June 2025 Market Commentary: Thematic Investing and Portfolio Construction for the Long-Term

Previous investment commentaries from the team at Foster Victor have highlighted the heightened market volatility and growing economic uncertainty that continue to define today’s markets. From evolving trade policies and shifting geopolitical alliances to inflation data and interest rate speculation, the current investment landscape may seem increasingly choppy and uncertain.

The endless stream of hyperbolic headlines can make it difficult to discern signal from noise. But in our view, the key to navigating this environment is not to react to every new economic data point, political development, or social media post. Instead, we prefer to stay grounded in what truly drives long-term value creation.

To that end, one key element of our investment process at Foster Victor includes the identification of secular drivers, or enduring forces such as technological disruption, demographic change, and healthcare innovation. They help us look beyond short-term volatility in order the better align portfolios with key macroeconomic shifts. Additionally, these secular growth drivers, or thematic trends, are rooted in long-term patterns across a broad range of economic sectors and geographic regions, offering valuable guidance for better portfolio diversification. Most importantly, they give us a framework for identifying opportunities that aren’t dependent on what the market does next week or next quarter.

Some of the themes currently guiding our thinking include:

• Artificial Intelligence: Advances in AI are fundamentally reshaping the business landscape, empowering companies to make faster, more insightful decisions by processing and analyzing massive and complex datasets in real time. This shift is unlocking new operating efficiencies and competitive advantages, helping drive long-term value creation opportunities.
• Quantum Computing: By harnessing the principles of quantum mechanics, quantum computing has the potential to solve increasingly complex problems at speeds far beyond the capabilities of classical computers. Though still in its early stages, this technology could unlock transformative breakthroughs across sectors such as healthcare, logistics, artificial intelligence, and materials science.
• Digital Infrastructure: The AI revolution is driving significant investment in digital infrastructure, particularly data centers. This includes not only semiconductors, networking, and cybersecurity, but also the often-overlooked physical demands of these systems. As AI workloads grow, so does the infrastructure required to support them – especially due to rising electricity consumption and the need for advanced cooling solutions.
• Robotics and Automation: Robotics and automation are no longer just about improving efficiency. Instead, they are fundamentally reshaping how work is done across industries. From manufacturing to logistics to space exploration, intelligent machines are performing tasks once thought impossible. Robots equipped with advanced sensors and AI can now assemble delicate electronics, conduct deep-sea or space exploration, and support medical procedures with precision. In logistics, autonomous drones and vehicles are streamlining last-mile delivery, improving reliability, and reducing costs. As capabilities expand, robotics is becoming a critical enabler of productivity and innovation across the global economy.
• Demographics: From aging populations and generational wealth transfers to accelerating urbanization, key demographic trends are reshaping global demand, consumption patterns and consumer preferences. Wide-reaching implications will impact industries including healthcare, housing, and consumer goods.
• Health & Human Flourishing: Advances in diagnostics, personalized treatment, and the pursuit of longevity are improving patient outcomes and lowering cost burdens. For example, telemedicine is expanding access to health care, especially in underserved or remote regions. Gene editing technologies like CRSPR offer hope for curing previously untreated diseases. Additionally, advances in AI-driven diagnostics are helping physicians detect health conditions sooner and with greater accuracy.
• Environment & Resources: As global demand for power continues to surge, driven by data centers, electrification, and industrial growth, there is a growing urgency to invest in sustainable, reliable energy solutions. This includes not only renewable sources like solar, wind, and hydro, but also the infrastructure required to store, transmit, and manage power more efficiently. The transition is further accelerated by government policy, geopolitical realignment, and corporate decarbonization goals. We should see long-term tailwinds across clean energy, grid modernization, and critical mineral supply chains.
• Deglobalization: The global landscape is undergoing a strategic realignment, with nations placing greater emphasis on economic self-reliance and national security. This shift is driving efforts to reshore critical industries, reduce dependency on fragile global supply chains, and strengthen domestic manufacturing capabilities. Governments are increasingly prioritizing sectors tied to defense, energy, semiconductors, and healthcare, viewing them as essential to both economic competitiveness and national resilience.

As Warren Buffett famously said, “Our favorite holding period is forever.” While not every investment will meet that standard, the quote captures our mindset well. By aligning our portfolios with powerful secular drivers, we aim to invest in businesses benefiting from durable tailwinds and strong fundamentals, regardless of the headlines, election cycles, or short-term market noise. This long-term perspective allows us to stay disciplined, take advantage of dislocations, and compound value over time.

We remain committed to a thoughtful, research-driven process that prioritizes long-term value creation. As always, we appreciate your continued trust and partnership.