ELMRI May 25 Report
Dear Investor,
I am pleased to announce the release of our May 2025 Monthly Report for our Funds. During the month of May, the ELMRI ANZ Conviction Fund increased by 9.4% and the ELM ResponsibleInvestments Global Fund increased by 9.5%.
Market Update:
Global equity markets rebounded strongly in May, overcoming continued volatility driven by trade policy announcements. The S&P 500 surged 6.3%, which was one of its strongest monthly performances in recent years. This was driven by strong corporate earnings particularly in the technology sector, and a perceived easing of trade tensions. While bond markets were impacted by rising yields and fiscal concerns, equities benefited from improving consumer sentiment and moderating inflation expectations.
In Australia, the Reserve Bank of Australia cut the official cash rate by 25 basis points to 3.85% at its May meeting, marking the second rate cut this year and bringing borrowing costs to their lowest level in two years. They cited easing inflation (now within its 2–3% target range) and a weaker global economic outlook as key reasons for the move, while signalling it remains cautious given ongoing global uncertainties. This monetary easing is expected to support household spending and provide a more favourable backdrop for Australian equities.
Market Outlook:
May’s strong market performance highlights the critical importance of staying invested, even amid ongoing volatility and market noise. As discussed in our previous report, market history shows that the strongest months often follow periods of heavy drawdowns, with recoveries that tend to be both swift and significant. Missing only a few of these significant recovery periods can have a major negative impact on long-term returns and underscores why trying to time the market is rarely effective and often harms investment results.
The current macroeconomic environment is increasingly favourable for our strategy. Inflation continues its downward trend, and central banks globally are either signalling or implementing rate cuts, which supports assets equities and reduces borrowing costs.
Advances in technology are also helping to moderate inflationary pressures by driving efficiencies and reducing costs across multiple sectors. This dynamic was evident in the post-GFC era, when companies like Facebook, Google, and REA Group capitalised on the shift toward more efficient digital solutions. Today, we observe a similar trend with artificial intelligence.
For example, Tesla's implementation of AI-driven self-driving technology has led to significant advancements in its autonomous driving capabilities, reduced the number of human interventions required and improved the safety and efficiency of driving.
Another example is Xero’s AI-powered features, which include automated bank reconciliation, expense categorisation, and invoice prediction. This has improved efficiency by reducing manual data entry and helping users identify errors or anomalies in real time.
WiseTech also uses AI-powered algorithms for shipment routing, customs compliance, and predictive analytics. This technology allows logistics providers to anticipate disruptions, reduce transit times and minimise costs.
Looking ahead, we remain confident that focusing on innovative and impactful companies within the sustainability universe will continue to deliver strong long-term outcomes. With declining inflation, lower interest rates, and accelerating advances in sustainable technology, market conditions position our companies to thrive as they address global challenges and capture future opportunities.
Company Spotlight: Joby Aviation
Joby Aviation, a California-based developer of electric air taxis for commercial passenger service, recently announced the successful closing a $250 million strategic investment from Toyota Motor Corporation. The partnership leverages Toyota’s manufacturing expertise and deepens the collaboration of the companies. Since the announcement on May 27, 2025, Joby shares have surged approximately 40%.
CEO JoeBen Bevirt highlighted the benefits already realised from Toyota’s involvement, particularly in streamlining manufacturing processes and optimising design. The collaboration reflects a shared vision for next-generation air mobility and positions Joby to better meet the demands of its partners and customers as it progresses toward commercial launch.
Company Spotlight: Xero
Xero is a global leader in cloud-based accounting software, dedicated to improving the lives of small businesses and their communities worldwide. Xero has quickly become one of the fastest-growing SaaS companies, with millions of subscribers using its platform in over 180 countries.
The company delivered a strong FY25 performance, with operating revenue rising 23% year-on-year to NZ$2.1 billion, driven by subscriber growth and increased average revenue per user (ARPU). Net profit after tax grew 30% to NZ$227.8 million, to reflect their disciplined cost management and operating leverage.
Xero added 254,000 net new subscribers to bring their total to 4.41 million, and ARPU rose 15% to NZ$45.08.
Product innovations included the expansion of "Just Ask Xero", a generative AI tool enhancing invoice and quote creation, and the introduction of Tap to Pay on iPhone, enabling contactless payments directly through the Xero Accounting app. Xero additionally launched ACH debit payments via Stripe for U.S. customers to facilitate faster and cheaper invoice payments.
Company Spotlight: Fisher & Paykel Healthcare
Fisher & Paykel Healthcare (FPH) is a global leader in respiratory and acute care, with their products significantly improving the outcomes of 20 million patients annually worldwide.
FPH achieved a record result for FY2025, surpassing NZ$2.02 billion of revenue for the first time and marking a 16% increase from the previous year. Net profit after tax rose by 43% to NZ$377.2 million, driven by strong demand across both Hospital and Homecare product groups.
The Hospital product group encompasses ventilation, high flow therapy, anaesthesia, and surgical care products. This segment accounted for 63% of operating revenue, growing 18% to NZ$1.28 billion. This growth was fueled by increased adoption of new applications consumables and the expanded rollout of the F&P Airvo™ 3 and F&P 950™ systems in the U.S.
The Homecare segment includes devices and systems used to treat obstructive sleep apnea and provide respiratory support around the home. Homecare accounted for 37% of revenue and rose 13% to NZ$739.9 million. This was supported by strong sales of Nova Micro™ and Nova™ Nasal masks launched in April 2024 and March 2025 respectively.
To support ongoing innovation, FPH invested NZ$226.9 million into research and development during the year. Their strengthened product portfolio and continued global demand positions FPH for sustained growth in FY2026.
Conclusion
These companies are all actively investing in innovation and expanding into new markets, with a proven track record of success. We are excited about the future of our companies and remain invested for the long term.
Both the ELM Global Fund and the ANZ Conviction Fund are well-positioned to deliver long-term returns while capitalising on the transformative opportunities presented by AI and sustainability. By adhering to a disciplined investment strategy and focusing on companies driving innovation and positive change, ELM Responsible Investments continues to create value for investors while supporting a sustainable future.
If you wish to discuss any aspect of this report in greater detail, please do not hesitate to reach out. I would be more than happy to arrange a meeting at your convenience. Those interested in investing with us can explore our investment portal and review our fund documentation by clicking the "Invest Now" buttons provided below.
Thank you for your ongoing interest and support.
Kind regards,
Jai Mirchandani
Founder, CIO and Portfolio Manager
ELM Responsible Investments
ELM Responsible Investments Global Fund
ELMRI ANZ Conviction Fund
This note has been prepared by ELM Responsible Investments (‘ELMRI’) ABN 70 607 177 711 AFSL 520428, for Australian wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Cth).
The information is not intended for general distribution or publication and must be retained in a confidential manner. Information contained herein consists of confidential proprietary information constituting the sole property of ELMRI and its investment activities; its use is restricted accordingly.
This note is for general informational purposes only and does not purport to be comprehensive or to give advice. The views expressed are the views of the writer at the time of preparation and presenting and all forecasts, assumptions, opinions, data and other information are not warranted as to accuracy or completeness and are subject to change without notice. This is not an offer document and does not constitute an offer or invitation of investment recommendation to distribute or purchase securities, shares, units or other interests to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this note. Any potential investor should consider their own circumstances and seek professional advice.
ELMRI funds, its directors, employees, representatives and associates may have an interest in the named securities.
Past performance is for illustrative purposes only and is not indicative of future performance.