IQ-EQ Fund Performance Snapshot
Equity markets rallied strongly during May, adding 5.1%, taking the MSCI World Index (net) to 11.2% year-to-date in euro terms. Emerging markets outperformed developed markets on optimism about a resolution of the situation in the Middle East. Despite repeated skirmishes between the US and Iran investors are expecting geopolitical tensions to continue to ebb. The oil price at month-end suggests that commodity traders see an opening of the Strait of Hormuz in the near term. As hopes of a lasting settlement rise, investor focus has returned to the AI opportunity.
The Information Technology sector was the standout performer during May, rising by 16.6%, driven higher by shares such as Apple, Microsoft and Micron. The sector accounted for almost 90% of the total index return during the month. The AI trade was, once again, very much the driver of investor exuberance. As geopolitical tensions eased, the oil price drifted lower, taking the energy sector with it – energy shares lost 5.2% during the period.
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.
May 2026 figures for the IQ-EQ range of Funds:
IQ EQ Global Equity Income Fund: April Ret. 3.14%, YTD 16.48% (Net of fees)
The Fund returned 3.14% compared with the MSCI World, which rose by 5.10%. Stock Selection and Sector Allocation effects were negative contributors to relative performance, while Currency Effects did not impact performance. The Stock Selection outcome was driven by holdings such as Zoetis and JPMorgan Chase. The contribution from Sector Allocation was due to the overweight position in Health Care and the underweight in Information Technology.
Key contributors during the period include:
+ Samsung Electronics (005930 KS Equity) is a South Korean-based multinational company manufacturing and selling electronic devices, appliances, and consumer electronics products. The company is the world's largest producer of memory semiconductors. In 2026, the company entered the year with strong momentum driven by AI infrastructure demand and its Nvidia partnership. The stock surged 43.1% during May, reaching a $1 trillion market cap on May 6th. During the month, Samsung announced a $26.6 billion bonus for 78,000 semiconductor employees, averaging $340,000 per worker, averting a potential strike which had been a concern for investors. On May 27th, union members approved the wage agreement with 73.7% in favour. On May 31st, Samsung announced investments in Anthropic and reported 40% automotive memory market share. Investors expect the memory supply shortage to deepen in 2027. Meanwhile, Samsung's High-Bandwidth Memory production leadership, automotive memory expansion, and sustained AI demand position the company for continued strong performance.
+ Cisco Systems Inc. (CSCO) designs, manufactures, and sells networking and communications equipment, including routers, switches, and security solutions for enterprises, service providers, and cloud operators. The company also provides software, services, and AI infrastructure solutions to support digital transformation and data centre modernization. The stock gained 31.6% in May, propelled by significant earnings upgrades. During the month, CSCO reported Q3 revenue up 12% YoY, and EPS of $1.06, exceeding consensus estimates. The company also announced a restructuring plan to cut nearly 4,000 jobs to focus investments on AI, silicon, optics, and security. Management raised FY26 “hyperscaler” AI order expectations to $9 billion from $5 billion and increased full-year revenue guidance to $62.8-63 billion. The stock surged 17% on May 14, marking its largest single-day gain since August 2011. Analysts raised average price targets following the results, with expectations for AI revenue to reach approximately $6 billion in FY27, supporting projected revenue growth of around 8%. The company's strategic pivot toward AI infrastructure positions it for sustained growth, though margin pressures from hardware-intensive sales remain a consideration.
- Zoetis Inc (ZTS) is a global leader in animal health, developing and manufacturing medicines, vaccines, and diagnostic products for livestock and companion animals. The company operates across multiple therapeutic areas including parasiticides, dermatology, pain management, and diagnostics. Zoetis experienced a sharp deterioration in its outlook in May following disappointing Q1 results. On May 7, the company reported Q1 2026 revenue of $2.26 billion, up 3% YoY but below the $2.30 billion that investors had expected. The company cut its full-year 2026 guidance, lowering its adjusted EPS expectations to $6.85-$7.00 from $7.00-$7.10 and reducing revenue outlook to $9.68 billion. The reason for the downbeat outlook was intensifying competition in companion animal franchises. Zoetis has a significant range of products in development, which should drive growth in the future. However, the near-term EPS downgrades drove sentiment during May.
- JPMorgan Chase & Co. (JPM) is a leading global financial services firm with assets of $4.4trn and global operations. The company is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. In 2026, the company entered the year facing elevated expenses but maintained strong operational momentum across its core businesses. The stock declined 4.4% during May as the company navigated market volatility and strategic investments. Nevertheless, on May 12th, the bank reported that balances within its prime-brokerage business had soared to a record as clients looked to seize on volatility, with clients actively trading and adding risk. JPMorgan's trading revenue has been surpassing consensus expectations and outperforming mid-teens guidance, while investment-bank fees have seen approximately 25-30% growth. On May 27, CEO Jamie Dimon said that the firm's full-year costs would be "closer to $106 billion than the $105 billion” guidance reaffirmed in April. JPMorgan's constructive second-quarter fee-income outlook is expected to boost analyst estimates, with markets revenue projected to meet or surpass the consensus of 11% YoY growth and investment banking projected to increase by 10% or more. Despite the share price weakness during May, the company continues to demonstrate resilience across its diversified business model, with strong capital markets momentum and industry-leading capital strength supporting its long-term growth trajectory.
IQ EQ Strategic: Global Quality Equity Fund*: May Ret. 3.54% YTD 6.87% (Net of fees)
The IQ EQ Strategic: Global Quality Equity Fund returned 3.54% over the month, compared with the MSCI World Index, which returned 5.10%. The Fund's underperformance was driven by Stock Selection, while Sector Allocation provided a positive contribution. Currency Effects had negligible impact. The positive Sector Allocation outturn was driven primarily by sector overweight positioning in Information Technology. The worst performing Sector Allocation was the Fund’s overweight Health Care position. The negative contribution from Stock Selection was due to the poor performance of stocks such as Monolithic Power Systems and Zoetis.
Key contributors during the period include:
+ Fortinet Inc. (FTNT) develops cybersecurity solutions including network firewalls, secure access service edge platforms, and security operations tools for enterprises and service providers. The company specialises in integrated security fabric architecture enabling unified threat protection across networks, endpoints, and cloud environments. On May 6th, Fortinet reported Q1 results with billings climbing 31% YoY, prompting analysts to raise price targets by an average of 23%. The stock surged 64% over May following the earnings beat. Mid-month, the company announced it is accelerating its FortiAIGate solution with Nvidia's AI platforms to protect AI workloads in data centres. The company raised full-year revenue guidance to $7.7-$7.8 billion from $7.5-$7.7 billion, with billings expected between $8.8-$9.1 billion. Fortinet continues to benefit from AI-driven data centre demand and network security upgrades, positioning the company for sustained growth.
+ NVIDIA Corp. (NVDA) designs and manufactures graphics processing units and system-on-chip units for gaming, professional visualisation, data centres, and automotive markets. The company specialises in accelerated computing platforms that power AI applications, high-performance computing, and autonomous systems. Early in the month, the stock declined 7% from its late April record high as investors rotated towards semiconductor rivals developing competing AI chips. However, the shares then surged 20%, approaching $6 trillion in valuation. On May 20th, NVDA reported Q1 fiscal 2027 revenue of $81.6 billion, up 85% YoY and exceeding estimates of $79.2 billion, with data centre revenue climbing 92% YoY to $75.2 billion. The company guided Q2 revenue to $89.2-$92.8 billion, above consensus estimates. Perhaps the most significant announcement was the company’s expectations for $20 billion in Vera CPU sales for the current year and projecting a new $200 billion CPU total addressable market by 2030. NVDA continues to benefit from sustained hyperscale spending, diversification into enterprise and government customers, and production ramps of its Blackwell and Rubin platforms, positioning the company for continued growth despite intensifying competition and geopolitical headwinds.
- Monolithic Power Systems Inc. (MPWR) designs high-performance analogue and mixed-signal semiconductors for power management across computing, automotive, industrial, and communications markets. The company specialises in integrated power solutions delivering energy efficiency for data centres, electric vehicles, and advanced electronics. Early in the month, analysts raised price targets by an average of 30% following late April earnings, lifting the consensus target to $1,776 from $1,576. Despite positive sentiment, the stock declined 3.0% over May amidst significant insider selling. The company expects Enterprise Data revenue to grow approximately 85% year-over-year, with Communications emerging as a second AI-driven growth pillar. MPWR continues to benefit from AI power demand and expanding solutions, though its premium valuation of 63x 2027 EPS reflects high growth expectations.
- Zoetis Inc (ZTS) is a global leader in animal health, developing and manufacturing medicines, vaccines, and diagnostic products for livestock and companion animals. The company operates across multiple therapeutic areas including parasiticides, dermatology, pain management, and diagnostics. Zoetis experienced a sharp deterioration in its outlook in May following disappointing Q1 results. On May 7, the company reported Q1 2026 revenue of $2.26 billion, up 3% YoY but below the $2.3 billion that investors had expected. The company cut its full-year 2026 guidance, lowering its adjusted EPS expectations to $6.9-$7.0 from $7.0-$7.1 and reducing revenue outlook to $9.7 billion. The reason for the downbeat outlook was intensifying competition in companion animal franchises. Zoetis has a significant range of products in development, which should drive growth in the future. However, the near-term EPS downgrades drove sentiment during May.
IQ EQ Global Focus Fund: May Ret. 1.09% YTD 4.06% (Net of fees)
The IQ EQ Global Focus Fund returned 1.86% during May. The equity portfolio returned 1.62%, while the bond portfolio returned 0.52%. Within the equity portfolio, holdings such as Best Buy and Corning were among the strongest contributors to performance during the month, while Zoetis and Waste Management detracted from performance.
Key contributors during the period include:
+ Best Buy Co Inc. (BBY) retails consumer electronics, home office products, entertainment software, appliances, and related services through its retail stores and website. The company entered 2026 with improving momentum following its first revenue increase in four years. The stock gained 28.9% in May, supported by resilient consumer demand and strong comparable sales trends. On May 28th, Best Buy reported Q1 2027 revenue of $8.94 billion, up 2% versus last year. Adjusted EPS were up 11% YoY, exceeding estimates driven by strength in gaming, computing, and mobile phones. The company reiterated its FY27 guidance of $41.2 billion to $42.1 billion in revenue, comparable sales of -1% to +1%, and adjusted EPS of $6.30 to $6.60, while projecting Q2 comparable sales growth of approximately 1%. Best Buy's marketplace and advertising initiatives continue to scale, supporting margin expansion and positioning the company for sustained growth as it prepares for a CEO transition in November.
+ Corning Inc (GLW) is a global technology-based company that produces 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. On May 6th, Corning announced a multiyear commercial and technology partnership with Nvidia to dramatically expand U.S.-based manufacturing of advanced optical connectivity solutions, with Nvidia purchasing $500 million in warrants for up to 15 million shares in GLW at $180 each. The shares surged as much as 21% on the announcement. Overall, the stock gained 10.3% during May. On the same day, Corning upgraded and extended its Springboard plan at an Investor Day, targeting a $20 billion annualized sales run rate by end of 2026 and accelerating to $40 billion by end of 2030, with expected 19% sales CAGR through 2030. The company expects optical content per GPU to increase 30-50% by 2028, driven by larger cluster sizes, rising bandwidth requirements, and scale-up networking opportunities.
- Zoetis Inc (ZTS) is a global leader in animal health, developing and manufacturing medicines, vaccines, and diagnostic products for livestock and companion animals. The company operates across multiple therapeutic areas including parasiticides, dermatology, pain management, and diagnostics. Zoetis experienced a sharp deterioration in its outlook in May following disappointing Q1 results. On May 7th, the company reported Q1 2026 revenue of $2.26 billion, up 3% YoY but below the $2.30 billion that investors had expected. The company cut its full-year 2026 guidance, lowering its adjusted EPS expectations to $6.85-$7.00 from $7.00-$7.10 and reducing revenue outlook to $9.68 billion. The reason for the downbeat outlook was intensifying competition in companion animal franchises. Zoetis has a significant range of products in development, which should drive growth in the future. However, the near-term EPS downgrades drove sentiment during May.
- Waste Management Inc (WM) is North America's leading provider of comprehensive environmental solutions, offering waste collection, disposal, recycling, and renewable energy services. On May 7th, management presented at a conference for industrial companies, highlighting Q1 core pricing of 6.3% and EBITDA margin expansion of 70 bps to 29.8%, while targeting approximately 3% revenue growth for 2026 as a bridge to 5-6% growth in 2027-2028. On May 11th, WM declared a quarterly dividend of $0.945 per share, and on May 13th, appointed Tara Hemmer as EVP and Chief Operating Officer. The stock declined 9.1% during May. Management reaffirmed FY2026 guidance of $26.4-26.6 billion in revenue and $8.15-8.25 billion in adjusted EBITDA, with EBITDA margins of 30.8-31.0%. Analysts maintained positive ratings, reflecting confidence in the company's pricing discipline and operational improvements despite near-term volume pressures from residential contract rationalization.
IQ EQ ESG Multi-Asset Fund: May Ret. 1.86% YTD 0.56% (Total Return, net of fees)
Within the Equity Portfolio:
The IQ EQ ESG Multi-Asset Fund returned 1.86%, net of fees, during the month. The equity component, which accounts for approximately 60% of the strategy, returned +2.9% gross. This compares with the MSCI World Index return of +5.10%. The relative performance of the equity book was driven by negative Stock Selection and Sector Allocation. Currency Effects were a modest negative contributor to relative performance in the month. Stock Selection was most negatively impacted within the Information Technology sector, which rose by 6.2% during the month, underperformed the Information Technology sector, which gained 16.6%. The negative Sector Allocation outturn for the quarter was driven by an overweight position in the industrials sector and an underweight position in the Information Technology sector.
Key contributors during the period include:
+ Oracle Corp (ORCL) operates as a cloud technology company, offering infrastructure software such as cloud, multicloud AI database, AI data platform, and other application solutions and services. The company serves customers worldwide. On May 4, Oracle secured a classified AI deal with the US Defence Department to deploy advanced AI capabilities on classified networks and announced an expanded partnership with IBM to collaborate on agentic AI and hybrid cloud innovations, with Red Hat Enterprise Linux becoming available within Oracle Cloud Infrastructure. The stock rose by 39.9% in May, with the most significant gains occurring on May 28-29 when shares jumped 9.5% to their highest level since November 2025. Analysts raised price targets following the strong AI infrastructure spending trends, with average price targets increasing to approximately $235. Oracle continues to benefit from robust technology infrastructure spending by its largest customers and partners, positioning the company as a key beneficiary of the global AI buildout.
- Alphabet Inc. (GOOGL) operates as a collection of businesses, with Google being the largest, comprising Google Services and Google Cloud, alongside “Other Bets” for non-Google ventures. The company generates revenue primarily from advertising, subscription-based products like YouTube TV and YouTube Music, cloud services, and the sale of apps and devices. Early in the month, Alphabet raised approximately $17 billion through its largest-ever euro-denominated bond sale and debut Canadian dollar notes to fund AI investments, while Google's Isomorphic Labs raised $2 billion in new funding. Mid-month, the company unveiled a redesigned search box for longer AI-driven queries and new coding tools at its developer conference and announced a partnership with Blackstone to create a $5 billion AI cloud business. Despite these positive developments, shares declined 0.6% over May to close at $380.34. Analysts raised the average price target to $430 following the company's strong AI product momentum and accelerating cloud demand, with Google Cloud's backlog nearly doubling to $462 billion and capital expenditure guidance for 2026 ranging between $180-190 billion. The company is well-positioned for continued growth, with AI-driven innovation expected to deliver meaningful upside to engagement, revenue, and profitability across its core Search, YouTube, and Cloud businesses.
Within the Bond Portfolio:
Performance
The bond portfolio returned 0.50% in May, marginally underperforming its benchmark, the JP Morgan Global Bond Index (unhedged in euros) which returned 0.52%. Performance benefited from the portfolio’s long duration position in UK gilts, which rallied amid improving prospects for a peace agreement in the Middle East. This development led to declining energy prices and helped to alleviate inflationary pressures. Additionally, UK Gilts were supported by comments from Andy Burnham, a potential successor to Keir Starmer, signalling a commitment to fiscal discipline should he become Prime Minister. Performance was offset by the portfolio’s long Japanese government bond versus a short US Treasury position, which detracted from returns. Japanese bonds came under pressure as the government signalled preparations for a supplementary budget to counter rising energy costs, likely to be funded through increased bond issuance.
Market
Bond markets were relatively strong in May with the JP Morgan Global Bond Index rising 0.52% during the month. In the preceding months, bond markets had been weak reflecting rising energy prices and therefore increasing inflationary pressures following the outbreak of war in the Middle East. However, improving prospects for a peace agreement, along with the reopening of the Strait of Hormuz, contributed to a decline in energy prices in May. This, in turn, helped to ease inflationary pressures and supported a recovery in bond markets.
IQ EQ Cash Fund: May Ret. 0.11% YTD 0.56% (Net of fees)
The IQ EQ Cash Fund returned 0.11% in May, net of management fees, in euro terms.
The gross running yield on the Cash fund at the end of May was 1.80% 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 continues 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.
ECB Chief Economist Lane expects officials will most likely raise quarterly inflation projections in June as the conflict in the Middle East keeps energy costs elevated. Lane added that oil prices are likely to remain higher for longer compared with March assumptions. ECB Governing Council member Schnabel believes that ‘given the size and the persistence of the current shock of the conflict in Iran, a rate hike in June will be needed’. Commenting on higher energy costs ECB Governing Council member de Guindos stated that ‘if you look at soft indicators, sentiment indicators, these indicators clearly point at an important impact on growth’.
The latest Eurozone inflation data showed inflation rose above 3% for the first time in over 2.5 years, amid growing expectations that the (ECB) will increase rates at their June meeting. Consumer prices increased 3.2% year-on-year, up from 3% in April, and in line with estimates. Core inflation, excluding food and energy, rose by more than expected, coming in at 2.5% year-on-year.
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.
************************************************
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.