arvy Strategies – Quarterly Report Q3 2025

arvy's teaser: Quality out of fashion – opportunity for the long-term. In the third quarter of 2025, global markets kept climbing despite growing concerns — driven by AI enthusiasm and a narrow group of tech giants. While hype dominates headlines, quality companies have rarely been this attractively valued.

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Dear arvy client,

In our latest arvy Strategies Quarterly Report, we share insights on:

• Why quality is temporarily out of favour — and why that’s a good thing
• The impact of AI on markets and corporate profits
• Recent winners and losers in our portfolios
• Our new investments and positioning for the months ahead

Stay invested. Stay long-term. Let compounding work for you.

Read or watch the full Q3 2025 Report

arvy Equity Strategy Update Q3 2025 | Update Wolters, Constellation | Performance, Buys & Sells

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The arvy strategies have delivered the following net returns in CHF this year and over previous periods.

arvy Savings Plan (net):

Strategie	Q3	YTD 2025	1 year	3 years p.a.	5 years p.a.	10 years p.a.
Defensive	-0.4%	2.7%	0.4%	6.0%	2.2%	4.3%
Balanced	-1.8%	3.5%	1.0%	8.8%	4.8%	5.8%
Growth	-3.7%	4.3%	1.7%	12.4%	8.1%	7.7%

arvy Pillar 3a (net)

Strategie	Q3	YTD 2025	1 year	3 years p.a.	5 years p.a.	10 years p.a.
Strolling	0.0%	2.5%	0.2%	5.3%	1.5%	3.8%
Walking	-0.7%	2.9%	0.5%	6.6%	2.8%	4.6%
Hiking	-1.8%	3.2%	1.0%	8.2%	4.6%	5.4%
Mountaineering	-2.6%	3.8%	1.3%	10.3%	6.2%	6.6%
Climbing	-3.7%	4.3%	1.7%	12.4%	8.1%	7.7%

arvy Equity Strategy (net):

Strategie	Q3	YTD 2025	1 year	3 years p.a.	5 years p.a.
arvy Equity Strategy in $	-2.6%	8.1%	6.4%	17.7%	8.6%
arvy Equity Strategy EUR
arvy Equity Strategy in CHF

In this review, we examine the current market environment, developments in the AI sector, winners and losers in the portfolio, our adjustments, and our outlook for the coming quarters.

Market Environment: Quality Out of Favour – Opportunity for Long-Term Investors

Global equities showed impressive strength in Q3. U.S. markets in particular continued to climb the “wall of worry”, supported by optimism that the Federal Reserve will manage a soft landing, inflation will ease, and recession can be avoided.

Selected returns of different asset classes:

Index	Q3	YTD 2025
MSCI AC World in CHF	7.2%	3.1%
Swiss Equities (SPI)	1.3%	8.2%
S&P 500	13.1%	13.3%
Bonds in CHF	0.0%	0.7%
Gold	17.3%	46.7%
Bitcoin	9.6%	21.9%
Cash	0.0%	0.0%

Source: Tradingview

Q3 2025 was characterised by high market concentration, ongoing AI euphoria and growing valuation gaps between hype and quality. While large tech giants posted new highs, the environment for quality companies — the kinds of businesses we invest in — was one of the most challenging since the dotcom era more than 20 years ago.

Chart 1: Quality stocks vs S&P 500, relative

Source: Jeff Weniger, Refinitiv

Historical note: The underperformance of quality stocks versus the broader market reached levels last seen in 1999. Historically, such phases have often proven to be excellent entry points for long-term investors.

While the market currently prefers the AI hype and channels capital into highly speculative names (mainly unprofitable tech stocks), we remain true to our philosophy: we invest in profitable, robust, and structurally growing companies — not in fashion trends.

A clear sign of our conviction: all three arvy founders — Patrick, Florian and Thierry — invested an additional six-figure amount directly into the arvy Equity Fund in September, on top of their regular monthly savings plans.

Why?

The companies we own together are as attractive as they have been in years.

Chart 2: arvy Portfolio: Fundamental data

Source: arvy, Fiscal AI

This underlines our confidence: quality pays off — especially when it’s out of fashion.

Let’s now look at what worked and what didn’t.

Winners and losers in the portfolio

Top performers

• Medpace – The leading provider of clinical research services for biotech companies benefited strongly from the revival of biotech financing cycles.
• Broadcom – As a diversified semiconductor company with a broad customer base, Broadcom is a structural winner of the AI trend, among other things due to a large supply contract with OpenAI.
• AutoZone – A textbook example of stability: the recession-resistant auto-parts business continues to deliver steadily rising profits.

Bottom performers

• Constellation Software, Wolters Kluwer and RELX – High-quality software companies suffered from sector-wide pressure and concerns that AI could cannibalise established business models.

Chart 3: arvy Portfolio — Top and bottom performers

Source: arvy

These short-term setbacks do not change the structural strength of these companies.

Let’s move on to the main theme: Artificial Intelligence.

What does arvy think?

Artificial Intelligence: The market is driven by narratives

The current market dynamic resembles historical phases of excess. In the 1970s (the “Nifty Fifty”), during the dotcom era, or in Japan in the 1990s we saw the same pattern: extreme concentration and very high valuations rarely end well over the long term.

Chart 4: Excerpt from the arvy Q3 quarterly update video

Source: arvy

Parallels to today

• Top-10 concentration is as high as in 1999.
• Valuations are elevated while underlying profit growth is structurally declining.
• High capital intensity among tech giants: AI investments can absorb up to 70% of operating cash flow. So far, this has produced little in the way of matching revenue.

Many of today’s Big Tech firms are no longer “asset-light”; they are investing billions in data centres and infrastructure. Historically, high capital intensity often correlates with falling returns on capital — a warning sign for future profitability. In practice, profits are currently missing for many of these companies, and even market leaders like OpenAI (parent of ChatGPT) generate only comparatively modest revenues relative to their massive investments.

The question remains: who ultimately pays for all of this?

This development resembles the Gartner Hype Cycle: new technologies and narratives can strongly influence markets and valuations, but they typically go through a cycle of over-expectation, correction, and eventual consolidation into sustainable growth.

Chart 5: Gartner Hype Cycle

Source: Gartner

Competition and growth pressure

Even former monopolies like Meta Platforms (which we hold) and Google face growing pressure:

• Advertising-market growth is now only about 9% p.a. (previously around 20% p.a.).
• New competitors such as Netflix, Walmart, Uber, Spotify and TikTok are pushing into adjacent markets and fighting for share.
• In cloud computing, players like Oracle and CoreWeave are becoming more relevant.
• Falling margins, heavy investments and declining free cash flows are weighing on valuations.

Nevertheless, we remain invested in the AI beneficiaries Broadcom, Microsoft and Meta Platforms for now. We let trends run because nobody can predict exactly when they will end. At the same time, we monitor momentum closely to limit risks and lock in gains when appropriate.

As usual, we’ll keep you updated on developments via the arvy app.

Let’s move on to portfolio adjustments and new investments.

Portfolio adjustments and new investments

Our focus remains unchanged: quality, capital discipline and sustainable earnings power.

Equities

New positions

• Booking Holdings — The industry leader in travel operates an asset-light model, benefits from strong margins and powerful network effects. Over 60% of European boutique hotels are listed on Booking.com. AI-driven automation improves efficiency and customer experience. Booking is a standout free-cash-flow generator with ongoing share buybacks.
• Philip Morris International — The company is undergoing a radical transformation: away from traditional cigarettes toward smoke-free products (IQOS, Zyn). Both segments grow at roughly 20% p.a. with significantly higher margins. The return of a US-market license opens a major new distribution channel.

Reductions and sales
We sold smaller, low-conviction positions such as Ares Management, Novo Nordisk, Copart and Watsco to make room for higher-conviction ideas. We also reduced larger software positions in Wolters Kluwer and Constellation Software in a risk-aware manner.

In addition, we are building two new family-owned oligopoly positions that deliver above-average returns on capital and stable cash flows. These positions are already visible in the app.

Bonds

In the bond book we remain balanced: 36% of the portfolio is invested in attractively yielding government bonds with high credit quality — including the USA, Germany, New Zealand and Spain. A further 50% is invested in corporate bonds from top issuers such as Johnson & Johnson, Booking Holdings and Siemens.

The average yield to maturity of our bond allocation currently stands at 3.63%.

This keeps the fixed-income portion a stabilising element in the portfolio for the Defensive and Balanced savings plan strategies as well as the Strolling, Walking, Hiking and Mountaineering strategies in Pillar 3a — offering attractive running yields and high credit quality.

Final thoughts

Markets are seldom calm — the coming months will almost certainly bring more “market noise.” Inflation, central-bank policy, geopolitical risks or AI-related headlines will continue to make the news.

No matter how the market moves in the short term: stay invested. Use price swings to your advantage, not as a reason to exit. Periods of uncertainty often offer the opportunity to buy high-quality companies at attractive prices.

Regular contributions — for example via your savings plan — are your best friend. Over long periods it’s disciplined, consistent participation — not perfect timing — that grows your wealth sustainably.

“Far more money has been lost by investors trying to anticipate corrections than in the corrections themselves.”
— Peter Lynch

Stay invested, stay long-term — and let compound interest work for you.

Best regards,
Your arvy team