GS International Fund Outran Peers in 1Q26 Energy Rout

The Goldman Sachs GQG Partners International Opportunities Fund beat its benchmark by a wide margin in the first quarter, helped by stock picks that sidestepped the worst of the energy sector's swings.

The fund returned roughly 8% in the three months through March, according to a quarterly factsheet reviewed by AlphaScala. That topped the MSCI EAFE Index by about 3 percentage points. The outperformance came during a period when crude oil fell 15% from January highs, then bounced 8% in late March, whipsawing international equity markets.

GQG Partners, the fund's sub-adviser, had trimmed exposure to European integrated oil majors late last year, the factsheet said. That positioning meant the fund missed the worst of the sector's 12% slide in February and early March. Instead, the manager added to positions in Japanese industrial firms and Swiss healthcare companies, both of which rose during the quarter.

The energy volatility was driven by a mix of OPEC+ supply surprises and weaker-than-expected Chinese demand data. The MSCI EAFE Energy sector lost 9% in the quarter, the worst performer among the index's 11 sectors. The fund's underweight in energy contributed roughly 2 percentage points of its relative outperformance, the factsheet said.

For investors in international equities, the quarter showed that active stock selection can still add value when sector rotations are sharp. The fund's focus on quality and valuation, a hallmark of GQG's process, helped it avoid the value traps that caught some passive strategies. The MSCI EAFE Value index fell 1.5% in the quarter, while the Growth index rose 3%.

The fund's largest holdings at quarter-end included Nestlé, Toyota Motor, and Roche Holding, the factsheet showed. None of those names are in the energy sector. The fund held about 4% in energy stocks, down from 7% at the end of 2025.

Goldman Sachs, the fund's distributor, has been expanding its lineup of actively managed international funds. The firm's asset management arm oversees roughly $2.8 trillion globally. The GQG partnership, launched in 2021, has gathered about $4 billion in assets, the factsheet said.

The outperformance in 1Q26 may draw attention to the fund's strategy, especially if energy volatility persists. OPEC+ is scheduled to meet again in June, and Chinese economic data remains mixed. The fund's managers said in the commentary that they see opportunities in Japanese financials and European industrials, sectors that could benefit from a weaker yen and infrastructure spending.

For now, the fund's track record in a turbulent quarter gives it a talking point with advisors. The factsheet noted that the fund has outperformed its benchmark in three of the past four quarters. The one miss came in the fourth quarter of 2025, when a rally in energy stocks caught the underweight position.

Investors can track the fund's performance and holdings on the Goldman Sachs asset management website. The fund carries an expense ratio of 0.85% for the institutional share class.