In the third quarter of 2026, global equities posted a modest gain amid a backdrop of significant intra-quarter volatility. High-momentum stocks — which had been among the market's strongest performers through the first half of the year, led by a blistering AI-driven rally in semiconductor and memory names — suffered a sharp reversal in July. The Philadelphia Semiconductor Index fell into bear market territory by mid-July, declining more than 20% from its late-June peak. Memory names were particularly hard hit, with SK Hynix plunging approximately 47% from its all-time high by late July, and Kioxia halving in market value from its June peak. High momentum stocks broadly fell along with growth stocks, bottoming on July 29. The MSCI ACWI similarly troughed on July 29, hitting its quarter low before rebounding sharply through August — reaching its quarter high on August 13. The recovery was then tested again in September, when the U.S. Federal Reserve raised its benchmark rate by 25 basis points citing persistent inflation. With the Fed's dot plot signaling further tightening ahead, global equities gave back some of their August gains but ultimately finished the quarter in positive territory.
In the Ninepoint Global Select Fund, we reduced our exposure to semiconductor and AI capex-related names by 18% of the fund across May and June, taking profits ahead of the volatility we expected. Even so, the sharp reversal in momentum stocks and the headwinds facing growth-oriented stocks weighed on the Fund’s returns relative to its benchmark, as the portfolio underperformed in the third quarter.
From a sector perspective, security selection in the Information Technology, Consumer Discretionary, and Communication Services sectors detracted from relative performance. This was partially offset by strong security selection and an overweight allocation to Health Care, which contributed to performance.
From a geographic perspective, the portfolio’s allocations to Canada and the Netherlands contributed to relative performance, while the United States and South Korea detracted. In terms of individual holdings, the top contributors during the period were Natera Inc., Crowdstrike Holdings Inc., and Guardant Health, while the top detractors were Corning Inc., Dutch Bros, and Sterling Infrastructure.
Looking ahead, we expect the long-term uptrend in equities to remain intact, though the road is likely to stay bumpy. The AI trade in particular may keep evolving as falling token costs, safety concerns, and political pushback on datacenter construction affect the pace of the buildout. Meanwhile, rapidly rising interest rates may be a headwind for expensive, unprofitable, and smaller-cap companies. We have been adjusting the portfolio to reflect these risks.
Overall, the third quarter was a reminder of how quickly market leadership can reverse. The Fund’s relative results were held back by the pullback in momentum and growth stocks, even after we took profits in semiconductor and AI-related names earlier in the year. We remain constructive on equities over the long term, and we continue to focus on high-quality businesses with durable growth that can hold up as interest rates rise and the AI trade matures.
NINEPOINT GLOBAL SELECT FUND - COMPOUNDED RETURNS¹ AS OF SEPTEMBER 30, 2026 (SERIES F NPP5014) | INCEPTION DATE: SEPTEMBER 17, 2025
|
|
1M |
YTD |
3M |
6M |
1YR |
INCEPTION |
|
FUND |
1.46% |
6.23% |
-7.11% |
8.50% |
4.36% |
5.64% |
Tony, Sam & JLO