International Concentrated Growth: investor letter Q1 2026

As with any investmen capital is at risk.

In the short term, markets can be unsettled, noisy and prone to latching onto the dominant narrative of the moment. Over the long term, returns tend to be driven by something more enduring: ownership of exceptional businesses, held with patience as they compound in value. The gap between the two is unusually wide at the moment, and the portfolio has had a difficult quarter.

However, while the recent period has been frustrating, we are excited about the portfolio we hold on your behalf and its future potential. We believe it consists of companies exposed to structural growth that are competitively advantaged and stewarded by people committed to the long-term creation of shareholder value. They are, in many cases, now cheaper than they have been for some time.

The war in the Gulf has understandably unsettled markets and revived concerns that higher energy prices could feed through into inflation. While this has influenced the backdrop, it has not been the principal driver of the portfolio's performance this quarter. Rather, the dominant force has been a sharp sell-off in businesses the market believes may be exposed to AI-driven disruption. We are typically enthusiastic about disruption and often able to tilt the portfolio towards the disruptors and away from the likely victims; this time, however, we have found ourselves on the wrong side of that divide, at least for now. Market participants have aggressively repriced perceived business model vulnerability, particularly across software and adjacent growth companies. The question markets have been grappling with is a simple one, even if the answer is not: Will AI compress economics in some software and services categories by automating workflows or shifting value away from certain application layers? That question has been treated as urgent, and in some areas, prices have moved as though conclusions are already known.

Some businesses, particularly those with narrow differentiation and low switching costs, will face a more challenging competitive landscape. Others look more durable, even as they evolve. Systems of record that sit at the heart of an organisation’s data and processes may prove more durable. The same is true of critical trust and security infrastructure, where reliability, resilience, compliance and fraud prevention matter most.

It has never been the case that software-native businesses thrive solely on their ability to write code. We should assume that coding is a commodity, that intelligence (of a certain variety) is effectively free and limitless, and then ask, ‘How do those conditions change the competitive position of this business?’  The market’s response this quarter has been to price in the downside risk. But for some software companies, the outlook will actually have improved. Generative AI will likely mean fatter tails: some businesses will accelerate growth and deepen their moat, while others will face rapid decline. We believe we hold a set of high-quality, adaptable companies that are deeply embedded in their customers’ workflows. But we can’t be complacent, and our task is to work out at which end of the fat-tail distribution they sit.

Let’s think through this lens about payments and money transfer. These are not optional layers; they are trust-critical infrastructure. Holdings such as Adyen, a recent detractor to performance, and Wise, which has fared better, are good examples. These businesses will evolve as AI changes interfaces, automation and fraud dynamics, but the need for robust, secure rails persists. In fact, firms that adopt AI more effectively than peers may strengthen risk controls, reduce costs and improve customer outcomes, potentially consolidating their market position rather than seeing it eroded.

Spotify, another of this quarter's detractors, is a useful example of how technological change can reinforce, rather than erode, the position of a well-adapted platform. Under Daniel Ek’s leadership, it has grown from a music streaming service into a global discovery and distribution platform that sits at the intersection of listeners and creators. As Ek put it in his final earnings call as CEO in February, Spotify is “first and foremost a technology company”. That mindset has helped it lead the shift from downloads to streaming, build powerful discovery tools such as Wrapped and Discovery Weekly, and create an open ecosystem that works across thousands of devices. Over the next ten years, Spotify is likely to evolve further beyond music into a broader media and creator platform, using AI, new interfaces, wearables and deeper personalisation to reshape how audiences engage with audio, video and other forms of content. That future is likely to be built on the same foundation that made Spotify what it is today: solving important problems for both consumers and creators at global scale.

While a number of holdings detracted this quarter as markets reassessed business models perceived to be more exposed to AI-driven disruption, it is important to note that this was not a uniform ‘growth sell-off’ across the portfolio. The digital infrastructure holdings performed strongly, reflecting their role as the enabling layer for the build-out now under way. TSMC and ASML sit at the heart of the semiconductor manufacturing ecosystem, the “picks and shovels” required to turn AI demand into real-world compute capacity. This is one of the largest exposures in the portfolio and a highly intentional one, built to benefit from the sustained capital intensity of the AI cycle rather than from any single application winner. As investors have focused on the scale and urgency of AI investment, these businesses have been beneficiaries, and their contribution has helped offset some of the weakness elsewhere in the portfolio.

Transactions

One area we previously noted as being of increasing interest was the defence industry, not simply because spending is rising, but because the nature of procurement itself appears to be changing. As military customers place greater emphasis on resilience, autonomy and specialised mission systems, attractive opportunities are beginning to emerge beyond the sector’s traditional incumbents. In February, we initiated a position in Exail Technologies, a French defence and maritime technology company whose products sit at two increasingly important points in modern maritime operations.

The first is navigation: Exail provides high-performance systems that enable vessels and autonomous platforms to determine their location and orientation when GPS is unavailable or unreliable. The second is autonomy: it enables unmanned maritime systems to perform activities such as mine countermeasures, seabed surveying and persistent surveillance, helping customers carry out difficult and potentially dangerous missions at a safer distance from human crews. In simple terms, Exail helps customers operate with greater precision, persistence and safety in environments where reliability is critical.

What appeals to us is that Exail combines differentiated technology with growing commercial relevance. Its navigation systems are used in demanding applications where accuracy matters deeply, while its maritime robotics offering is being introduced into areas of procurement, moving from experimentation to wider operational adoption. We also believe the company benefits from vertical integration, specialist expertise and the potential to scale production as demand grows. Taken together, this gives Exail the characteristics we look for in a long-term holding: exposure to an important structural change, genuine technical advantage and scope for stronger profitability as adoption broadens.

The purchase of Exail was funded from reductions in large holdings that have performed strongly over the past few years, including ASML, TSMC and MercadoLibre.

Outlook

"The future is already here. It’s just not evenly distributed.” - William Gibson, Author 

Periods like this can make it easy to lose sight of what ultimately matters: the quality of the businesses we own on your behalf and the scale of the opportunities in front of them. The portfolio remains anchored in exceptional companies with strong competitive positions, long reinvestment runways and management teams focused on long-term value creation.

What markets are trying to judge at the moment is not simply whether AI will matter, but where its economic benefits will accrue. In some areas, particularly across software and services, share prices have moved as though the answers are already clear. We are less convinced by that certainty. The more likely outcome is a wider dispersion of results: some businesses will see their advantages weaken, while others will strengthen their position as products improve, costs fall, and customer value rises.

That is the context in which we assess the portfolio. In several cases, the key question is not whether a business remains relevant, but whether its role becomes more or less valuable as technology changes. Where we see durable roles, deep customer embedment and credible paths to long-term value creation, we are comfortable continuing to own those businesses despite near-term uncertainty. Alongside this, the portfolio retains meaningful exposure to the enabling infrastructure of the AI build-out, where the scale of investment remains substantial and where value creation does not depend on correctly identifying each eventual application-layer winner.

The next decade will not look like the last one, and it would be a mistake to invest as though it will. But the principles behind successful compounding remain the same: owning exceptional businesses, backing them with patience and thinking clearly when markets are inclined to overreact. That discipline remains central to how we invest on your behalf.

International Concentrated Growth 

Annual past performance to 31 March each year (%)

Annualised returns to 31 March 2026 (%)

Source: Revolution, MSCI. US dollars. Returns have been calculated by reducing the gross return by the highest annual management fee for the composite. 1 year figures are not annualised.

Past performance is not a guide to future returns.

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This communication was produced and approved in April 2026 and has not been updated subsequently. It represents views held at the time and may not reflect current thinking.

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