American Express has been a significant positive contributor to our fund, adding 0.7% to performance this quarter. We believe in the strength of its business model and its ability to navigate the current economic landscape. The company continues to demonstrate resilience and growth potential, making it a valuable holding in our portfolio. We are optimistic about its future performance as consumer spending remains robust, and American Express is well-positioned to benefit from this trend.

We initiated a new position in leading global payments and financial services company American Express during the quarter following a break in the stock price driven in part by market concerns around the potential impact of artificial intelligence on white collar employment and the downstream implications for credit card spending which we believe are overblown. We believe these fears created an attractive opportunity to invest in a high-quality, affluent customer base that supports attractive long-term growth. American Express’s differentiated customer base, characterized by higher average spend levels and lower credit risk, supports attractive pricing power with merchants and consumers.

We used most of our Ametek proceeds to establish a new position in American Express in March, at a price of $294. American Express is one of the premier status brands in the world, with a customer base of prime borrowers who often pay hundreds of dollars a year for the privilege of earning lucrative rewards. Spending on the card has been rising faster than overall consumer spending in recent years and lately has been accelerating. Cardholders seem keenly aware of the value they’re getting back on their spending. Amex continues to add premium cardholders at remarkable rates: it added 5.8 million new consumer card accounts in 2025 at an average annual fee above $210.

American Express (AXP) has shown strong performance with an 18.6% increase in the second quarter, driven by its affluent customer base that saw revenues rise 8% at constant currency. The company is enhancing its offerings with upgrades to its US Consumer and Business Platinum cards, aimed at capturing the spending of younger consumers, who now represent 35% of total US consumer spending. These strategic investments are expected to strengthen AXP's network effect and increase switching costs for commercial card users, positioning the company favorably as consumer spending continues to rise.

American Express (AXP) finished 2024 on a strong note, with earnings growing 23% for the year. However, provisions for credit losses increased, reflecting a more cautious credit outlook. Despite net write-off rates remaining below historical averages, indicating strength in the underlying credit quality, the stock was not cheap, leading us to trim our position in Q1. AXP remains well-capitalized, and its affluent customer base is expected to fare better than the general economy in the coming months.