IQ-EQ Fund Performance Snapshot
Equity markets rose 1.6% during August taking the year-to-date performance to 14.4%. By mid-month the return had exceeded 3.5% but equities weakened in the last two weeks as energy prices rose on the ongoing tensions in the Middle East and the end of the earnings season, which had been supportive up to that point.
The Information Technology sector was responsible for almost 90% of the total index return during August as investors returned to the sector following a selloff that ran through June and July. The earnings season was generally regarded as positive for most of the AI-related players.
Interest rate-related sectors such as Utilities and Real Estate lagged the market as bond yields remained at elevated levels and expectations of interest rate rises in the US and Japan began to rise late in the month.
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.
August 2026 figures for the IQ-EQ range of Funds:
IQ EQ Global Equity Income Fund: August Ret. 0.28%, YTD 20.38% (Net of fees)
The IQ EQ Global Equity Income Fund returned 0.28% compared with the MSCI World, which rose by 1.6%. Stock Selection and Sector Allocation effects were negative contributors to relative performance, while Currency Effects were a positive contributor. The Stock Selection outcome was driven by holdings such as Ferrovial and Cummins. The contribution from Sector Allocation was due to the overweight position in Industrials. The underweight in Information Technology contributed negatively to Sector Allocation.
Key contributors during the period include:
+ Merck & Co. (MRK) is a global pharmaceutical company focused on prescription medicines, vaccines, biological therapies, and animal health products, with key franchises spanning oncology, vaccines, and infectious disease. Its flagship product, Keytruda, is the world's leading cancer immunotherapy, complemented by a growing portfolio including Winrevair for pulmonary arterial hypertension. In 2026, shares have gained approximately 40% year-to-date, underpinned by strong pipeline execution and a series of new product launches. The stock advanced approximately 13% over August, driven by two significant catalysts: early in the month, Merck reported Q2 2026 revenue ahead of consensus, with Keytruda and Winrevair ahead of expectations. The stock rose on the day. Late in the month, a federal court rejected Merck's challenge to the Medicare drug price negotiation programme, tempering some of the gains. Management raised full-year 2026 sales guidance to $66.3–$67.3 billion and reiterated a long-term commercial opportunity of over $70 billion from more than 20 pipeline products. Merck's broadening pipeline, strong cash generation, and active business development position it well for durable growth beyond its flagship franchise.
+ Samsung Electronics Co. (SMSN) is the world's largest memory chip maker and a global technology leader, operating across four divisions: DX (Device eXperience), DS (Device Solutions), SDC (display panels), and Harman (connected car systems and audio/visual products). The company produces a broad range of products spanning DRAM, NAND flash, smartphones, televisions, and home appliances. Early in August, Samsung unveiled a new 3D-memory roadmap delivering roughly eight times the performance of next-generation memory modules. The company also reported Galaxy Z Fold 8 smartphone preorders were running 30% ahead of the prior estimates. On August 14th, the company released Q2 2026 results in line with analyst expectations and provided positive guidance. The company expects to distribute approximately W30 trillion in cash dividends in Q3 2026, with the remaining allocation to be finalised at a January board meeting. Management guided for continued High Bandwidth Memory (HBM) momentum underpinned by improving yields and performance for HBM4. This bodes well for future profitability.
- Ferrovial NV (FER) is a global infrastructure operator focused on toll roads and airports, with operations concentrated in North America. The company operates across four divisions — Highways, Airports, Construction, and Energy. Shortly after delisting in Europe and focusing on the US, a Ferrovial-led consortium was selected to deliver Tennessee's $9.2 billion I-24 Southeast Choice Lanes project in Nashville — a 26-mile managed lane concession valued at $24.8 billion — lifting the stock by nearly 3% on the day. Late in the month, analysts cut their average price target to approximately €59 from €65, citing uncertainty over the project's return profile. The stock fell over 3% in response, closing August down approximately 10.6% for the month. North American infrastructure projects are expected to drive annual revenue growth of 4–5% and profit gains of 6–9% through 2028, supported by a net-cash position of €1.31 billion outside its projects. Despite near-term questions over the I-24 return assumptions, Ferrovial's mature toll road portfolio and the anticipated opening of Phase A of the New Terminal One at JFK in March 2027 underpin a resilient long-term earnings profile.
- Cummins Inc. (CMI) designs, manufactures, and distributes engines, filtration, and power generation products for commercial truck, industrial, and data centre markets. The company operates through five segments: Engine, Distribution, Components, Power Systems, and its zero emissions business, Accelera. The company’s shares have gained approximately 10.6% year-to-date to end-August, supported by strong demand across the company's truck and power generation businesses. On August 4th, Cummins reported revenue ahead of consensus, while EPS missed analyst estimates, weighed down by higher incentive compensation accruals and an unfavourable discrete tax item. The shares fell approximately 6% on the day. Mid-month, Cummins announced its largest-ever battery energy storage system deployment, supplying a major US data centre project through its Power Generation business. Management raised revenue growth and earnings guidance, driven by stronger demand in North American, China construction, and power generation. Despite near-term margin pressure from elevated incentive compensation, Cummins' record revenue, raised full-year outlook, and expanding data centre footprint suggest a positive medium-term outlook.
IQ EQ Strategic: Global Quality Equity Fund*: August Ret. 2.33% YTD 14.04% (Net of fees)
The IQ EQ Strategic: Global Quality Equity Fund returned 2.33% over the month, compared with the MSCI World Index, which returned 1.60%. The Fund's outperformance was driven by both Sector Allocation and Stock Selection. Currency Effects had negligible impact. The positive Sector Allocation outturn was driven primarily by overweight positioning in Information Technology and underweight positioning in Utilities. The underweight positioning in Materials was the Fund’s worst performing sector. The positive contribution from Stock Selection was due to the strong performance of stocks such as Recruit Holdings, Wheaton Precious Metals and Veeva Systems.
Key contributors during the period include:
+ Recruit Holdings Co. (6098) is a Japanese HR technology and staffing company, operating the Indeed job-search platform alongside a global staffing business. Its HR Technology segment serves employers and job seekers globally. In 2026, shares have more than doubled YTD, gaining c.106%. On August 7th Recruit released Q1 FY2027 earnings, reporting a consensus beating revenue of c. ¥1 trillion (+19% YoY), driving a 23% surge in stock price. The company also raised FY2027 revenue guidance to ¥4.23 trillion, driven by AI momentum in HR Technology. Though a Japan Fair Trade Commission inspection of its domestic staffing operations remains a risk, Recruit's record share price and AI-driven growth suggest strong near-term momentum.
+ Wheaton Precious Metals Corp. (WPM) is a Canadian precious metals streaming company that acquires silver, gold, palladium, and cobalt production from miners worldwide in exchange for upfront payments. Revenue is generated by selling these metals at a fixed cost per ounce, providing leveraged exposure to precious metal prices. In 2026, surging precious metal prices have driven WPM 29% higher YTD. The stock gained 37% over August. Early in the month, WPM posted record Q2 revenue of c.$929M (+85% YoY) and adj. EPS of $1.19, beating consensus. Full-year 2026 production guidance was reiterated. WPM is well-positioned to pursue further streaming deals and gain from strong commodity prices.
- Applied Materials, Inc. (AMAT) provides materials engineering solutions for semiconductor chip and display manufacturing, serving foundries, memory producers, and device manufacturers. Its primary segments are Semiconductor Systems (c.77% of revenues) and Applied Global Services (AGS). AMAT entered August up 89% YTD, underpinned by robust AI-driven semiconductor demand, however the stock fell 9.7% over August. On August 13th, AMAT reported Q3 FY2026 net sales of c.$9B (+25% YoY) and adj. EPS of $3.50 (+41% YoY), both beating consensus. Management also guided Q4 net sales and adj. EPS above consensus. AMAT's earnings momentum and AI tailwinds support a constructive long-term outlook despite near-term multiple compression.
- Broadcom Inc. (AVGO) designs and supplies semiconductor and infrastructure software solutions across data centre networking, broadband, wireless, storage, and industrial markets. Its portfolio spans AI ASICs, networking chips, and infrastructure software for hyperscalers globally. In 2026, AVGO is up 6.5% YTD, supported by accelerating hyperscaler capex and AI demand. AVGO gained c.10% early in the month before reversing to close down c.5% as AI financing concerns took hold. Shares fell on a VMware security flaw and a BofA estimate putting Broadcom's chip-financing vehicle at $370 billion in senior debt by mid-2029. Indeed, later in the month, Broadcom reportedly sought up to $100 billion in debt for an AI chip deal. Despite these headwinds, the company targets AI revenue exceeding $100 billion in 2027 and its AI positioning and hyperscaler agreements support a constructive outlook.
IQ EQ Global Focus Fund: August Ret. -0.06% YTD 6.62% (Net of fees)
The IQ EQ Global Focus Fund returned -0.06% during August. The equity portfolio returned 0.1% gross, while the bond portfolio returned -0.34%. Within the equity portfolio, holdings such as Merck and Tractor Supply were among the strongest contributors to performance during the month, while Ferrovial and Cummins detracted from performance.
Key contributors during the period include:
+ Merck & Co. (MRK) is a global pharmaceutical company focused on prescription medicines, vaccines, biological therapies, and animal health products, with key franchises spanning oncology, vaccines, and infectious disease. Its flagship product, Keytruda, is the world's leading cancer immunotherapy, complemented by a growing portfolio including Winrevair for pulmonary arterial hypertension. In 2026, shares have gained approximately 40% year-to-date, underpinned by strong pipeline execution and a series of new product launches. The stock advanced approximately 13% over August, driven by two significant catalysts: early in the month, Merck reported Q2 2026 revenue ahead of consensus, with Keytruda and Winrevair ahead of expectations. The stock rose on the day. Late in the month, a federal court rejected Merck's challenge to the Medicare drug price negotiation programme, tempering some of the gains. Management raised full-year 2026 sales guidance to $66.3–$67.3 billion and reiterated a long-term commercial opportunity of over $70 billion from more than 20 pipeline products. Merck's broadening pipeline, strong cash generation, and active business development position it well for durable growth beyond its flagship franchise.
+ Tractor Supply Company (TSCO) is the largest rural lifestyle retailer in the United States, serving recreational farmers, ranchers, and rural homeowners with products spanning livestock and pet supplies, hardware, tools, and seasonal merchandise. The company operates over 2,600 stores in the US under the Tractor Supply and Petsense by Tractor Supply banners. In 2026, the stock has faced significant headwinds. Early in the month, the company declared a quarterly cash dividend of $0.24 per share and expanded its pet assortment with over 200 new products, reinforcing its focus on the pet category. Mid-month, management unveiled a strategic turnaround plan — including price reductions, a scaling back of store expansion, and lower financial targets — as executives concluded that inflationary pressures on its core customer base would persist, with the stock rising approximately 13.2% over the month as investors responded positively to the reset. On August 19th, the company issued $500m in senior unsecured five-year notes at a yield of 5.204%, directing proceeds towards repaying its senior credit facility. Late in the month, Petsense by Tractor Supply launched an exclusive same-day delivery partnership with Instacart, expanding digital fulfilment reach across more than 130 store locations. Management guides for full-year 2026 adjusted EPS of $1.90–$2.00 and comparable store sales of -1% to flat, having withdrawn its prior long-term financial framework. The strategic pivot and debt refinancing demonstrate management's resolve to stabilise the business and improve growth and profitability.
- Ferrovial NV (FER) is a global infrastructure operator focused on toll roads and airports, with operations concentrated in North America. The company operates across four divisions — Highways, Airports, Construction, and Energy. Shortly after delisting in Europe and focusing on the US, a Ferrovial-led consortium was selected to deliver Tennessee's $9.2 billion I-24 Southeast Choice Lanes project in Nashville — a 26-mile managed lane concession valued at $24.8 billion — lifting the stock by nearly 3% on the day. Late in the month, analysts cut their average price target to approximately €59 from €65, citing uncertainty over the project's return profile. The stock fell over 3% in response, closing August down approximately 10.6% for the month. North American infrastructure projects are expected to drive annual revenue growth of 4–5% and profit gains of 6–9% through 2028, supported by a net-cash position of €1.31 billion outside its projects. Despite near-term questions over the I-24 return assumptions, Ferrovial's mature toll road portfolio and the anticipated opening of Phase A of the New Terminal One at JFK in March 2027 underpin a resilient long-term earnings profile.
- Cummins Inc. (CMI) designs, manufactures, and distributes engines, filtration, and power generation products for commercial truck, industrial, and data centre markets. The company operates through five segments: Engine, Distribution, Components, Power Systems, and its zero emissions business, Accelera. The company’s shares have gained approximately 10.6% year-to-date to end-August, supported by strong demand across the company's truck and power generation businesses. On August 4th, Cummins reported revenue ahead of consensus, while EPS missed analyst estimates, weighed down by higher incentive compensation accruals and an unfavourable discrete tax item. The shares fell approximately 6% on the day. Mid-month, Cummins announced its largest-ever battery energy storage system deployment, supplying a major US data centre project through its Power Generation business. Management raised revenue growth and earnings guidance, driven by stronger demand in North American, China construction, and power generation. Despite near-term margin pressure from elevated incentive compensation, Cummins' record revenue, raised full-year outlook, and expanding data centre footprint suggest a positive medium-term outlook.
IQ EQ ESG Multi-Asset Fund: August Ret. 0.60% YTD 3.37% (Total Return, net of fees)
Within the Equity Portfolio:
The IQ EQ ESG Multi-Asset Fund returned 0.60%, net of fees, during the month. The equity component, which accounts for approximately 61% of the strategy, returned +1.54% gross. This compares with the MSCI World Index return of 1.6%. The relative performance of the equity book was driven by a negative contribution Sector Allocation. Stock Selection, and Currency Effects were negligible. Stock Selection was most positively impacted by SAP while TJX detracted most from Stock Selection. The negative Sector Allocation outturn for the month was driven by an underweight position in the Information Technology sector.
Key contributors during the period include:
+ SAP is a German enterprise software company and the world's leading provider of enterprise resource planning (ERP) solutions, serving large and mid-sized organisations across industries globally with cloud, on-premises, and hybrid software platforms. Its flagship RISE with SAP programme drives cloud migration, while newer offerings including Business Data Cloud and the Joule AI copilot underpin its artificial intelligence strategy. Despite a strong August, the shares remain down approximately 5.8% on a total return basis in 2026, reflecting persistent investor caution around the pace of AI monetisation. The stock gained approximately 21.3% over the month. Business Data Cloud reportedly featured in over 90% of SAP's largest Q2 deals, reinforcing its strategic importance to enterprise clients. Analysts raised their average price target, with one firm lifting its target to €215 from €190. An SAP executive purchased approximately €267,000 of shares on the open market. Management targets cloud revenue of €25.8–26.2 billion at constant currency and free cash flow of approximately €10 billion for the full year. SAP's entrenched ERP franchise and ongoing cloud transition provide a durable earnings base, though the pace of AI product delivery remains the key variable for re-rating the stock.
- TJX Companies, Inc. (TJX) is the world's leading retailer of discounted, branded apparel and home fashions, operating banners including T.J. Maxx, Marshalls, HomeGoods, and international chains across Europe and Canada. The company generates revenue through its Marmaxx, HomeGoods, TJX Canada, and TJX International segments, offering branded merchandise at significant discounts to full-price retail. In 2026, shares entered the year under pressure as consumer spending headwinds weighed on the broader retail sector. The stock fell approximately 14.3% during August, with the decline concentrated around mid-month earnings report. Despite earnings being in line with expectations, the shares dropped over 4% on the day as investors focused on Marmaxx's comparable sales growth of just 1% — its weakest since 2017 — attributed to self-inflicted merchandising missteps in the Apparel and Home categories. Strength elsewhere, failed to offset the Marmaxx concern, and TJX simultaneously announced plans to accelerate store openings to 4% annually with a long-term global store target raised to 7,500 despite the prevailing consumer backdrop. TJX raised full-year FY27 guidance, on revenue and profits and expressed confidence in driving sales and traffic through the remainder of the year. Despite the near-term Marmaxx execution stumble, TJX's diversified portfolio, robust cash generation, and structural off-price advantages position it well to recover and sustain long-term growth.
Within the Bond Portfolio:
Global bond markets were weaker in August, with the JPMorgan Global Bond Index declining by 0.77% over the month. The principal driver of this negative performance was the rise in energy prices linked to the ongoing conflict in the Middle East, which continued to fuel concerns about inflation. As a result, markets increasingly priced in the prospect of higher future interest rates, leading to higher bond yields and lower bond prices across global markets.
The bond portfolio returned -0.66% in August, outperforming its benchmark, the JPMorgan Global Bond Index (unhedged in euro), which returned -0.77%. Sector allocation was the largest contributor to relative performance, with overweight positions in agency and corporate bonds adding value. This was partially offset by curve positioning within UK gilts, which detracted from returns over the month.
IQ EQ Cash Fund: August Ret. 0.13%, YTD 0.96% (Net of fees)
The gross running yield on the Cash fund at the end of August was 1.98% as the ECB continues to monitor inflation, European infrastructure spending as well as the impacts of geopolitical events such as conflict in 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.
Eurozone inflation rose 3.3% year on year in August, from 2.4% in July. However, core inflation excluding food and energy came in at 2.4%, highlighting the impact that geopolitical tensions are having as energy costs posted a 14.3% increase year on year. With markets pricing in a further move to tighten monetary policy from the ECB in September, ECB Governing Council Member Kocher believes that ‘upside risks to inflation have increased again recently’ and that if this picture is confirmed in the ECB’s new forecast that another interest-rate hike will be necessary in the near future.
The latest report from the Ifo institute showed that the business outlook in Germany improved for a fourth consecutive month as the economy proved resilient amid the conflict in the Middle East. The Ifo’s expectations gauge rose to 89.1 from a revised 86.8 in July, marking the longest period of improvements since 2023. Economists had estimated a reading of 87.5 in a recent Bloomberg survey while a reading on current conditions improved to 88.5. Ifo President Fuest stated that the German economy is recovering, that companies were more satisfied with their current situation, with some significant upward revisions to expectations.
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.