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FMI Portfolio Sees Slight Dip in Q4 2025

  //business-finance.news-articles.net/content/202 .. 25/fmi-portfolio-sees-slight-dip-in-q4-2025.html
  Published in Business and Finance on Sunday, January 25th 2026 at 15:14 GMT by Seeking Alpha
      Locale: UNITED STATES, CANADA, SWITZERLAND, CHINA, GERMANY, FRANCE, UNITED KINGDOM, IRELAND, JAPAN, NETHERLANDS

Sunday, January 25th, 2026

The year 2025 drew to a close with the FMI International Equity Portfolio Unhedged experiencing a slight dip in returns during the fourth quarter. While a negative return isn't cause for immediate alarm, a deeper dive into the quarterly commentary reveals a complex interplay of market forces, strategic decisions, and an overall cautiously optimistic outlook for the future. As of December 31st, 2025, the Portfolio's performance underscores the challenges and opportunities inherent in international investing.

A Volatile Quarter Defined by Currency Impacts

The final quarter of 2025 was characterized by significant volatility within international equity markets. A prevailing trend saw developed markets outperforming their emerging counterparts, a dynamic often linked to stronger economic data releases and a bolstering of investor confidence. However, this seemingly positive development was significantly tempered by the impact of currency fluctuations. The Portfolio, being U.S. dollar-denominated, felt the sting of these shifts, ultimately contributing to the negative return.

The commentary highlights the continued pressure of inflation, a global economic concern that has dominated headlines for the past several years. Central banks, while signaling an ongoing commitment to restrictive monetary policies aimed at curbing inflation, contributed to the market uncertainty.

Portfolio Strategy: A Long-Term Perspective

Despite the quarter's performance, the underlying investment philosophy of the FMI International Equity Portfolio remains firmly rooted in a long-term growth strategy. The team's approach prioritizes active stock selection and a diversified allocation across both developed and emerging markets. The focus isn't on chasing short-term gains but on identifying companies possessing robust fundamentals, sustainable competitive advantages, and valuations that suggest long-term potential.

The Portfolio's management emphasizes a 'bottom-up' investment process, meaning decisions are driven by the analysis of individual companies rather than broad macroeconomic trends. This meticulous approach allows for the identification of opportunities that might be missed by more passive investors.

A crucial element of the Portfolio's strategy is its decision to remain unhedged. This deliberate choice allows the Portfolio to benefit from favorable currency movements; conversely, as experienced in Q4 2025, it also exposes the Portfolio to the downside risks when currency trends are unfavorable. The team believes this potential for upside outweighs the cost in the long run.

Tactical Adjustments and Sector Focus

As of the end of 2025, the Portfolio's geographic allocation demonstrated a tilt towards developed markets. This strategic move reflects the investment team's assessment that developed economies currently offer a more attractive risk-adjusted return profile. While emerging markets remain a part of the Portfolio, selective reductions were made in regions perceived to carry increased risk or limited growth potential. The Portfolio maintains exposure but is being more discerning about where those funds are allocated.

Sector allocation has remained largely consistent with the long-term strategy. Overweight positions continue to be held in technology, consumer discretionary, and healthcare - sectors considered to be poised for growth driven by evolving consumer behaviors and technological advancements. The team's focus on technology is particularly noteworthy, reflecting a belief in the transformative power of innovation across various industries.

Looking Ahead: Opportunities Amidst Volatility

The FMI International Equity Portfolio's outlook for the future remains cautiously optimistic. While acknowledging that near-term market volatility is likely to persist, the team believes attractive investment opportunities still abound. They are particularly attentive to regions and industries capitalizing on secular growth trends, reinforcing the focus on technology, healthcare, and renewable energy.

Going forward, the Portfolio managers will maintain a vigilant watch on inflationary pressures and the subsequent decisions made by central banks worldwide. Any necessary adjustments to the Portfolio's positioning will be made in response to these evolving conditions, ensuring the Portfolio remains aligned with its long-term objectives.

Ultimately, the FMI International Equity Portfolio's Q4 2025 commentary serves as a reminder that international investing is a complex endeavor requiring a long-term perspective, a disciplined approach, and the willingness to navigate periods of volatility.