Following the strong recovery in April, global equity markets continued to advance during May. The MSCI World Index rose by 4.8 %, the U.S. S&P 500 gained 5.2 %, the European STOXX Europe 600 increased by 2.4 %, while Sweden’s OMXS30 advanced by 2.5 %.
The market rally was driven by increasing optimism and an earnings season that, in many cases, exceeded market expectations. Renewed enthusiasm surrounding artificial intelligence and related investments also contributed positively to market performance.
During the month, several U.S. indices reached new all-time highs, while market gains broadened beyond the largest technology companies to encompass a wider range of sectors and businesses.
Overall, the earnings season confirmed a stable underlying performance among many high quality companies. Within the technology sector, investments in AI infrastructure, cloud services, and data capacity continued to serve as key growth drivers. Demand in these areas appears to be structural rather than merely cyclical.
Order intake among industrial companies remains solid across several niches, particularly among businesses exposed to electrification, automation, the energy transition, and operational efficiency improvements.
Consumer related companies also displayed a more differentiated performance during May. Businesses with strong brands, pricing power, and clearly defined customer value propositions continue to be better positioned to protect margins and market share.
Overall, recent developments indicate that the market continues to favor companies with strong earnings visibility, structural growth opportunities, solid balance sheets and competitive positions, as well as flexibility within their cost structures.
The U.S. economy continues to demonstrate resilience. The labor market remains stable, and real economic growth persists, although inflation remains above the Federal Reserve’s long term target. As a result, the Federal Reserve has maintained a balanced stance, weighing continued economic strength against the risk of more persistent price pressures related to energy markets and geopolitical developments. In Europe, the overall trend was also positive, albeit somewhat more subdued than in the United States. European equity markets were supported by stable earnings growth.
In an environment characterized by a constant flow of information, geopolitical uncertainty, and short term market fluctuations, it is increasingly important to distinguish between structural developments and temporary events. Our investment framework, the “Outside View,” is built on placing current events within a broader historical and global context.
During the spring, we noted that our Swedish equity fund, NE Sweden, ranked first in Dagens industri’s performance survey covering the previous three months among nearly 100 Swedish equity funds. This result provides clear confirmation of the strength of our investment approach and the value of a disciplined and selective company selection process.
As of May 29, 2026, our Nordic equity fund, NE Strategy, has received the highest possible rating, 5 out of 5, for Consistent Return over both a ten year period and since inception. The fund has also achieved the highest rating, 5 out of 5, for Total Return over three years and since inception. Total Return and Consistent Return are rating categories within the LSEG Lipper Leaders Rating System and are based on a fund’s historical risk adjusted returns relative to comparable funds. In addition, during 2024, the fund was recognized by Lipper as Europe’s best Nordic equity fund over a five year period.
As we have emphasized in previous monthly letters, equity markets often react strongly to macroeconomic developments and geopolitical uncertainty in the short term. Over longer periods, however, value creation is driven primarily by companies’ earnings growth, capital allocation, competitiveness, and ability to adapt. This underscores the importance of maintaining a long term investment perspective.
During the spring, we have also observed increased interest in funds with a clearly defined investment philosophy, a long track record, and a consistent investment process. In an environment where interest rates, inflation, and geopolitics continue to influence market sentiment, confidence in the investment process becomes particularly important.
Macroeconomic developments and the current geopolitical landscape continue to support a selective approach focused on high quality businesses with sustainable competitive advantages. We remain focused on companies with durable earnings growth, pricing power, flexible cost structures, strong balance sheets and cash flow generation, as well as a proven ability to capitalize on long term growth trends. These are the types of sustainably profitable businesses that, over time, are best positioned to generate attractive returns.
In an environment characterized by both structural growth opportunities and ongoing macroeconomic change, we believe that company selection will remain a key determinant of investment returns going forward.
