Strong 1H 2025 Performance of Our Thematic Investment Strategies

In a financial landscape constantly reshaped by powerful global forces, understanding and responding to long-term trends is paramount. At WELREX, we believe in a proactive approach to investment, rooted in deep thematic analysis and a multi-asset strategy designed to navigate complex markets.

As we reflect on the first half of 2025, our Chief Investment Officer, Kirill Pyshkin, shares a comprehensive look into our thematic portfolios. This report offers insights into how our distinct views and strategic allocations, from an emphasis on European markets to our unique calls on technology, have shaped our performance. We invite you to explore the detailed outcomes and the strategic thinking behind them. 

Past performance is not a reliable indicator of future results. Capital is at risk.

1H 2025 Performance of Our Thematic Portfolios 

Overall, we saw an outstanding result from our thematic portfolios, which returned an average of +16.6% in USD over 1H 2025, almost double the return of our competitors (+8.6%). Our thematic average also outperformed global equities (MSCI ACWI) which returned +10%, and global aggregate bonds in USD (+2.3%). 

Beyond excellent instrument selection, our significantly larger allocation to Europe and underweight USD position, compared to peers and benchmarks, played a crucial role in this success story. 

However, our outperformance is not representative of thematic equities overall.  

The return from our competitors’ thematic equity funds lagged behind equities overall, continuing the underperformance streak of thematic equities that began in 2022.  

Some of this underperformance could be attributed to an over-reliance on the “Mag7” (Magnificent Seven) stocks, which delivered just +2.2% return, less than half the return of the S&P500 (+5.5%), which itself underperformed global equities. 

Security and Safety +30.6% in USD 

This theme delivered outstanding performance, achieving over three times the return of our competitors. To a large degree, this is attributable to our significant allocation to European defence stocks, which performed extremely well on the back of the NATO push towards a 5% of GDP spending target.  

Our timing in increasing European allocation at the expense of the US was particularly beneficial. Likewise, we correctly took some profits from certain Safety and Security sub-theme stocks that subsequently did not perform as well. 

Infrastructure +22.0% in USD 

Another outstanding performance from our portfolio, delivering more than twice the return of our competitors. The Transport & Structures sub-theme was the main positive contributor, as the German government has been considering €1 trillion in spending on defence and infrastructure. We have significant exposure to Germany. In addition, some of our names in ICT infrastructure in the US and Asia delivered very strong returns.  

Kirill highlighted this portfolio in a separate article: “How to invest in infrastructure,” as it was the best performer after Q1 (+11.5%). The return has almost doubled since then. 

AI, Quantum and Data +21.1% in USD

This portfolio delivered over twice the return of our competitors.  

Originally named “AI and Big Data,” we renamed it after adding Quantum technologies exposure in May, which we are planning to grow. We believe that Quantum is a major technology at an inflection point. Both Data and AI and Tools and Infrastructure sub-theme names contributed strongly. 

This portfolio comprises mostly US equities and as such underperformed in Q1. However, after the “Liberation Day” tariff announcement, it sprung into action.

Immediately after the tariff announcements, amidst investor gloom and falling share prices, WELREX made a contrarian call, stating that we viewed tariffs as positive for the US, which made us less negative on US assets, and that we were making changes to our portfolios accordingly.  

We then increased our exposure to tech names, which had a very positive effect on this portfolio, as it went from being the worst performer in Q1 2025 (-15.6%) to the third best in 1H. In our article on thematic equities in January, we specifically highlighted that single-theme thematic equities, especially those with a concentration in one particular market, could be very volatile, which is a positive when markets are rallying. 

Europe Renaissance +20.7% in USD 

This is a multi-asset, 100% Europe portfolio designed to benefit from the reinvigoration of Europe, which was a major macro call in our 2025 outlook. 

It delivered almost twice the return of our competitors. In fact, this portfolio is unique and has no direct competitors, so we compare our performance with an average of two European equity and two European bond funds. Given that there is no regional allocation difference, our outperformance is purely due to our superior instrument selection. 

Our outperformance was broad-based. In equities, we saw excellent contributions from defence, financials, consumer, and infrastructure stocks, including small caps. In fixed income, we had significantly better returns than competitors due to our selection of long-duration Eurozone Government bonds and UK Corporates. 

Inflation Buster +20.4% in USD 

This multi-asset portfolio is designed not only to defend against inflation but also against a weak USD, as we highlighted in a separate article “Fighting the weak dollar.” 

 This portfolio delivered over 3x the return of our competitors. Gold, which was up +26.2% over the period, was the largest contributor, but some other commodities and stocks returned more than 30%, 40%, or even 70%. 

Consumer Brands +14.2% in USD 

The return from this portfolio is over 3x better than that of the competitors.  

Almost half of this portfolio is in Europe, which benefited the performance. Although the Good & Homes sub-segment was mixed, as many of the luxury brands were weak, some Financial Products and TMT (Technology, Media, and Telecommunications) companies compensated with very strong performance. 

High Income +12.3% in USD 

This is a multi-asset portfolio designed to produce high recurring income from bond coupons and dividends in addition to capital appreciation.  

Net projected income is 4.9%, the same for bonds and equities. In addition, our capital appreciation was almost five times the return of the competitors. We had some very strong returns from high-dividend financial, infrastructure, and emerging markets equities, and even some of our European bonds were up in double digits in USD. 

BRICs Rising +11.3% in USD 

This is a multi-asset portfolio designed to benefit from faster growth of BRICs (Brazil, Russia, India, China, and South Africa).  

It delivered a return just ahead of our competitors. Similar to our competitors, we had strong double-digit returns from equities, especially Brazil, which is a major allocation for us, and single-digit returns from local currency bonds. 

Financial Technology +8.9% in USD 

This portfolio’s return was below competitors, which were skewed by two extremely well-performing funds.  

Processors and Hubs sub-themes did better than Digital. However, we did not have much European exposure in this portfolio to benefit from the allocation. 

Health Technology +4.6% in USD 

This portfolio performed just behind peers. The Biotech sub-segment was negative, despite some very strong stock picks in the Health sub-segment. 

In summary

Our strong performance in the first half of 2025 underscores WELREX’s commitment to delivering value through the expertly crafted thematic investment strategies.  

We believe that by staying attuned to long-term global trends and proactively adjusting our multi-asset portfolios, we can continue to navigate complex markets and provide our clients with robust returns.  

We remain dedicated to innovation and look forward to continuing to identify the opportunities that shape our future, helping you achieve your financial aspirations.