Currency Headwinds and Volatility Test Savana’s SVNP ETF Resilience

A Year of Market Turbulence and Opportunity

2025 proved to be a year of stark contrasts for investors. Global equity markets extended their post-pandemic rally, yet beneath the surface lurked heightened uncertainty. The year began with cautious investor sentiment amid the prospect of a second Trump term, which soon escalated into a sharp market sell-off triggered by tariff escalations. The S&P 500 plunged roughly 16% from peak to trough, rattling nerves over inflation, supply chain disruptions, and global growth prospects.

However, this turbulence proved temporary. Markets recalibrated as tariff tensions eased through negotiated agreements with key trading partners, and inflation remained contained around 2.7%. Technology-driven productivity gains helped companies absorb cost pressures, setting the stage for a robust V-shaped recovery in the latter half of the year.

SVNP’s Systematic Approach Shines Amid Big Tech Dominance

While much of the market’s attention focused on the AI-fuelled surge of the so-called Magnificent Seven tech giants, Savana’s ASX-listed Savana US Small Caps Active ETF (SVNP) charted a different course. By systematically targeting undervalued US small-cap stocks, SVNP delivered a 12.9% net return for the calendar year, decisively outperforming a broad range of US equity ETFs available to Australian investors.

This performance is particularly notable given the dominance of large-cap, AI-driven narratives that propelled benchmarks like the S&P 500 and Nasdaq 100 to record highs. SVNP’s disciplined stock-picking, grounded in valuation asymmetry and fundamental strength, allowed it to uncover opportunities overlooked by consensus, resulting in a win rate exceeding 60%.

Top Performers and Strategic Insights

Among SVNP’s top contributors were Canadian Solar Inc and Kohl’s Corp, both of which experienced sharp rebounds after periods of market neglect. Canadian Solar surged over 160% in two months following positive sector developments, while Kohl’s benefited from a re-rating driven by undervaluation and a strong real estate portfolio. Other notable winners included Viasat, Inc. and Brighthouse Financial, Inc., the latter attracting takeover interest at a significant premium.

On the downside, some holdings like Xerox Holdings Corp and DXC Technology Co faced ongoing structural challenges, while consumer-facing names such as Bumble Inc. saw growth expectations reset amid intensifying competition. Savana’s approach acknowledges that losses are inevitable but seeks to minimise their frequency and impact through a systematic, algorithm-driven process that leverages diverse predictive signals.

Navigating Currency Headwinds and Looking Ahead

SVNP’s net returns were tempered by adverse USD/AUD currency movements, which subtracted approximately 7.2% from performance due to the fund’s unhedged exposure. Despite this headwind, the ETF’s relative outperformance underscores the strength of Savana’s methodology in navigating complex market dynamics.

As 2026 unfolds amid persistent uncertainty and volatility, Savana’s results offer a compelling case for systematic, valuation-focused investing in less efficient market segments. The firm signals confidence in its approach and hints at expanding opportunities to capitalise on its investment insights in the year ahead.