IQ-EQ Fund Performance Snapshot
Equity markets rose by 1.50% during February as measured by the MSCI World Index (net). That return takes the year-to-date gain to 2.44%. It was a choppy month in which the sector rotation, which began last October continued as scepticism about the potential returns from AI investments grew. Meanwhile, the Supreme Court’s rejection of President Trump’s tariffs was largely ignored by investors, despite the potential negative impact on tax revenues in the future. The US administration’s decision to send more warships to the Middle East ahead of negotiations with Iran, caused the oil price to rise above $70 per barrel – up from $60 at the start of the year. Operation Epic Fury, which commenced on the 28th of February would see the oil price spike again towards $80 per barrel as investors braced for the market to open on March 2nd.
In a sign of the continuing sector rotation, the Materials, Utilities and Energy sectors were the best performers during the month, while sectors dominated by AI-related sectors such as Communications Services, Consumer Discretionary and Information Technology, underperformed.
At IQ-EQ Fund Management, we focus on profitable businesses which generate persistent returns and have high levels of protection combined with competent management. We define these as quality businesses, and we expect them to perform irrespective of market volatility. In the long run, we believe these characteristics will deliver outperformance for our clients.
February 2026 figures for the IQ-EQ range of Funds:
IQ EQ Global Equity Income Fund: YTD 10.80% (Net of fees)
The Fund returned 7.30% during February, compared with the MSCI World Index, which rose by 1.50%. Stock Selection and Sector Selection were positive contributors to relative performance during the month, while Currency Effects were a small negative. Sector selection was driven by an overweight position in Industrials and an underweight in the Consumer Discretionary sector. The underweight positions in the Energy and Real Estate sectors were minor negative contributors to relative performance. Corning and TSMC were among the strongest contributors to equity performance during the month.
Key contributors during the period include:
+ Corning Inc. (GLW) is a global technology-based company producing optical fibre, cable, and photonic components for the telecommunications industry, as well as manufacturing glass panels, liquid crystal display glass, and projection video lens assemblies for the information display industry. GLW has several secular opportunities which outweigh the cyclical exposures that many manufacturing companies face. The company has also noted strong demand more generally for US-made components and equipment in light of the new US tariff regime. Meanwhile, the company is executing on its strategic plan (“Springboard”), which had aimed to get operating margins to 20%, well ahead of schedule. GLW has been citing strong demand in its Optical division from AI-related business in recent months and announced in January that it had signed a deal to supply $6bn worth for optical products to Facebook parent Meta. The shares rose strongly on the news. The company was among the best performers in the portfolio in February.
+ Taiwan Semiconductor Manufacturing Company (TSM) is a multinational semiconductor production and development company headquartered in Hsinchu, Taiwan. TSM manufactures semiconductors for corporations such as Apple, Nvidia, AMD and Qualcomm. The company has become the dominant global microchip manufacturer due to its adoption of the “pure-play foundry” model, allowing it to focus on making chips that other companies design. TSM has become the primary chip supplier to the “Magnificent 7”. Despite ongoing concerns about tariffs and American relations with China, the company has confirmed that it will increase investment in the current year. TSM has excellent sustainability credentials, operating with an exceptionally strong competitive moat, allowing them to pay 70% of free cash flow in dividends each year. The company released its fourth quarter earnings report and outlook in mid-January that was well ahead of investor expectations. Management cited resilient long-term, AI-driven growth and said it was investing in new capacity in Taiwan and the US. Momentum in the shares continues through February as investors focused on the hardware providers within the AI ecosystem.
- Cummins Inc. (CMI) manufactures and sells a wide range of diesel, natural gas, and hybrid engines, power generators and alternators. Its ability to improve the efficiency of its power solutions enables it to deliver double digit margins. Innovation is also positioning the company for the transition to electric powertrains. This has resulted in strong ESG credentials, highlighting its role as a leader in low emissions technologies. The Engine division has been relatively weak since US Environmental Protection Agency (EPA) announced earlier this year that it might row back on legislation tightening emissions, which is due to come into effect in 2027. The laws were expected to result in a strong market for trucks in the run-up to the introduction of the legislation. This is now at risk due to the EPA review. However, the company has recently reported strong performance in its Data Centre backup power business, which results from the deployment of AI-related services. Meanwhile, the company’s Accelera unit, which is focused on zero-emissions vehicles and technologies, is experiencing good revenue growth and a strong backlog in its hydrogen technologies. CMI released an earnings update early in February that disappointed investors, specifically on the power generation side. This caused the shares to fall on the day, before recovering those losses during the rest of the month.
- Airbus (“AIR”), is the largest aeronautics and space company in Europe, providing products, services and solutions for the commercial aircraft, helicopter, defence and space sectors. The company has three divisions: Airbus Commercial, Airbus Helicopters, and Airbus Defence & Space. AIR, along with Boeing, operate a de facto duopoly in the production of commercial aircraft. The company has made market gains against its US rival in recent years, particularly in the narrowbody segment of the market, due in part to some missteps at Boeing in this segment. At its fourth quarter earnings update in February, management scaled back expectations of the number of the A220 and A320 Neo narrowbody aircraft deliveries during 2026 and the A320 Neo reduction was attributed to the failure of US engine manufacturer, Pratt and Whitney, to deliver the contracted number of engines to AIR.
IQ EQ Strategic: Global Quality Equity Fund*: YTD 1.62% (Net of fees)
The IQ EQ Strategic: Global Quality Equity Fund returned 0.26% over the month, compared with the MSCI World Index, which rose by 1.50%. Stock Selection and Sector Allocation contributed negatively and Currency Effects had a negligible impact. The negative contribution from Stock Selection was due to the weak performance of stocks such as Alphabet and Novo Nordisk. The negative Sector Allocation outturn was driven primarily by sector overweight positioning in the Information Technology sector. The best performing sector position was the Fund’s overweight in the Health Care sector.
Key contributors during the period include:
+ Wheaton Precious Metals Corp. (WPM) operates as a precious metals streaming company, focusing mainly on gold and silver projects, with a worldwide customer base. Greater than 90% of WPM’s production comes from assets that fall in the lowest half of their respective cost curves, and the portfolio has over 30 years of proven and probable reserve mine life. Profitability reached record highs in 2025, fuelled by strong precious-metal prices and higher sales tied to production. Its portfolio is overweight gold, with fixed unit costs amplifying commodity volatility. That leverage was exposed in February as precious metals prices, silver especially, experienced high volatility after strong January gains. This was a result of the unwinding of an historic run up in prices and geopolitical tensions between the US and Iran. WPM also acquired an additional 34% silver stream on the Antamina Mine in Peru from BHP for $4.3 billion in upfront cash, marking the largest precious metals stream ever executed. This adds to the company's diversified portfolio of long-life, low-cost assets is set to continue delivering solid operating results.
+ Procter & Gamble Company (PG) is a global leader in the fast-moving consumer goods industry, focused on providing branded consumer packaged goods of superior quality and value. Its brands are household names; Pantene, Gillette, Oral-B, Tide/Ariel, Pampers, Charmin, etc. The Company provides products in the laundry and cleaning, paper, beauty care, food and beverage, and health care segments. PG released its Q2 fiscal year 2026 earnings at the end of January. The company reported core EPS of $1.88 that beat consensus estimates while maintaining its full-year guidance for growth in sales and EPS. The results were driven by strong momentum in markets outside the US, such as Latin America and China. Management highlighted AI-powered innovation that helped add to their personalisation and marketing strategy, and reduced R&D time in several new products including a Pantene spray and waterless Tide laundry tile. The household and personal care sector is expected to outperform in 2026, and PG should also benefit from this tailwind.
- Novo Nordisk A/S-B (NOVOB) is a high-quality pharmaceutical company, specialising in diabetes and obesity. This addresses two of the largest markets in the pharmaceutical space, which are driven by the increased consumption of high fat foods and the sedentary nature of many forms of work. NOVOB’s growth is largely underpinned by its GLP-1 drugs for diabetes and obesity. In 1Q26 the company began selling its new GLP-1 pill in the US after receiving approval from the FDA. At the start of February, the company forecast a decline in sales for FY26 due to stronger competition in its key obesity and diabetes drugs in the U.S. market. The company also released disappointing results for a head-to-head study of its next-generation, dual antagonist, weight-loss drug CagriSema versus Eli Lilly's blockbuster Zepbound. While the results showed that the drug was well tolerated, it failed to show non-inferiority to Zepbound. The company responded by intensifying the price war against rival drugs by dropping US prices of Wegovy and Ozempic by up to half starting next year. Novo's future growth is supported by a strong pipeline including advancement of trials for Amycretin (weight loss) and Ziltivekimab (cardiovascular) this year.
- Alphabet Inc. (GOOGL) is composed of Google and a collection of subsidiaries through which it offers web-based search, advertisements, mapping, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products. The company performed strongly in 2025 with earnings that showed broad-based strength in revenues across all divisions. Growth in its Search business was particularly strong. Alphabet followed that performance with strong reviews of its latest version of Gemini, the company’s AI model. Investors noted that the company ascribed the acceleration in search to the adoption of AI – a development that investors had seen as a potential threat to GOOGL as competitors, such as Microsoft, closed the gap in search. According to the company, AI is driving more search activity as users input more complicated searches confident in the knowledge that Google’s AI systems can produce accurate results. The shares weakened during February after the company announced that it would double capital expenditure, to $185bn in 2026, sparking concerns about the likely returns on this investment.
IQ EQ Global Focus Fund: YTD 2.96% (Net of fees)
The IQ EQ Global Focus Fund returned returned 2.36% during the month. The equity portfolio returned 2.51%, while the bond portfolio returned +3.37%. Within the equity book, TSMC and Nestlé were the best performers, while the biggest detractors from performance were Alphabet and ADP. An overweight position in Industrials contributed positively to returns within the equity book.
Key contributors during the period include:
+ Taiwan Semiconductor Manufacturing Company (TSM) is a multinational semiconductor production and development company headquartered in Hsinchu, Taiwan. TSM manufactures semiconductors for corporations such as Apple, Nvidia, AMD and Qualcomm. The company has become the dominant global microchip manufacturer due to its adoption of the “pure-play foundry” model, allowing it to focus on making chips that other companies design. TSM has become the primary chip supplier to the “Magnificent 7”. Despite ongoing concerns about tariffs and American relations with China, the company has confirmed that it will increase investment in the current year. TSM has excellent sustainability credentials, operating with an exceptionally strong competitive moat, allowing them to pay 70% of free cash flow in dividends each year. The company released its fourth quarter earnings report and outlook in mid-February that was well ahead of investor expectations. Management cited resilient long-term, AI-driven growth and said it was investing in new capacity in Taiwan and the US.
+ Cummins Inc. (“CMI”) manufactures and sells a wide range of diesel, natural gas, and hybrid engines, power generators and alternators. Its ability to improve the efficiency of its power solutions enables it to deliver double digit margins. Innovation is also positioning the company for the transition to electric powertrains. This has resulted in strong ESG credentials, highlighting its role as a leader in low-emissions technologies. The Engine division has been relatively weak since US Environmental Protection Agency (EPA) announced last year that it might row back on legislation tightening emissions, which is due to come into effect in 2027. The laws were expected to result in a strong market for trucks in the run-up to the introduction of the legislation. This is now at risk due to the EPA review. However, the company reported strong performance in its Data Centre backup power business, which results from the deployment of AI-related services. Meanwhile, the company’s Accelera unit, which is focused on zero-emissions vehicles and technologies, is experiencing good revenue growth and a strong backlog in its hydrogen technologies.
- Alphabet Inc. (GOOGL) is composed of Google and a collection of subsidiaries through which it offers web-based search, advertisements, mapping, software applications, mobile operating systems, consumer content, enterprise solutions, commerce, and hardware products. The company performed strongly in 2025 with earnings that showed broad-based strength in revenues across all divisions. Growth in its Search business was particularly strong. Alphabet followed that performance with strong reviews of its latest version of Gemini, the company’s AI model. Investors noted that the company ascribed the acceleration in search to the adoption of AI – a development that investors had seen as a potential threat to GOOGL as competitors, such as Microsoft, closed the gap in search. According to the company, AI is driving more search activity as users input more complicated searches confident in the knowledge that Google’s AI systems can produce accurate results. The shares weakened during February after the company announced that it would double capital expenditure, to $185bn in 2026, sparking concerns about the likely returns on this investment.
- Automatic Data Processing Inc. (“ADP”) founded in 1949, is a US provider of human resources management software and services, headquartered in Roseland, New Jersey. ADP is best known for its Payroll and Human Capital Management (HCM) products including ADP Workforce Now and ADP Global View Payroll. The company also provides many resources and services for smaller businesses using the ADP RUN solution. ADP’s performance is highly correlated with macroeconomic trends such as health of the labour market, interest rates, and unemployment. Its strategy involves extending its reach in the field of HR using its novel next-generation cloud platform. ADP released its second quarter earnings at the end of January. Despite guiding investors to the top end of its forecast range for the year, shares slipped during February, falling by 12.5%. The main narrative driving the underperformance is that AI could replace software companies such as ADP, regardless of the degree to which they are embedded in their customers’ workflows.
IQ EQ ESG Multi-Asset Fund: YTD 1.02% (Total Return, net of fees).
Within the Equity Portfolio:
Key contributors during the period include:
+ Taiwan Semiconductor Manufacturing Company (TSM) is a multinational semiconductor production and development company headquartered in Hsinchu, Taiwan. TSM manufactures semiconductors for corporations such as Apple, Nvidia, AMD and Qualcomm. The company has become the dominant global microchip manufacturer due to its adoption of the “pure-play foundry” model, allowing it to focus on making chips that other companies design. TSM has become the primary chip supplier to the “Magnificent 7”. Despite ongoing concerns about tariffs and American relations with China, the company has confirmed that it will increase investment in the current year. TSM has excellent sustainability credentials, operating with an exceptionally strong competitive moat, allowing them to pay 70% of free cash flow in dividends each year. The company released its fourth quarter earnings report and outlook in mid-January that was well ahead of investor expectations. Management cited resilient long-term, AI-driven growth and said it was investing in new capacity in Taiwan and the US. Momentum in the shares continues through February as investors focused on the hardware providers within the AI ecosystem.
- Automatic Data Processing Inc. (“ADP”) founded in 1949, is a US provider of human resources management software and services, headquartered in Roseland, New Jersey. ADP is best known for its Payroll and Human Capital Management (HCM) products including ADP Workforce Now and ADP Global View Payroll. The company also provides many resources and services for smaller businesses using the ADP RUN solution. ADP’s performance is highly correlated with macroeconomic trends such as health of the labour market, interest rates, and unemployment. Its strategy involves extending its reach in the field of HR using its novel next-generation cloud platform. ADP released its second quarter earnings at the end of January. Despite guiding investors to the top end of its forecast range for the year, shares slipped during February, falling by 12.5%. The main narrative driving the underperformance is that AI could replace software companies such as ADP, regardless of the degree to which they are embedded in their customers’ workflows.
Within the Bond Portfolio:
Performance
Bond yields declined (and prices rose) across most major markets in February, lifting the JP Morgan Global Bond Index by 1.96%. The rally was broad based among Developed Market government bonds helped by a flight-to-safety. This was driven in part by concerns that rapid advances in Artificial Intelligence may disrupt existing business models, especially within the software sector, and could negatively affect employment.
Market
The bond portfolio returned 1.93% in February, compared with a 1.96% gain for its benchmark, the JP Morgan Global Bond Index (unhedged in euros). An overweight position in 30‑year Japanese Government Bonds, funded by an underweight in 30‑year US Treasuries, contributed positively to relative performance. However, this benefit was offset by an overweight in government agency bonds, which underperformed and detracted from returns.
IQ EQ Cash Fund: YTD 0.22% (Net of fees)
The IQ EQ Cash Fund returned 0.11% during the month, net of management fees, in euro terms.
The gross running yield on the Cash fund at the end of February was 1.78% as the ECB continue to monitor inflation and the potential economic impact of trade tariffs, European infrastructure spending as well as geopolitical events such as the Middle East to the current cycle of monetary policy. The Fund Management team continue to maintain ca. 30% of the fund in short term liquidity & short-dated government bonds, blended with deposits termed out for different maturities out to a maximum of one year.
The ECB kept interest rates on hold in February for the fifth consecutive time at 2%, as expected. The accompanying ECB statement showed officials believe that ‘the economy remains resilient in a challenging global environment’ and that ‘low unemployment, solid private sector balance sheets, the gradual rollout of public spending on defence and infrastructure and the supportive effects of the past interest rate cuts are underpinning growth’. The ECB also noted that the outlook is still uncertain due to ongoing global trade policy uncertainty and geopolitical tensions.
ECB President Lagarde downplayed the recent strength of the Euro and described eurozone inflation as being ‘in a good place’. Lagarde believes that ‘efforts to bring inflation down have been effective, even though inflation has declined, surveys show that many citizens still perceive prices to be rising faster than the official data suggest’. European Central Bank (ECB) Governing Council member Vujcic said the central bank must not be complacent in the fight against inflation, and that overall economic and geopolitical environment leave no room for complacency. Vujcic called for ongoing monitoring of evolving risks and data-driven decisions, to balance short-term challenges with long-term goals.
In Germany, the latest Ifo Institute’s expectations index rose to 90.5 from a revised reading of 89.6 for January. The reading was above the median estimate of 90 in a recent survey by Bloomberg. Ifo President Fuest said that the German economy is showing signs of life. ECB President Lagarde said that Europe is in a good position to capitalise on AI even without leading the way in developing models, adding that ‘if history is any guide the larger economic prize may lie not in producing these tools, but in applying them across the wider economy’.
Key contacts
If you have any queries please contact Timothy.Kelly@iqeq.com. or any member of our sales team at assetmanagement@iqeq.com. Additional information on the Davy Funds Plc range of funds can be found on our website here.
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WARNING: Past performance is not a reliable guide to future performance. The value of investments may fall as well as rise. Investments denominated in non-euro currencies, may be affected by changes in exchange rates when converted to euro or other currencies.
* Effective 1st May 2024 the IQ EQ Fund Management (Ireland) Limited managed sub-funds on the Davy Funds Plc umbrella were renamed removing “Davy” from the name and/or including “IQ EQ”. ( Davy Global Equity Income Fund to IQ EQ Equity Income Fund; Davy Strategic: Global Quality Equity Fund to IQ EQ Strategic: Global Quality Equity Fund; Davy Global Focus Fund to IQ EQ Global Focus Fund; Davy ESG Multi-Asset Fund to IQ EQ ESG Multi-Asset Fund, and Davy Cash Fund to IQ EQ Cash Fund). There has been no change to the investment objective or process.
IQ EQ Fund Management (Ireland) Limited is regulated by the Central Bank of Ireland. Details about the extent of our authorisation and regulation by the Central Bank of Ireland are available from us upon request.