Trojan Global Equity Fund

In September, bond yields not seen for almost 25 years narrowed market leadership around AI-driven growth. European and equal-weighted US indices each fell -5%, while the tech-heavy S&P 500 was roughly flat and the NASDAQ rose +2% (all in local currencies). Meta’s launch of Muse was a focus for enthusiasm as the AI consumer agent app quickly reached No.1 in the app store charts. Muse follows a tradition of Meta copying others’ ideas and using its distribution and infrastructure muscle to win adoption. Muse’s early success partly allays fears that Meta will overspend on AI. Meta’s shares were +30% (in GBP) in the month.

AI agents completing tasks on consumers’ behalf raises questions for the Fund’s other companies built to serve humans online. If agents transact for us across the web, why use intermediaries such as booking.com (‘Booking’) to reserve a hotel room? Our answer rests on human behaviour and Booking’s value proposition. Travel is often used to showcase AI agents because it is a complicated shopping experience. It is also an expensive, highly considered purchase, for which people want broad choice, control and peace of mind. Customer service matters, including attractive prices and the smooth handling of payments, cancellations and refunds. We expect Booking to retain its appeal in an agentic era. The upper tiers of its Genius loyalty programme account for a high-50s percentage of booking.com room nights. A mid-60s percent of consumer room nights come directly to booking.com, mostly via its mobile app. For indirect traffic, Booking is no stranger to powerful ‘partners’ further up the chain; Google absorbs most of its ~$9bn annual performance marketing budget. A more fragmented purchase funnel may improve the terms on which Booking acquires traffic.

We do not dismiss the risk of disruption as consumers adopt AI agents for online shopping. We are watching closely for signs of adaptation and take comfort from Booking’s test-and-learn culture. The shares trade at a lowly ~14x estimated earnings, and heavy buybacks support expectations for low-to-mid teens earnings per share growth. Regulatory change in Europe and any easing of Middle Eastern hostilities offer further near-term upside.