The Touchstone Non-US Equity Fund faced an underperformance scenario in the fourth quarter of 2025, relative to its benchmark, the MSCI All Country World Ex-U.S. Index. Despite this, targeted stock choices in Information Technology and Financials bolstered its results. The fund made significant portfolio adjustments, including the divestment of BNP Paribas S.A. and Sony Financial Group Inc. The detailed commentary from Touchstone Investments offers deeper insights into the factors influencing these outcomes and future strategies.
Q4 2025 Fund Performance Overview
In the final quarter of 2025, the Touchstone Non-US Equity Fund (Class A Shares, Load Waived) recorded an overall performance that lagged behind its designated benchmark, the MSCI All Country World Ex-U.S. Index. This outcome reflects various market dynamics and investment decisions made throughout the period. Despite the benchmark underperformance, the fund's management highlighted specific areas where their investment strategy yielded positive results, particularly in key sectors like Information Technology and Financials. These sectors demonstrated resilience and growth, contributing favorably to the fund's returns and partially offsetting weaker performances elsewhere within the portfolio. The strategic decisions to either maintain or adjust holdings in these sectors were crucial in shaping the fund's quarterly trajectory.
The management of the Touchstone Non-US Equity Fund continuously assesses market conditions and individual company prospects to optimize portfolio composition. During the fourth quarter of 2025, this active management approach led to the strategic exit from certain positions. Specifically, the fund divested its entire holdings in BNP Paribas S.A., a notable move that suggests a re-evaluation of its potential or perceived risks within the financial sector. Concurrently, Sony Financial Group Inc. was also exited from the portfolio, indicating a similar reassessment of its role and expected contribution to the fund's objectives. These divestitures underscore the fund's commitment to maintaining a dynamic and responsive investment strategy, adapting to evolving market landscapes and company-specific developments to safeguard and enhance shareholder value.
Strategic Portfolio Adjustments and Sector Contributions
Despite the overall underperformance against its benchmark in Q4 2025, the Touchstone Non-US Equity Fund demonstrated strategic prowess in specific sectors. The fund's investment choices within the Information Technology and Financials sectors proved to be advantageous, contributing positively to its overall performance. This targeted success indicates a skillful identification of growth opportunities and robust companies within these industries, which helped mitigate some of the broader market challenges or less favorable outcomes from other parts of the portfolio. The ability to generate positive contributions from these key sectors highlights the active management team's capacity to navigate complex market conditions and make discerning investment decisions that benefit the fund's returns.
A critical aspect of the fund's strategic adjustments during the fourth quarter of 2025 involved significant changes to its holdings. The decision to completely exit positions in companies such as BNP Paribas S.A. and Sony Financial Group Inc. reflects a proactive management approach. These divestitures were likely influenced by a thorough re-evaluation of these companies' future prospects, risk profiles, or alignment with the fund's evolving investment objectives. Such moves are indicative of a dynamic portfolio management strategy designed to continuously optimize the fund's composition in response to new information and market shifts. By making these decisive changes, the fund aims to reallocate capital to more promising opportunities and improve its long-term performance potential, ensuring the portfolio remains aligned with its strategic goals and risk parameters.