IQ-EQ Fund Performance Snapshot
Equity markets fell by 1.7% in the first quarter of 2026 as measured by the MSCI World Index (net) in euro terms. After gaining 2.4% during January and February, the surprise attack by the US and Israel on the Iranian leadership and its military infrastructure, and the subsequent closure of the Strait of Hormuz, caused global energy prices to spike and risk assets to fall steadily during March. Conflicting statements from the US and Iran about background negotiations added to the uncertainty. The outcome for the quarter might have been worse had President Trump not indicated on the last day of the quarter that an end to the conflict could come within weeks, causing the US market to rally by 2.2%.
The Energy sector was the standout performer during the quarter, rising by 40% as oil prices breached $100 per barrel for the first time since the Russian invasion of Ukraine in 2022. The price of a barrel of Brent crude had risen from $60 to $70 per barrel in the run-up to the start of the US/Israel bombings on Feb 28th. On a number of occasions during March the price came close to $120. As at quarter-end, US gasoline prices had breached $4 per gallon for the first time since 2022, putting pressure on the US administration for a quick resolution to the situation. The Utilities sector was also a relatively strong performer as rising European power prices are expected to boost profits in the region; the ongoing robust AI-related demand for power in the US boosted Utilities companies there. The Consumer Discretionary and Information Technology sectors were laggards during the quarter. These sectors house mega-cap stocks such as Microsoft, Nvidia and Apple, which underperformed during the quarter as investors reduced risk.
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.
March 2026 figures for the IQ-EQ range of Funds:
IQ EQ Global Equity Income Fund: YTD 4.80% (Net of fees)
The Fund returned +4.80% during the quarter, compared with the MSCI World Index, which fell by 1.7%. Stock Selection and Sector Selection were positive contributors to relative performance during the quarter, while Currency Effects were 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 negative contributors to relative performance. Corning and TSMC were among the strongest contributors to equity performance during the quarter. The currency outcome was driven by a rise in the dollar versus the euro during the quarter.
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 quarters 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 during the quarter.
+ 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 continued through the quarter 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 the 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 it gets 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 over the remainder 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. Middle East hostilities exacerbated the underperformance as travel in the region was curtailed and investors began to reassess the tourism prospects for region, which is an important customer of AIR.
- RELX PLC develops information-based analytics and decision tools for professional and business customers in the Risk, Scientific, Technical & Medical (STM), Legal and Exhibitions sectors. The Risk business helps detect and prevent online fraud and money laundering and deliver insight to insurance companies among others. STM helps researchers and healthcare professionals improve health outcomes by combining high-quality scientific and medical information and trusted data sets with technology solutions. In Legal, RELX owns LexisNexis, the go-to database for legal professional worldwide. The company’s exhibitions business, RX, is second only to Informa in that space. As AI-related shares have surged in the past 12 months, investors have also been looking for companies at risk from the deployment of AI tools. With its large databases of information and tools that analyse that information, investors are concerned about startups disintermediating companies such as RELX. However, RELX’s chief selling point is the quality control, peer reviewing and trust associated with their brands and the tools they provide professionals. The shares recovered somewhat in the latter half of the quarter on a good Q4 earnings report, which allayed some investor concerns.
Top Five: Corning, TSMC, Samsung, Johnson & Johnson, Merck.
Bottom Five: Airbus, Relx, Paychex, ADP, Roche.
IQ EQ Strategic: Global Quality Equity Fund*: YTD 1.62% (Net of fees)
The IQ EQ Strategic: Global Quality Equity Fund returned -3.23% over the quarter, compared with the MSCI World Index, which returned -1.71%. The Fund's underperformance was driven by Sector Allocation and Stock Selection, while Currency Effects provided a positive contribution. The negative Sector Allocation outturn was driven primarily by sector underweight positioning in Energy and overweight positioning in Information Technology. The Fund’s best performing sector allocation was underweight positioning in Financials. The negative contribution from Stock Selection was due to the poor performance of stocks such as Novo Nordisk and Adobe. The currency outcome was mainly driven by a rise in USD versus EUR during the quarter.
Key contributors during the period include:
+ ASML Holdings NV (ASML) develops, produces and markets semiconductor manufacturing equipment; specifically, machines to produce semiconductors through lithography. Lithography is the process through which design patterns for chips (mainly CPUs and GPUs) can be physically etched onto the silicone. ASML’s market share in the lithography segment exceeds 80% as they are the sole supplier of Extreme Ultraviolet (EUV) lithography, which can print circuits at 7nm and smaller. An earnings update in January showed that Q4 2025 bookings were significantly above the market’s expectation, rising €7b quarter‑on‑quarter to nearly €39b. Revenue also saw a slight beat at €9.7b. Memory drove 56% of this surge, with Logic making up the other 44%. The industry environment in the past few quarters has witnessed a significant increase in DRAM memory prices. ASML, with its exposure to all the major memory companies, will be a significant beneficiary of this memory up-cycle.
+ KLA Corp (KLAC) is the global leader in process control equipment for semiconductor manufacturing. The Company offers surface profilers, nanomechanical testers, chips, and semiconductor assembly solutions. Semiconductor Process Control, including wafer inspection, is the top revenue generating product line. The company's equipment is essential for manufacturing advanced semiconductors at 2-nanometer and 1-nanometer nodes. Q2 fiscal 2026 earnings delivered revenues of $3.3 billion and record FCF. This was driven by continued investment in foundry/logic and strength in DRAM/HBM. Management projects high-teens percentage year on year revenue growth in calendar 2026. Near-term challenges include supply constraints for optical components until mid-2026 and geopolitical tensions with China. KLA remains well-positioned to achieve its long-term revenue and operating margin targets, driven by increasing chip complexity and its leading market share in process-control equipment for AI chips.
- 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. The company has also begun offering a unique subscription programme through its telehealth partners such as Hims & Hers. Novo's future growth is supported by a strong pipeline including advancement of trials for Amycretin (weight loss) and Ziltivekimab (cardiovascular) this year.
- Adobe Inc (ADBE) is a leading global provider of digital imaging and print publishing products, with its flagship Creative Cloud product line serving as the primary revenue driver. The company operates two main segments: Digital Media which includes Creative Cloud and Document Cloud, and Digital Experience which provides marketing and analytics solutions to enterprises. The company is best known for its Photoshop, PDF and Flash platforms. Q1 earnings were a solid beat for revenue and EPS, while the Q2 outlook remained in-line. The future remains uncertain for Adobe as creative software companies face among the highest risk of disruption from AI. Increasing AI capability is expected to slow seat-based revenue growth. Adobe’s share price decline over the period reflects this significant investor concern and has led to the departure of CEO Shantanu Narayen. However, opportunities exist to monetise its vast content libraries in AI model training. Management have highlighted encouraging early indicators along with improving ARR across Express, Acrobat AI Assistant and Firefly.
Top Five: ASML, KLA, Lam Research, Monolithic Power Systems, Applied Materials.
Bottom Five: Novo Nordisk, Adobe, Johnson & Johnson, Visa, Intuit.
IQ EQ Global Focus Fund: YTD -2.46% (Net of fees)
The IQ EQ Global Focus Fund returned -2.46% during the quarter. The equity portfolio returned -3.2%, while the bond portfolio returned +1.7%. Within the equity book, TSMC and CBOE were among the best performers, while the biggest detractors from performance included Adobe 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-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 continued through the quarter as investors focused on the hardware providers within the AI ecosystem.
+ CBOE Global Markets Inc (CBOE) operates the oldest and largest options exchange in the US, handling more than 30% of the total options volume. In addition to handling contracts listed on multiple exchanges, CBOE has exclusive listing rights over some of the most popular index options contracts, such as the SPX and VIX. From a governance perspective CBOE leads most global peers. The company’s share price rose steadily during 2025 and accelerated into Q1 2026 as the company delivered on revenue and margin forecasts as it divested some businesses. Average daily volumes of options on broad indices, such as the S&P 500, are making new records as volatility has increased in recent months. New guidance for 2026 will, if achieved, support the shares from here. While the shares lost some ground following the start of the Iran war, CBOE outperformed peers and the market rising by over 15% during the quarter.
- Adobe Inc (ADBE) is a leading global provider of digital imaging and print publishing products, with its flagship Creative Cloud product line serving as the primary revenue driver. The company operates two main segments: Digital Media which includes Creative Cloud and Document Cloud, and Digital Experience which provides marketing and analytics solutions to enterprises. The company is best known for its Photoshop, PDF and Flash platforms. Q1 earnings were a solid beat for revenue and EPS, while the Q2 outlook remained in-line. The future remains uncertain for Adobe as creative software companies face among the highest risk of disruption from AI. Increasing AI capability is expected to slow seat-based revenue growth. Adobe’s share price decline over the period reflects this significant investor concern and has led to the departure of CEO Shantanu Narayen. However, opportunities exist to monetise its vast content libraries in AI model training. Management have highlighted encouraging early indicators along with improving ARR across Express, Acrobat AI Assistant and Firefly.
- 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, the 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. ADP was among the biggest detractors from Stock Selection during the quarter.
Top Five: TSMC, CBOE, Cummins, Air Liquide, Waste Management.
Bottom Five: Adobe, ADP, Nasdaq, Pandora, CTS Eventim.
IQ EQ ESG Multi-Asset Fund: YTD-3.20% (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 continued through the quarter as investors focused on the hardware providers within the AI ecosystem.
- Oracle (ORCL) supplies enterprises with hardware, software and services to run their businesses effectively. The company’s products include databases, applications and cloud-based services. After much recent investment in cloud computing, this area now accounts for 85% of ORCL’s sales, while hardware is just 5%. In late-June of 2025 the company issued its fiscal year 2025 annual results, which impressed investors. Moreover, the company issued forecast for strong growth in cloud and AI-related products and services. Looking ahead to fiscal year 2026, the company guided for revenue growth of 40% in cloud services, following on from 24% in fiscal 2025. This was followed up in August by an earnings report that forecast much higher-than-expected revenues from AI businesses, which sent the shares significantly higher. There is currently some scepticism about the company’s partnership with OpenAI and the funding requirement for the rollout of datacentres, which will be fitted out by Oracle and used by OpenAI. This, combined debt raising, caused a fall in the shares in the fourth quarter of last year and into January 2026. Despite tracking sideways in February and March, ORCL was among the biggest detractors from Stock selection in the quarter.
Within the Bond Portfolio:
Performance
Bond markets were positive in the year to February 28th. However, they came under pressure in March following the outbreak of war between the United States (including Israel) and Iran. This led to the effective closure of the Strait of Hormuz, triggering a sharp rise in energy and other commodity prices. As a result, concerns grew that inflation could increase, potentially prompting central banks to raise interest rates — a development that is generally negative for bond markets. However, this weakness in bonds was offset by the strength of the US dollar. This helped the JP Morgan Global Bond Index (unhedged in euros) to deliver a positive return of 0.59% over the first quarter.
Market
The bond portfolio was up 0.48% during the first quarter, underperforming its benchmark, the JP Morgan Global Bond Index (unhedged in euros), which was up 0.59%.
The strongest positive contribution to performance came from the portfolio’s allocation to corporate bonds. However, this was more than offset by an overweight position in long dated UK gilts. This detracted from performance as bond markets sold off amid inflation concerns in March, driven by the impact of the war on energy and commodity prices.
IQ EQ Cash Fund: YTD 0.32% (Net of fees)
The IQ EQ Cash Fund returned 0.32% during the quarter, net of management fees, in euro terms.
The gross running yield on the Cash fund at the end of March was 1.80% as the ECB continue to monitor inflation, 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. Nordea was added to the Counterparty list in Q1, to improve the credit quality and return on the fund in H1 2026.
The ECB kept interest rates on hold in March for the sixth consecutive time at 2%, as expected. The ECB statement noted that the war in the Middle East has made the outlook significantly more uncertain, creating upside risks for inflation and downside risks for economic growth and that it will have a material impact on near-term inflation through higher energy prices. Officials noted that the medium-term implications will depend both on the intensity and duration of the conflict and on how energy prices affect consumer prices and the economy. ECB President Lagarde added that ‘we are both well positioned and well equipped to deal with the development of a major shock that is unfolding’.
The latest Ifo institute’s expectations index dropped to 86 from a revised 90.2 previously, the lowest level in over a year as Germany’s business outlook was impacted by higher energy costs driven by events in Iran. Ifo President Fuest said that ‘the war in Iran has put any hope of a recovery on ice for the time being, uncertainty among companies has increased noticeably’. ECB President Lagarde said that the central bank will act decisively if the current surge in energy prices risks a broader bout of inflation, adding that ‘we will not act before we have sufficient information on the size and persistence of the shock and its propagation’. The latest S&P Global Composite Purchasing Managers’ Index (PMI) reading came in at 50.5, down from 51.9 in February. Activity in the eurozone’s private sector rose less than anticipated, increasing at its slowest pace since last May as the conflict in the Middle East takes hold.
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.