How Epoch navigated 2025’s shocks – plus 2 stocks investors should watch

Volatility has a habit of revealing who is truly disciplined and who is simply riding the market’s momentum. 

In a year defined by geopolitical shocks, trade tensions, and persistent uncertainty around inflation and monetary policy, that distinction has mattered more than ever for global equity investors.

In this rapid-fire interview, Kera Van Valen, portfolio manager at Epoch Investment Partners, unpacks how their global equity strategy has navigated the choppiness of 2025.

Rather than chasing crowded trades or fashionable themes, Van Valen discusses below how Epoch stayed firmly anchored to its long-held philosophy of prioritising cash flow generation, disciplined capital allocation and a robust risk framework. 

What has been the most important theme for you this year?

For us, the presence of broad market volatility has been a key theme throughout much of the year. A global trade shakeup, a sustained rise in geopolitical tensions, and uncertainty around inflation and monetary policy going forward have driven choppiness in equities that we've benefited from.

We prioritise cash flow generation and disciplined capital allocation in our holdings, the outturn of which is a portfolio that is positioned to generate outperformance in declining markets and capture significant upside during rallies.

Equities have risen significantly this year, but the path upwards has been marked with volatility, which has enabled our strong relative return year-to-date.

What did you get right in 2025?

Disciplined adherence to our risk framework and continued focus on finding highly cash generative companies that prioritise returning cash to shareholders have fueled our robust performance this year. 

Market returns have been concentrated recently, and the world's hyper-fixation on AI as a theme can sometimes entice investors to chase crowded trades. 

We have ample exposure to AI in our portfolio and hold positions in several of the Magnificent 7 stocks that have dominated index returns, but we do not stray from our style, our investment philosophy, or our focus on risk management. These tenets enabled relative outperformance during some of the more volatile periods this year.

What did you get wrong?

One challenge for us this year came from our materials exposure, specifically within the chemicals industry. 

A prolonged petrochemical downcycle and uncertainties driven by tariffs and a murky trade environment pressured cash flows of some of our holdings in the space - Dow Inc (NASDAQ: DOW), for example. 

We closed our position in Dow in Q3, as weakness in end demand led us to believe the dividend may be at risk, which proved true as the company did cut their dividend after our exit.

Though it was one of our larger detractors relative to other holdings year to date, portfolio impact was not material due to the position's smaller weighting.

What caught you by surprise?

Early in the year, the rapid pace with which the incoming U.S. administration moved to implement an aggressive tariff agenda, along with the broad scope of targeted countries, caught us (and much of the world, it appeared) by surprise. 

Subsequent actions, including rescindments and pauses on levied tariffs, also proved unpredictable (by design, perhaps), and fueled much of the volatility we saw in H1. 

For us, markets being caught off guard was actually more of a tailwind, as the GESY portfolio is positioned defensively and in anticipation of surprise shocks to sentiment. The period where these developments were most influential for equities ended up being one of the best for us from a relative return standpoint this year.

What are two stocks that illustrate your process and the type of companies you favour?

One stock that fits the profile for what we look for is CVS (NYSE: CVS), the largest pharmacy benefit manager in the U.S., with a broad network of retail pharmacies, urgent care clinics, and primary care offices. 

The company generates ample free cash flow by increasing global health care spending and steady growth in enrollment for health insurance and related services. CVS returns capital to owners via a growing dividend that is well covered by free cash flow. 

The company has also focused on debt reduction in recent years and is expected to resume regularly repurchasing shares once leverage targets are reached.

Another example would be Broadcom (NASDAQ: AVGO), a designer and manufacturer of digital and analog semiconductors focused on connectivity. Cash flow is driven by expanding connectivity needs requiring faster speeds and greater bandwidth in wired connections. 

The increasing complexity of today's cellular networks drives wireless cash flow generation. It is also benefiting from its custom AI accelerators to efficiently help the deployment of generative AI workloads. 

Management targets returning 50% of free cash flow in the form of dividends to shareholders. The balance of cash generation is used to fund debt reduction, share repurchases, and/or accretive M&A.

Managed Fund

Epoch Global Equity Shareholder Yield Fund (Hedged)

Global Shares

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