2025 Global Impact Value Equity Strategy (GIVES) Review
Our Global Value Impact Equity Strategy (GIVES) significantly outperformed this year, delivering a 31% total return, or more than eleven percentage points ahead of the MSCI Sustainable Impact Index and about ten percentage points ahead of the MSCI World Index.
2025 Global Review Letter
In 2025 Lyrical Global generated a 21.1% return, in line with the MSCI World Index and slightly ahead of the MSCI World Value Index. This was a satisfying result, especially considering we passed on two of the highest-returning areas of the market: mega cap tech stocks and large European banks. Fortunately, our bottom-up, fundamental stock selection made up for the absence. We matched the MSCI World Index’s return, mostly due to earnings growth in our portfolio. Our companies grew EPS 14.2%, in 2025, well ahead of the 9.6% of the MSCI World.
In the U.S., it was difficult to keep pace with a market propelled by AI enthusiasm and the mega-cap tech companies. The market leadership in the U.S. was so narrow that 70% of the S&P 500 constituents underperformed. Despite this challenging environment, our U.S. investments kept pace with the index return. We were able to do this, in part, by benefitting from several AI beneficiaries. In our global fund, five AI-related stocks rose by 72% and delivered eight percentage points, representing about 36% of our total return for the year. To be clear, these stocks were selected from amid the junk, with an average forward P/E of 10.2x at purchase. And despite the swift rise this year, the four AI-related stocks we continued to hold at year-end traded at only 16.0x P/E.
Outside the U.S., it was a different story, with strong returns for both the indices and our stocks. The MSCI EAFE delivered a 31.2% return, finally closing some of the valuation gap that had expanded for more than a decade between U.S. and non-U.S. stocks. Our non-U.S. stocks performed even better, returning 33.9%. Here too we faced a significant headwind from banks, which surged by 55% and accounted for 30% of total non-US stock return of the MSCI World. Even though these bank stocks are cheap, we avoid them because of their weak business structures and poor fundamentals, which has made them long-term underperformers.
2025 International Value Review
2025 was a strong year for international equity markets, as improving fundamentals and investor sentiment helped narrow the long-standing valuation gap between U.S. and non-U.S. stocks. The MSCI EAFE Index returned 31.2% for the year. Our International Value Equity strategy delivered a 35.5% return, producing attractive absolute results and outperforming the MSCI EAFE by 4.3 percentage points and the MSCI EAFE Equal-Weighted Index by 6.0 percentage points. While performance trailed the 42.2% return of the MSCI EAFE Value Index, the strategy generated a meaningful excess return versus its broad market benchmark during a robust period for international equities.
While non-U.S. stocks closed some of the valuation gap with the U.S., we see more room to go. Foreign stocks remain at a wide discount to the S&P 500 despite posting similar fundamentals to their U.S. peers. This creates a fertile hunting ground for us, and we continue to find good businesses at bargain prices.
Our strong return this year came despite a couple of headwinds, both of which we expect to reverse. First, 2025 was another year in which the largest cap stocks drove market returns. The EAFE beat its equal-weighed version by 1.7 percentage points in the year, making this the eighth straight year of cap-weighted outperformance. Such periods of cap-weighted outperformance have historically preceded periods of mean reversion. Second, bank stocks massively outperformed, appreciating 67% and driving an astounding 16 percentage points of total return to the EAFE Value. We avoid banks for their weak business structures and poor fundamentals. This has made them long-term underperformers, a trend we expect to resume in the future.
Even though the portfolio was up significantly in 2025, we have high expectations for forward returns. Our fund ended the year at a forward P/E of 12.1x. While this is higher than the 10.4x P/E valuation we carried into 2025, it is still exceptionally cheap for a portfolio of attractively growing businesses.
2025 U.S. Value Review Letter
4Q 2025 Update Webinar Replay
Original broadcast details
Date: Thursday, January 15, 2026
Executive Summary
2025 was a good year for Lyrical in the U.S.We generated strong absolute returns of 17.9% matching the S&P 500 despite not owning Magnificent Seven stocks. Moreover, we outperformed both the S&P 500 Value and S&P 500 Equal Weight by 4.7 and 6.5 percentage points, respectively.
2025 was a great year for Lyrical outside the U.S.Lyrical International generated a 35.5% return and outperformed the MSCI EAFE by 4.3 percentage points, and the S&P 500 by 17.6 percentage points.
We are concerned about the high valuation of the S&P 500 The S&P 500 forward P/E multiple is now 22.2x, and 32% higher than the S&P 500 EW despite both constructions producing the same earnings growth over the last eleven years. We do not believe this premium is sustainable.
Lyrical performance should be driven by our uncommon combination of valuation and growthAs to valuation, in the U.S. the value spread between our portfolio and the S&P 500 is historically wide at 78%. This compares to about a 30% spread during the first decade of our firm. Regarding growth, our U.S. companies have an average historical EPS CAGR of over 10.6%, four percentage points faster than the S&P 500 growth of 6.6%.
3Q 2025 Update Webinar Replay
Original broadcast details
Date: Tuesday, October 14, 2025
Executive Summary
Third quarter returns continued an already strong year in the U.S. Lyrical-CS returned 3.4% in the quarter, bringing the year-to-date return to 15.7%. The S&P 500 continued to be boosted by mega-cap growth stocks and returned 8.1% in the quarter, outperforming our CS composite by 470 basis points, but we still lead that index by 90 bps for the year.
Third quarter returns continued an even stronger year for International. TThe MSCI EAFE index returned 4.8% in the quarter and is now up 25.1% year-to-date, outperforming the S&P 500 by 10.3 percentage points. Lyrical’s International composite returned 2.6% in the quarter, underperforming the EAFE, but is still outperforming for the year by a wide margin with a 30.6% return, 550bps ahead of the EAFE index.
Like U.S. and International, Global Value and GIVESunderperformed in the quarter, butare outperforming for the year. Lyrical Global returned 2.5% in the quarter, bringing the year-to-date return to 18.8%. The MSCI World Index was also boosted by U.S. mega-cap growth stocks and returned 7.3% in the quarter, outperforming our Global composite by 480 basis points. Year-to-date we still lead that index by 140 bps. GIVES returned 5.6% in the quarter, compared to 10.1% for the MSCI Sustainable Impact Index. Year-to-date GIVES returned 27.7%, 10.6 percentage points ahead of the index.
We believe our uncommon combination of value and growth is as attractive as ever. In regard to valuation, the value spread in the U.S. between our portfolio and the S&P 500 is historically wide at 80%. This compares to about a 30% average spread during the first decade of our firm. Regarding growth, our U.S. companies have an average historical EPS CAGR of over 10%, more than three percentage points faster than the S&P 500 growth of 6.4%. If our companies keep compounding earnings, their stock prices should follow. And if that growth continues to match or outpace that of the S&P 500, their valuation multiples should rise too, and their stock prices should rise even more.
The Wall Street Transcript: Interview with Andrew Wellington
The following interview is reprinted from June 16, 2025
2Q 2025 Update Webinar Replay
Original broadcast details
Date: Tuesday, July 15, 2025
Executive Summary
Lyrical’s U.S. CS composite had a great quarter with a 12.7% return.Lyrical-CS outperformed the S&P 500 by 180 bps, despite a difficult environment. Mega-cap stocks outperformed, and the large-cap value indices underperformed. Lyrical was able to overcome those headwinds due to our idiosyncratic stock selection. Year-to-date, Lyrical-CS is 570 bps ahead of the S&P 500 and 860 bps ahead of the S&P 500 Value.
It was an even better quarter for our International Value composite.The MSCI EAFE index is up 19.5% year-to-date, outperforming the S&P 500 by 13.3 percentage points. On top of that, our International composite is outperforming the EAFE benchmark by 7.7 percentage points, returning 27.2% year-to-date.
Global Value also strongly outperformed.Our Global portfolio returned 13.9% in the quarter, ahead of the MSCI World Index by 240 bps and ahead of our style benchmark, the MSCI World Value Index, by 850 bps.
Our Global Value Impact Strategy, GIVES, crossed the 5-year mark with a strong track record. Since its launch in June 2020, GIVES has delivered a 15.1% annualized net return, nearly 1,000 bps per year better than the MSCI Sustainable Impact Index. This outperformance has come from avoiding expensive impact stocks and focusing on the overlooked impact stocks in the cheapest parts of the market.
We believe we remain well-positioned with our uncommon combination of value and growth.The S&P 500 forward P/E is 73% higher than Lyrical’s CS composite, despite our higher growth profile. In International, we also have the same combination of lower valuation and higher growth. We believe these valuation spreads should normalize, which would provide a significant performance tailwind in the future.
Global Strategy Update: Assessing Tariff Risk and Resilience
Our Global portfolio delivered a return of 1.7% in the first quarter. This performance outpaced the MSCI World index by 350 bps. In a reversal of the trend of the prior two years, the Magnificent Seven mega-cap growth stocks on average declined by over 15%, dragging down the MSCI World. While we trailed our value style benchmark by 310 bps, we are encouraged by the meaningful outperformance versus the MSCI World benchmark.
The broader market story this quarter was the remarkable strength of markets outside the U.S. While the S&P 500 declined 4.3%, the MSCI EAFE index rose 6.9%, an 11.2 percentage point difference and the widest quarterly spread between the two since Q2 of 2002, nearly 23 years ago.
Non-U.S. markets have been shunned and with reason, given the dominating performance of the S&P 500 over the past 15 years. But in the wake of investors passing over stocks outside the U.S., we’ve found plenty of opportunities. Heading into this year, we had 9 high-quality non-U.S. businesses trading for less than 10x forward earnings and the overall portfolio traded at a P/E of just 11.0x. In the first quarter, we benefited from this extreme valuation potential in non-U.S. stocks, and we believe there is substantially more remaining.
Global Impact Value Equity Strategy (GIVES) Update: Assessing Tariff Risk and Resilience
Our Global Impact portfolio delivered a return of 3.9% in the first quarter. This performance outpaced the MSCI World index by 570 bps. In a reversal of the trend of the prior two years, the Magnificent Seven mega-cap growth stocks on average declined by over 15%, dragging down the MSCI World. We also outperformed our style benchmark, the MSCI World Sustainable Impact Index, by 370bps.
The broader market story this quarter was the remarkable strength of markets outside the U.S. While the S&P 500 declined 4.3%, the MSCI EAFE index rose 6.9%, an 11.2 percentage point difference and the widest quarterly spread between the two since Q2 of 2002, nearly 23 years ago.
Non-U.S. markets have been shunned and with reason, given the dominating performance of the S&P 500 over the past 15 years. But in the wake of investors passing over stocks outside the U.S., we’ve found plenty of opportunities. Heading into this year, we had six high-quality non-U.S. businesses trading for less than 10x forward earnings and the overall portfolio traded at a P/E of just 11.8x. In the first quarter, we benefited from this extreme valuation potential in non-U.S. stocks, and we believe there is substantially more remaining.