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L1 Capital International Fund posts 2.6% Q2 return, rebalances weights
The fund returned 2.6% net of fees in the June 2026 quarter, underperforming its benchmark by 10.0 percentage points.
L1 Capital International Fund, an unhedged global fund managed by L1 Capital, reported a 2.6% return net of fees during the June 2026 quarter, versus a 12.5% benchmark return (all in A$), according to its Q2 2026 investor letter published July 20, 2026.
The letter characterizes the broader backdrop as a two-speed but resilient global economy alongside uncertainty, and it describes markets as narrow, with high exuberance and pronounced over-pessimism. It also frames the investment debate around a possible AI bubble, distinguishing between stronger underlying fundamentals and speculative momentum.
L1 Capital said the fund’s underperformance was driven more by investments it did not hold than by positions it held, while reiterating its focus on quality, valuation, and avoiding permanent capital loss. The firm also said it remains positioned to deliver attractive risk-adjusted returns for patient investors.
In the letter, L1 Capital noted that Microsoft is no longer among the fund’s top 10 holdings after the manager rebalanced portfolio weights between Alphabet and Microsoft. The fund said it remains comfortable with Microsoft’s Azure hyperscaler business, but believes the business may be less well positioned than Alphabet’s GCP and Amazon’s AWS, citing Microsoft’s progress lag in developing its own AI chips, including GPUs, CPUs, and ASICs.