Artemis Global Income went parabolic in 2025. The equity income fund was up 45.2% last year, the best performance in the entire IA Global Equity Income sector by almost 13 percentage points and outpacing the MSCI ACWI.
The managers pride themselves on running a ‘differentiated portfolio’, often searching for opportunities in areas that other investors may not be looking at.
Heading into 2026, this is leading the team to increase its exposure to emerging markets. At 24.5% of the total portfolio, EM exposure is now at its “highest level ever”, according to Josh Passmore, investment director at Artemis.
See also: EM outlook: Emerging markets at an ‘inflection point’ after strong 2025
Part of this interest in emerging markets is because of recent macro tailwinds. The weaker dollar due to president Trump’s aggressive fiscal policy, rising commodity prices, and improving demographics can all help drive emerging market stocks over the long-term, the Artemis director said.
On top of this, the fiscal situation in emerging markets is now “what everyone used to be told developed markets should look like,” Passmore said.
For instance, while the US runs an 8% fiscal deficit and has a national deficit of more than $38trn, emerging markets such as South Korea more tightly control government debt, the Artemis manager said.
“On balance, it looks like emerging markets have a lot going for them,” he said.
As a result, Korea has become one of the team’s largest hunting grounds and now represents about 10% of Artemis Global Income’s portfolio.
Korean stocks posted a strong 2025, with the KOSPI rising by 66.9% last year. It has maintained momentum this year, with the index up 29% so far this year (as of 17 February) and the team believe it could have further to run.
Within Korea, the team currently favours Samsung Electronics, the largest single allocation in the portfolio at 4%.
This is one of the “picks and shovels” of the AI rally, as one of the main producers of advanced memory chips. With no new chip manufacturing facilities expected to come online until 2027/28, Samsung has benefitted from a “scarcity of chips”, causing the stock price to rise by about 216% in the past 12 months.
Meanwhile, some of this increased exposure to emerging markets was part of a geographic rotation within the portfolio.
Passmore said for the past 30 years, investment in critical industries such as materials and defence was ignored in favour of capital-light technology companies such as Meta.
However, people have realised that it is “ridiculous” to assume that industries such as defence can remain underinvested.
But this meant many of the positions that drove the portfolio’s strong performance last year have become more crowded and expensive, he said.
For instance, the team purchased Rheinmetall in 2017 when it was highly unpopular, but it has surged 73.9% in the past 12 months as NATO countries have pledged to raise defence spending.
See also: Spring Statement 2025: Chancellor announces extra £2.2bn in defence spending
“At this point, who doesn’t know defence spending is going to have to go up? The sector has gone from being priced for no growth to being priced for a lot of it,” he said.
Similarly, a position in European banks used to be much more contrarian, but “now it feels like we’re constantly reading about how European banks have outperformed the magnificent seven over the past three years”.
By contrast, emerging markets are full of stocks with great pricing power that offer exposure to similar themes at much lower multiples, Passmore said.
For instance, European electrical producer Siemens Energy is up 153% over the past year and now trades at a 35x price-to-earnings (P/E) multiple. But in China, there are stocks such as Dongfang Electric and Harbin Electric, which are “effectively the Chinese equivalent of Siemens” offering similar services of gas turbines and power infrastructure, but trading at a “low-to-mid teens multiple”.
See also: Artemis’ Raheel: Why China is unstoppable
Similarly, the fund has increased its stake in Hon Hai Precision, a Taiwanese electrical technology producer.
While it is most well-known as one of the main producers of iPhones, Hon Hai also builds servers for data centres, which has become a growing part of the business, according to Passmore.
As part of this, Hon Hai is a main supplier to many of the technology hyperscalers, giving indirect exposure to the AI rally, but on a “multiple in the teens and on a 3.14% dividend yield”.
“It’s a bit of a simplification, but when we like our themes but the stocks get expensive, we try and find similar exposure at cheaper valuations,” Passmore concluded.
