The year 2025 showed two very different sides. It started strongly, with markets rising by about five percent in January, but after Liberation Day in April, the direction changed quickly. The volatile market environment reminded investors how fast sentiment can change.
In 2025, the Sifter Fund returned 6.6 percent for the PA share class and 7.1 percent for the PI share class. Past performance is not a guarantee of future results.
The year 2025 was very mixed
After Liberation Day, uncertainty increased quickly. Markets started to talk about a trade war, and global trade became unusually strained.
The situation began to calm down only after the trade issues were resolved and visibility improved. Toward the end of the year, the share prices of Sifter’s quality companies started to recover. The market no longer rewarded stories, but demanded results.
Company earnings, predictability, and the ability to perform in a changing environment returned to the focus of investors.
Above all, 2025 will be remembered as a year that tested investors’ patience more than a typical investment year. Many Sifter investors saw the market decline early in the year as an opportunity, and the fund received a solid amount of additional capital inflow after the worst part of the sell-off.
Best performers in the Sifter Fund in 2025
Lam Research benefited as a semiconductor equipment supplier from a recovery in investments, driven by strong end demand for memory chips.
Alphabet was supported by earnings growth, a stronger advertising business, and the shift of artificial intelligence from a perceived threat into a clear opportunity.
Safran continued its positive performance, supported by structural growth in the aviation industry and a predictable aftermarket business.
Decliners in the Sifter Fund in 2025
Novo Nordisk faced strong share price pressure due to profit warnings and uncertainty in the US market environment. In our view, the company’s long-term growth outlook remained strong, but we continue to monitor the development of compounded GLP-1 and market share dynamics in the U.S.
West Pharmaceutical Services was affected early in the year by weaker guidance and higher-than-expected inventory levels among its customers. We made a new deep dive into the company and were encouraged by the company’s long-term opportunities, especially at the current valuation.
Old Dominion Freight Line saw its share price decline mainly due to slowing demand, reflecting the cyclical nature of the transportation market.
Portfolio changes in 2025
During 2025, we made moderate but carefully considered position trimming to the portfolio.
We fully exited three companies and added three new companies to the portfolio. In addition, we adjusted position sizes by reducing or increasing existing holdings.
All decisions were guided by the same principle. We evaluate companies based on their long-term earnings potential and valuation.
Disposals and reductions were made when the expected return weakened relative to risk, while new investments and additions focused on companies where five-year earnings potential and valuation offered a more attractive overall opportunity.
Sifter Fund Allocations
The Sifter Fund’s allocation differs clearly from the global equity index.
The fund is overweight in technology, industrials, and healthcare, where we see the most predictable earnings growth, strong competitive advantages, and pricing power.
In contrast, the fund has no exposure to energy, materials, financials (banks), or consumer cyclical companies.
From a geographic perspective, the portfolio is focused on North America and developed Europe, but investment decisions are driven primarily by companies, not countries.
The allocations reflect our focus on a small number of globally leading quality companies, rather than on index composition or macro views.
Outlook for 2026
1. Earnings surprises and a shift in monetary policy
We expect inflation to come better under control in 2026, especially in the United States. This would create downward pressure on policy interest rates and improve the overall financing environment.
Lower interest rates support a recovery in investment activity, particularly in industrial sectors, and could have a positive impact on company earnings during the year.
This type of environment would especially benefit high-quality industrial companies whose businesses respond positively to stronger industrial activity. Examples from the Sifter portfolio include Old Dominion Freight Line, Canadian National Railway, and Atlas Copco.
2. Profitability of AI and data center investments
Another key turning point in 2026 is related to investments in artificial intelligence and data centers. We expect the market to start demanding clear evidence of whether these investments will be truly profitable, and when.
The size of the investments alone is no longer enough. The focus is shifting to the returns generated on the capital invested.
If these investments deliver credible and measurable returns, this would support the entire AI ecosystem. Companies in the Sifter portfolio that could benefit include semiconductor and equipment suppliers such as Applied Materials, Lam Research, and Taiwan Semiconductor Manufacturing Company, as well as companies that are able to use AI effectively in their core businesses, such as Alphabet and Microsoft.
3. Volatility and geopolitical uncertainty continue
Regardless of whether AI and data center investments ultimately prove profitable or not, we expect the related uncertainty to increase market volatility in 2026.
As the market looks for answers, price movements can be fast and sharp.
At the same time, the geopolitical environment remains unstable. Recent years have shown that political and geopolitical events can affect markets suddenly and broadly. We expect this uncertainty to continue in 2026 and to be reflected in higher market volatility.
Volatility itself is neither positive nor negative, but it highlights the importance of risk management and the role of company quality in a portfolio.
How Sifter is positioned
The Sifter Fund’s strategy is to stay fully invested in high-quality companies. We believe that over the long term, better returns come from holding strong businesses.
A focus on high-quality, predictable businesses with strong pricing power, high profitability, and healthy balance sheets. In our experience, such companies tend to perform well even in more challenging market conditions.
Balanced exposure to long-term growth drivers such as AI, data centers, and industrial investment, combined with active risk management and disciplined buy and sell decisions.
A readiness to take advantage of market volatility by adding long-term quality companies when volatility creates attractive entry points.
Santeri Korpinen
CEO
