Polaris Global Equity Composite Posts 5.04% Gain in Q3 2025

The Polaris Global Equity Composite achieved a net gain of 5.04% for the third quarter of 2025, although it lagged behind the MSCI World Index, which saw a return of 7.36%. The performance was predominantly driven by a strong showing in the health care sector, particularly with contributions from United Therapeutics Corp., which emerged as the top performer in the portfolio. Over the quarter, the fund made strategic exits from Canadian Tire and Tecnoglass, citing stretched valuations following good performance.

Market Overview and Sector Performance

Global equity markets experienced robust gains in Q3 2025, supported by resilient corporate earnings and excitement surrounding artificial intelligence (AI). The U.S. Federal Reserve’s first interest rate cut of the year added to the positive climate. Emerging markets outperformed, particularly China, buoyed by a truce in U.S.-China trade relations and strength in AI-related sectors. The KOSPI Index in South Korea reached new heights, driven by technological advancements and positive domestic policies.

In developed markets, weaker currencies aided export-oriented indices. Japan’s TOPIX Index recorded an impressive 11.0% gain, while the FTSE All-Share Index in the U.K. rose by 6.9%. Notably, markets in Spain, the Netherlands, Italy, Belgium, and Canada outperformed the U.S. market, which still gained over 8% as measured by the S&P 500 Index. In contrast, France and Germany struggled with geopolitical uncertainties and fiscal concerns, leading to a less favorable growth outlook.

The sector performance was diverse, with health care emerging as the best performer. Several pharmaceutical stocks, including United Therapeutics, posted gains exceeding 20%. Financials, consumer discretionary, and information technology also contributed positively, while communication services faced challenges, which dampened overall returns for the Composite.

Key Contributors and Strategic Moves

The Polaris Global Equity Composite’s performance in health care was particularly strong, with United Therapeutics leading the way. The company’s rapid growth was propelled by favorable late-stage clinical trial results for its drug Tyvaso, aimed at treating idiopathic pulmonary fibrosis (IPF). This development could potentially add between $4-5 billion in peak sales to a therapy that already generated $1.1 billion in revenue in 2024.

Other notable performers included AbbVie, Inc., which remains on track for high single-digit revenue growth through 2029, driven by its autoimmune drugs. Conversely, Jazz Pharmaceuticals garnered investor interest following FDA approval for its innovative brain tumor drug, Modeyso, despite previous underwhelming results.

In the financial sector, Carlyle Group Inc. saw its shares rise over 20% due to strong performance in its credit and secondaries business. Mitsubishi UFJ Financial Group also benefited from a favorable interest rate environment in Japan, alongside strong fee income and lending growth.

Despite some positive developments, the consumer discretionary sector faced challenges. Sally Beauty Holdings, Inc. reported better-than-expected results and raised its sales outlook, while Vipshop Holdings Ltd. in China indicated modest growth expectations. Sony Group Corp. maintained solid engagement in its gaming sector and made strategic investments in its core strengths.

At the same time, some companies in the consumer discretionary space struggled. For example, LKQ Corp. cut its revenue outlook due to continued market weakness in North America, while F&F Co. faced declining net profits as consumer spending on apparel slowed.

The IT sector saw Samsung Electronics outperform, bolstered by advancements in chip technology and significant contracts, including a $16.5 billion deal with Tesla for AI chips.

In contrast, the heavy-duty truck market faced challenges, with Daimler Truck Holding and Allison Transmission Holdings reporting declines due to tariff impacts and slowing demand.

Overall, the investment environment continues to reflect a “two-speed” economy, characterized by an AI-driven boom alongside subdued growth in most other sectors. The Polaris Global Equity Composite remains strategically positioned to capitalize on attractively priced opportunities, particularly in financials and defensives.

As we look ahead, the focus will remain on managing inflation without stalling growth, enhancing fiscal discipline, and investing in innovation. Signs of recovery in various regions, including Asia and parts of Europe, suggest a potentially balanced approach to future growth, steering the portfolio towards sustainable, broad-based performance.