients. This material does not constitute investment advice and should not be viewed as current or past recommendations or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy. Any documents describing Altrinsic’s products or services shall not constitute an offer to sell or a solicitation to buy the securities from any person in any jurisdiction where it is unlawful to do so. Any specific investments referenced may or may not be held by accounts managed by Altrinsic and do not represent all of the investments purchased, sold or recommended for client accounts. Readers should not assume that any investments in securities described were or will be profitable. There are no guarantees that investment objectives will be met. Investing entails risks, including possible loss of principal. Altrinsic may modify its investment approach and portfolio parameters, in the future, in a manner which it believes is consistent with its overall investment objective of long-term capital appreciation and reduced risk.

Past performance is not a guide to or otherwise indicative of future results. No representation is being made that any account will or is likely to achieve future profits or losses similar to those shown. Any investment results and portfolio compositions are provided for illustrative purposes only and may not be indicative of the future investment results or portfolio composition of any account, investment or strategy managed by Altrinsic.

Disclosure of Risk Factors: An investment in any account, investment or strategy is speculative and involves a significant degree of risk, which each prospective investor must carefully consider. Returns generated from an investment in any account, investment or strategy may not adequately compensate investors for the business and financial risks assumed. An investor in any account, investment or strategy could lose all or a substantial amount of his or her investment. Before making an investment, prospective investors are advised to thoroughly and carefully review any disclosure documents with their financial, legal and tax advisors to determine whether and investment is suitable for them.

Additional Performance Disclosure – Use of Benchmarks: Benchmarks are provided for illustrative purposes only. Comparisons to benchmarks have limitations because benchmarks have volatility and other material characteristics that may differ from the accounts, investments or strategies managed by Altrinsic. Because of these differences, benchmarks should not be relied upon as an accurate measure of comparison.

Important Disclosures with Respect to Australia: These materials are not, and under no circumstances are to be construed as, a prospectus, an offering memorandum, an advertisement or a public offering of any securities described herein in Australia or any province or territory thereof. Under no circumstances are these materials to be construed as an offer to sell securities or as a solicitation of an offer to buy securities in any jurisdiction of Australia. Altrinsic Global Advisors, LLC is regulated by the US Securities and Exchange Commission (SEC) under US laws which differ from Australian laws, however, Altrinsic Global Advisors, LLC is exempt from the requirement to hold an Australian Financial Services License (AFSL) under the Corporations Act in respect of financial services it provides to wholesale clients only in Australia.

Certain information contained herein (the “Information”) is sourced from/copyright of MSCI Inc., MSCI Solutions LLC, or their affiliates (“MSCI”), or information providers (together the “MSCI Parties”) and may have been used to calculate scores, signals, or other indicators. The Information is for internal use only and may not be reproduced or disseminated in whole or part without prior written permission. The Information may not be used for, nor does it constitute, an offer to buy or sell, or a promotion or recommendation of, any security, financial instrument or product, trading strategy, or index, nor should it be taken as an indication or guarantee of any future performance. Some funds may be based on or linked to MSCI indexes, and MSCI may be compensated based on the fund’s assets under management or other measures. MSCI has established an information barrier between index research and certain Information. None of the Information in and of itself can be used to determine which securities to buy or sell or when to buy or sell them. The Information is provided “as is” and the user assumes the entire risk of any use it may make or permit to be made of the Information. No MSCI Party warrants or guarantees the originality, accuracy and/or completeness of the Information and each expressly disclaims all express or implied warranties. No MSCI Party shall have any liability for any errors or omissions in connection with any Information herein, or any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. (www.msci.com)

This document is not intended for public use or distribution.

International Equity

Quarterly Letter

International Equity Commentary | 4Q 2025

John DeVita, CFA

John Hock, CFA

Rich McCormick, CFA

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