Momentum investing involves buying stocks that have recently outperformed on the expectation that strong price trends will persist over the medium term. Rather than assessing a company's fundamental value or quality, momentum strategies follow price signals and rotate into whatever has been working and away from whatever has not.

Of the four main investment factors, momentum was the strongest performer over the three years to the end of April 2026. The MSCI AC World Momentum index returned 91.8% in sterling terms over the period, well ahead of its growth (69.7%), quality (64.2%) and value (47.8%) counterparts.

However, momentum is also the factor most prone to sharp reversals: when market leadership changes quickly, heavily momentum-oriented portfolios can suffer steep losses in a short space of time. The drawdown visible across all four factors in early 2025 was particularly pronounced for momentum, before the index recovered strongly to finish ahead of its peers.

Performance of investment factors over 3yrs to end-Apr 2026

Source: FE Analytics. Total return in sterling between 1 May 2023 and 30 Apr 2026.

In this article, Trustnet ranked all funds in the IA Global sector by their three-year correlation to the MSCI AC World Momentum index to identify those most closely aligned with the momentum style.

The two funds with the highest correlation to the momentum index are iShares Edge MSCI World Momentum Factor UCITS ETF and Xtrackers MSCI World Momentum UCITS ETF, both at 97.7%. It should come as little surprise that ETFs designed to track the momentum factor have the highest correlation with the index.

What might surprise, however, is the fact that both funds have delivered around 78% over the three-year period, trailing MSCI AC World Momentum by more than 10 percentage points (although still putting them in the IA Global sector's first quartile).

Both are passive strategies that track the MSCI World Momentum index, which only includes momentum stocks from developed markets. The MSCI AC World Momentum index, on the other hand, includes emerging market stocks and features SK Hynix, Samsung Electronics and Taiwan Semiconductor Manufacturing among its top 10 constituents. These stocks have surged of late, thanks to the AI-driven semiconductor boom.

Source: Finxl. Correlation to MSCI ACWI Momentum and total return in sterling between 1 May 2023 and 30 April 2026.

The two highest-returning funds in the table of the sector's most correlated are Artisan Global Equity (up 90% over the three years) and SVS Aubrey Global Conviction (up 87.3%).

SVS Aubrey Global Conviction, managed by Andrew Dalrymple since 2007, has a concentrated, high-conviction approach and invests in companies expected to be producing earnings growth of at least 15% over a two-year time horizon, have a 15% forecast return on equity and are highly cash generative.

More than a third of the portfolio is in industrials with a similar amount in information technology, including Taiwan Semiconductor Manufacturing, SK Hynix, Broadcom and Samsung.

Artisan Global Equity, run by Mark Yockey, Andrew Euretig, and Charles Hamker since 2012, invests in companies positioned to benefit from several long-term secular growth trends. One of these themes is electrification, which is currently surging because of demands from data centres, electric vehicles, artificial intelligence and cloud computing, and defence and aerospace, which is benefitting from pledges by governments around the world to boost defence spending.

Performance of SVS Aubrey Global Conviction and Artisan Global Equity over 3yrs to end-Apr 2026

Source: FE Analytics. Total return in sterling between 1 May 2023 and 30 April 2026.

The most credentialled active fund in the table is T. Rowe Price Global Focused Growth Equity, managed by David Eiswert and Nabil Hanano. It returned 67.4% over the three-year period, placing it in the sector's first quartile, and carries a Square Mile A rating, Rayner Spencer Mills Research approval, a place on the FE Invest Approved List and an Alpha Manager designation for Eiswert.

Analysts at Titan Square Mile said: "This fund has a distinct bias towards large-capitalised growth stocks, but it operates within sensible parameters that should provide investors with broad regional and industry exposure to companies in both developed and emerging countries.

"The fund has demonstrated an ability to deliver strong relative performance in rising markets, but this is likely to come at the expense of underperforming the index during times of market stress. Despite this, we think investors will be well served over the course of a full market cycle."

JOHCM Global Select, managed by Christopher Lees and Nudgem Richyal since 2008, is another rated by analysts.

Rayner Spencer Mills Research said: "A disciplined buy-and-sell approach underpins the team's portfolio management. Stocks trending downwards are avoided, and winners are trimmed back to equal weight when they grow significantly. Sales are decisive, with holdings sold entirely when fundamentals or technical indicators weaken, or ESG standards are no longer met."

ESG and sustainable funds form another clear theme in the list of global funds with a high correlation to momentum stocks: Janus Henderson Global Sustainable Equity, Federated Hermes Global Equity ESG Pathway and JPM Global ESG Equity appear in the table.

The connection between ESG screens and momentum correlation follows the same logic as their correlation with growth and quality as screens that remove energy, materials, utilities and traditional financials consistently point portfolios towards technology stocks, which have been among the strongest momentum plays of the three-year period.

SpaceX shares are set to start trading on 12 June, and whether you want them or not, they may end up in your portfolio. Here's what you need to know before that happens.

What is SpaceX?

SpaceX is Elon Musk's space company. Its business runs across three areas: launch services, with Falcon rockets carrying cargo and people into orbit; satellite internet via Starlink, which provides internet access to remote and underserved locations; and artificial intelligence, through the xAI division that owns the Grok chatbot and X, formerly known as Twitter.

Starlink is the part currently generating most of the revenue, but the whole of SpaceX recorded $18.7bn in sales in 2025 and a $4.9bn loss. At its target valuation of $1.8trn, it would be priced at 95x last year's revenue, around 4 times Nvidia's equivalent rating.

What is an IPO?

An initial public offering (IPO) is the first time a company sells shares to the public. Before an IPO, ownership is held by founders, early employees and private investors such as venture capital funds. Going public allows a company to raise money from a broader pool of investors and gives existing shareholders a route to sell.

SpaceX's offer period is open now. Shares are expected to be admitted to trading at 2.30pm UK time on 12 June, though actual trading may not begin until several hours later while a price discovery process plays out – a period in which buy and sell orders are submitted and the market settles on a value before continuous trading begins. Investors applying during the offer period are getting in ahead of that process, but at no guaranteed price. If demand is high, they may end up paying more than the indicated range.

Why does this impact nearly all investors?

The IPO is consequential not just for those who want to gain direct exposure to SpaceX or who invest in funds that already hold the name, but to everyone who has a broad-based passive investment in global markets.

Upon becoming public, the company will become one of the biggest worldwide and hence be part of most major indices.

Index providers have changed their rules to allow SpaceX into the Nasdaq 100 and FTSE Russell indices without the usual seasoning period – typically a year or more on the market before index inclusion. These tracker funds will therefore be forced buyers in the first weeks of trading. The S&P 500 has not followed suit, so S&P index funds will not be compelled to buy on day one.

The anticipated passive demand is so great that active managers who would otherwise avoid SpaceX are considering buying at IPO and selling to passive funds once they are forced in at whatever price the market sets, as Downing’s multi-manager Simon Evan-Cook noted in his Substack column last week.

What are the growth opportunities?

According to AJ Bell head of markets Dan Coatsworth, two stand out. The first is Starship, SpaceX's next-generation reusable rocket, currently in test flights.

SpaceX calls it the most powerful launch vehicle ever developed. If it becomes fully operational, it would extend the company's capability to carry larger satellites and to reach the Moon and Mars.

The second is US government defence work. SpaceX has won a $2bn contract to build a satellite constellation as part of early-stage work on the Golden Dome, Donald Trump's proposed missile defence system. That contract puts SpaceX alongside established defence contractors should the project progress.

What are the main risks?

Coatsworth listed launch failures, regulatory changes and competition as operational risks. On xAI specifically, he said it is a second-tier player compared with Anthropic and OpenAI, with a risk of falling further behind. Building orbital data centres brings its own difficulties: space weather, debris and the near-impossibility of repairing equipment remotely.

There is also dilution risk. SpaceX's ambitions require sustained capital and further fundraising rounds would reduce existing shareholders' stakes.

And then there is the Musk factor. His involvement in Donald Trump's department of government efficiency earlier this year hit Tesla's share price and European sales. SpaceX has the same person at the top, with more concentrated control, at a considerably higher valuation.

“Investing in individual companies is higher risk than investing in funds or trusts comprised of a collection of companies, bonds and other instruments,” Coatsworth said. “While there is a lot of buzz around the IPO, it is important to understand that shares can fall in value as well as go up.”

Who is the competition?

AJ Bell identified four companies are worth watching. Blue Origin, owned by Amazon founder Jeff Bezos, has reusable rockets and is building its own satellite communications network. Amazon is separately buying Globalstar and developing its Amazon Leo satellite venture. ArianeGroup, the joint venture between Airbus and Safran, is already carrying Amazon's satellites into orbit. And Rocket Lab operates across launch services and spacecraft – a smaller operation in the same space. Its shares have risen 365% over one year and 2,759% over two years, according to Google Finance data to 1 June 2026.

Why is the IPO controversial?

The valuation is the first question. At $1.8trn and 95x sales, SpaceX would sit among the six most valuable companies on the Nasdaq 100 before it has turned a profit.

“Bulls might argue SpaceX's earnings growth potential is so great that valuing it using 2027 or 2028 forecast earnings could make the equity rating look less rich,” Coatsworth said. “Bears could respond by saying that SpaceX is too immature or too high-risk a business to warrant a sky-high valuation.”

A related concern for Evan-Cook is who is selling the IPO. Goldman Sachs is the lead underwriter, standing to earn a share of what Wall Street will collect in fees from the listing. Evan-Cook argued that gives Goldman a direct financial interest in the IPO succeeding.

“If you’re buying SpaceX’s shares at IPO, you are relying on Goldman’s recommendation that $1.8tn is what the company is worth.”

Morningstar analysts valued the company at $780bn, less than half the asking price.

The second controversy is about governance. Musk will be chief executive, chief technical officer and chair simultaneously, as well as controlling the election of directors. He holds class B stock with 10 votes per share against the 1 vote per share available to public investors, giving him roughly 85% of voting power while owning around 41% of the stock, as recently covered on Trustnet. Public investors would be buying into a company where the founder's judgment cannot formally be challenged and his continuity is built into the legal structure. This isn’t new: an increasing number of US IPOs follow a version of this structure.

A third concern is the lock-up. SpaceX is not following the standard 180-day restriction that prevents pre-IPO investors from selling immediately. Instead, it has a staggered arrangement allowing sales at set points across the first 180 days, including after its first quarterly results as a listed company. Early backers sitting on large gains will have multiple windows to exit.

What should investors do?

Those who want to buy should only buy an amount that – if it went up in smoke – would feel somewhere between ‘I hardly noticed’ and ‘ouch! that smarted’, said Evan-Cook.

“If you’re thinking of putting in an amount that would sit anywhere beyond, say, between ‘I feel sick’ and ‘I’m ruined!’, then you might want to reconsider. Because no matter what you hear – for or against – nobody knows what SpaceX is worth, or what the future has in store for it,” he said.

According to Joakim Agerback, manager of the Finserve Global Security fund, the bigger opportunity for long-term investors "may not be the IPO itself but the broader space economy". He said a broader approach "may be preferable", pointing to companies such as Rocket Lab, AST SpaceMobile, Planet Labs, Leonardo, OHB, SES, Eutelsat, Hanwha Aerospace, SKY Perfect JSAT and iQPS, which "offer exposure to the same trend of the expansion of the global space economy."

“The most compelling aspect of this IPO may ultimately be what it signals for the sector as a whole. The scale of capital attracted to space infrastructure, connectivity, launch services and adjacent technologies reinforces the industry's long-term growth potential,” he concluded.

Funds with exposure to artificial intelligence, semiconductors and Asian markets bore the heaviest losses in the sell-off that closed last week, as several shocks sent growth and technology stocks sharply lower while defensive and income-oriented funds rose.

Markets were unsettled on Friday when the US Labor Department reported that employers added 172,000 jobs in May, roughly double economists' forecasts. Markets sold off as investors took this as pressure on the Federal Reserve to raise interest rates this year.

Neil Wilson, investor strategist at Saxo UK, said: "The trigger was a stronger-than-expected payroll employment report that backed up what I've been saying about resilience in the US labour market.

"The market was underestimating how soon the Fed could go ahead with raising interest rates. On Thursday I noted it was time for a pullback and cited potential volatility catalysts coming from not just the Middle East but a sooner-than-expected Fed tightening impulse and IPO crunch."

Another blow came from Broadcom after its AI chip revenue forecast missed expectations despite beating earnings. A third pressure came from new US tariff proposals, largely intended to replace a temporary global tariff set to expire on 24 July.

"Some of the froth is coming off the top of the AI trade here," Wilson said. "AI and semiconductor-linked stocks were sold but this was not a broad sell-off with consumer staples, healthcare, utilities, real estate and financials up on Friday."

Performance of global equities on Fri 5 Jun 2026

Source: FE Analytics. Total return in sterling.

The chart above shows how the MSCI AC World index fell 1.8% in sterling terms on Friday, although momentum and tech stocks came off much worse. Korea – home to some of chipmakers and semiconductor companies underpinning the AI revolution – was down 6.3%.

Nigel Green, chief executive of deVere Group, added: "What investors are witnessing is the first real macro shock of the AI era. Investors have been reminded that expectations can become so elevated that even a relatively modest disappointment can trigger a global repricing.

"AI is no longer behaving like a technology sector. It's now behaving like a macro asset class capable of moving markets, influencing capital flows and shaping investor sentiment across continents. The fact that one earnings report from California can trigger selling from Seoul to Silicon Valley within hours is an enormous wake-up call."

Performance of Investment Association sectors on Fri 5 Jun 2026

Source: FE Analytics. Total return in sterling.

Across the Investment Association universe, the IA Technology and Technology Innovation sector was hardest hit, with its average member down 2.01% while IA Asia Pacific Excluding Japan was close behind with a 1.99% decline. IA Global Emerging Markets lost 1.4%, IA Latin America 1.3% and IA China/Greater China 1.2%.

UK funds held up: the average IA UK All Companies fund rose 1.12%, IA UK Equity Income 1.15% and IA UK Smaller Companies added 1.16%. These were the only sectors up more than 1% on Friday, after the UK market's structural tilt towards financials, energy, consumer staples and healthcare made it a natural beneficiary of the rotation away from US growth.

The table above shows the 50 funds with the largest losses and several themes run through the list.

Source: FE Analytics. Total return in sterling.

The most heavily represented is AI and technology, with dedicated AI funds including Invesco Artificial Intelligence Enablers, L&G Artificial Intelligence and Xtrackers Artificial Intelligence and Big Data all appearing, alongside broad technology trackers such as Xtrackers MSCI USA Information Technology and iShares S&P 500 Information Technology.

Asia and Korea funds are another cluster. Wellington Asia Technology's 8.8% loss placed it second on the worst-hit list. Franklin FTSE Korea, HSBC MSCI Korea and iShares MSCI Korea reflect South Korea's heavy semiconductor weighting through Samsung and SK Hynix.

Clean energy funds suffered with First Trust Nasdaq Clean Edge Green Energy (the day's biggest faller) and iShares Global Clean Energy Transition falling in reflection of the sector's sensitivity to rate expectations. Clean energy projects are long-duration, capital-intensive assets whose valuations reprice sharply when rate-cut expectations evaporate.

UBS Solactive US Listed Gold & Silver Miners, Amundi Gold Miners and iShares Gold Producers also fell – as did the gold price. Gold is often sold in time of market stress as investors seek out easy sources of liquidity, while the yellow metal has become more volatile recently following its record-breaking gains in 2025.

Thematic and disruptive innovation funds round out the themes in the list of Friday's biggest fallers. Neuberger Next Generation Connectivity, Neuberger Next Generation Mobility, AMOVA ARK Disruptive Innovation and AXA World Funds Robotech all appear.

Source: FE Analytics. Total return in sterling.

However, some funds did post gains amid Friday's sell-off. UK equity funds dominate the top 25 as 14 of the days' best performers were UK-focused, spanning large-cap, smaller companies, income and ESG-tilted strategies. WS Lindsell Train UK Equity gained 2.5%, abrdn UK Value Equity rose 2.3% and IFSL Evenlode Income added 2.1%.

Healthcare funds also did well. AXA Framlington Health rose 2.9%, the best return of any fund on the day, while Schroder Global Healthcare, Invesco Global Health Care Innovation and AXA Framlington Biotech were among the best performers.

US consumer staples ETFs also appeared, with State Street SPDR U.S. Consumer Staples Select Sector, iShares S&P 500 Consumer Staples and Xtrackers MSCI USA Consumer Staples all gaining around 2.2% as investors rotated into more defensive sectors.

Today’s investing landscape reflect a macroeconomic regime very different from the one investors grew accustomed to following the global financial crisis. Shifts set in motion by pandemic-era imbalances, geopolitics, supply chain realignment, and a major pivot in monetary policy have proven enduring rather than cyclical.

Recent years have brought clarity and reaffirmed a central reality; the ‘old normal’ of near zero interest rates, muted inflation volatility and persistently low yields is not returning. Instead, we operate in a world of higher-trend inflation, frequent macro swings, and a more balanced distribution of returns across asset classes.

The composition of the regime shift has changed, though the direction remains the same: growth rests on a firmer foundation, supported by improving productivity and sustained investment in infrastructure and energy systems. Inflation is lower than the post-Covid peaks but is exhibiting stickiness, driven by structural forces including labour scarcity, commodity underinvestment, and the shift toward deglobalisation.

Equally important are the forces behind these long-term assumptions: normalising interest rates in recent years, elevated geopolitical fragmentation, physical resource constraints and the fading of the disinflationary tailwinds of the 1990–2019 era all remain firmly in place. Real yields remain meaningfully positive, inflation risks remain volatile and asymmetric to the upside, and we expect rotation of market leadership in coming years.

Investors have demonstrated a tendency to chase past winners, falling for the FOMO trap. However, the reality of market cycles suggests caution. Indeed, market leadership changes during different regimes.  

In the early 2000s, real assets and bonds were clear winners, however in the last 15 years, equities and private assets dominated market leadership. As a result of the robust performance of US equities, valuations are now at near historical extremes. Yet the underlying reality is more nuanced: while technology-led growth is real, the cost of capital has structurally risen, input prices remain firm, and margins may struggle to remain at peak.

This is why rotation away from narrow US equity leadership and toward more attractively valued, more diversifying assets is stronger today than at any time since the early 2000s.

Real assets in particular stand out. Their combination of appealing valuations, strong inflation linkage and healthy fundamentals in supply-constrained segments positions them for a larger role in long-term portfolios. Infrastructure and natural resource equities benefit from multi-year investment cycles and supply discipline; commodities have experienced years of underinvestment; and listed real estate, having reset meaningfully, offers more balanced return prospects with improved income yields.

However, risks do remain, AI-driven productivity could disappoint or lead to structurally higher unemployment, while inflation could reaccelerate on renewed supply shocks. Geopolitical events may further disrupt global trade flows. Valuations across equities or private markets may adjust faster than expected. The bond market could also reprice the long-term neutral rate higher, or credit spreads could widen abruptly after a prolonged period of tightness.

Despite these, the macro backdrop and market setup provide the strongest foundation for rotation in more than a decade. With forward-looking returns shaped increasingly by starting valuations, cash flows and structural sensitivities, we believe the next decade will diverge meaningfully from the last and the greatest risk for investors is missing the broadening opportunity set.

Full 10-year capital market assumptions: Expected average annual returns vs. prior-decade annual returnsⁱ

Macroeconomics: We expect the global economy to deliver moderate but stable growth over the next decade, with the US averaging 2.1% real GDP growth and global growth trending at 3.6% annually. We expect 1.8% trend productivity growth, partly linked to AI diffusion and ongoing investment in digital and physical infrastructure – offset by worsening demographics and episodic supply frictions. Consumer inflation is expected to average 3.0% annually in the US, well above the 1.6% experienced in the last cycle and significantly higher than the Federal Reserve’s long-term target. This elevated inflation reflects structural tightness in labour and materials, a more fragmented global trading system and geopolitical friction.

Fixed income: Interest rates are likely to remain higher than in the prior decade, with long term yields reflecting positive real rates and firmer inflation expectations. While absolute yields drifted lower during 2025, the long-term equilibrium for interest rates has reset meaningfully higher, offering investors a more attractive long-term fixed income return profile relative to the last decade.

We expect US government bonds to deliver solid, if unspectacular, nominal returns of 4.2% annually. Credit sectors will benefit from healthy economic and corporate fundamentals. However, today’s tight spreads and expected greater cyclical volatility suggest returns will be income driven, with little potential capital appreciation.

Equities: US equity returns, at 5.8% annually for the next 10 years, remain constrained by elevated valuations, slower-trend growth, higher input costs and a structurally higher cost of capital. We see better opportunities in developed non‑US equities, with returns holding steady from the prior forecast at 7.0%, as valuations are more compelling and earnings growth has room to normalize.

Emerging markets (EMs) remain a selective opportunity, with fundamentals varying widely across regions and sectors. EM equity returns are expected to be 6.3%, below their long-term historical average given the healthy gains of the last decade.

Real assets: 2025 was a reminder that real assets can perform well when other markets show strong returns. Most real assets categories were up more than 10%, and they stand out as one of the most compelling long-term opportunities today. We expect natural resource equities to lead with annual returns of 8.5%. Infrastructure is projected to return 7.9%, real estate 7.8 and commodities 5.9%, all supported by structural scarcity, inflation sensitivity and sustained investment needs. Valuations are attractive, fundamentals remain strong, and correlations with traditional stocks and bonds continue to offer diversification benefits.

Jeffrey Palma is head of multi-asset solutions at Cohen & Steers. The views expressed above should not be taken as investment advice.

 

ⁱ Past performance is no guarantee of future results. Forecasts are inherently limited. There is no guarantee that any market forecast will be realized. (1) 2016–2025 performance (01/01/2016–12/31/2025) represented by the following: Fixed income: Cash: Bloomberg U.S. Long Government/Credit Index. TIPS: U.S. Treasury Inflation Notes Index. Treasuries: Bloomberg U.S. Treasury 7-10 Year Index. Investment-grade corporate bonds: Bloomberg U.S. Corporate Investment Grade Index. High-yield bonds: ICE BofA High Yield Master II Index. Preferred securities: ICE BofA Fixed Rate Preferred Securities Index. Long-term Treasuries: Bloomberg U.S. Treasury Long Bond Index. Long-term corporates: Bloomberg Long U.S. Corporate Bond Index. U.S. equities: S&P 500 Total Return Index. Global equities: MSCI ACWI Total Return Index. EAFE: MSCI EAFE Total Return Index. Emerging markets: MSCI Emerging Markets Total Return Index. Real assets: U.S. REITs: FTSE Nareit All Equity REITs Index. Global REITs: FTSE EPRA Nareit Developed Real Estate Index. Global listed infrastructure: UBS Global 50/50 Infrastructure & Utilities Index (net) through March 31, 2015, and the FTSE Global Core Infrastructure 50/50 Net Tax Index for periods thereafter. Natural resource equities: S&P Global Natural Resource Equities Index. Commodities: Bloomberg Commodity Total Return Index. Private real estate: NCREIF ODCE Index. Volatility is represented by standard deviation, which is a statistical measure of the historical volatility of returns; the higher the number, the greater the risk.

UK investment trusts aren't screamingly cheap at present but there are still some true bargains to be had for investors looking down the discount aisle.

The UK is a microcosm of the wider investment trust universe, with share price discounts narrowing in recent months.

Indeed, data from the Association of Investment Companies (AIC) found the average discount reached single digits (9.6%) for the first time in nearly four years at the end of May, half the peak of 18.8% in October 2023.

Richard Stone, chief executive of the AIC, said: "It has been a challenging period for investment trusts but there is light at the end of the tunnel. The sector has reshaped itself over the past four years with unprecedented levels of M&A and share buybacks, as well as mandate changes and fee cuts to give shareholders a better deal.

"While the challenges are not over yet, it's encouraging to see that the average industry discount is now back in single digits."

In this new series, Trustnet looks at the current share price discounts or premiums of trusts versus their own five-year historic average. This shows investors whether these funds are cheap or expensive relative to what investors have typically paid in the past.

The average trust discounts in the IT UK All Companies, UK Equity Income and UK Smaller Companies sectors are all narrower today than their historic five-year averages, data from the AIC shows.

Investors have become more positive on the UK in recent years as the market has staged a comeback thanks to rising energy prices aiding oil majors and higher interest rates boosting banks and other financial groups. But some have slipped through the net.

Source: AIC, Morningstar. Individual trust data for companies with a market cap above £100m.

In particular, smaller companies remain out of favour. While the FTSE 100 has climbed 76.2% over five years, the FTSE 250 and Deutsche Numis Smaller Companies indices are up just 19.5% and 14.3% respectively.

Of the five trusts trading at a two-percentage point wider discount than their long-run average, four come from the IT UK Smaller Companies sector.

Oryx International Growth is the cheapest. It's 32.3% share price discount to net asset value (NAV) is some 9.1 percentage points wider. The £256m UK smaller companies trust is managed by Chris Mills at Harwood Capital.

Its shares were on a 32.3% discount as of the end of May 2026,versus the trust's five-year average of 23.3%. The sector average discount currently stands at just 10.7%, making this half the price of its peers.

The trust has lost investors 26.9% over the past five years, although it has doubled investors' cash over the past decade, enjoying a strong run from 2018-2021.

Rights & Issues, managed by Jupiter's Matthew Cable, is the second-biggest bargain when compared with its own history. Its 18.9% discount is 5 percentage points wider than its average.

Earlier this year, the board reinstated its share buyback programme after shareholders approved the proposition at its annual general meeting. The same proposal had been blocked the previous year.

Odyssean Investment Trust (4.6 percentage points wider) and Marwyn Value Investors (two percentage points) round out the smaller companies trusts in the top five.

Merchants Trust is the only non-small-cap trust more than two percentage points wider than its history (2.9 percentage points).

It has been a top-quartile performer in the IT UK Equity Income sector over 10 years, although it has slipped below the average peer over one and three years.

Run by Simon Gergel since 2006, it remains on a relatively narrow discount of 4.3%, although this is wider than its average 1.4% and the sector's 1.9%.

Aidan Moyle, investment analyst at Hargreaves Lansdown, said those interested in the trust could look to use it "as part of an income-focused investment portfolio or to add larger UK companies' exposure to a broader, diversified portfolio".

Not everything, however, is cheap. Indeed, many trusts are more expensive than their recent history after the improved performance of domestic stocks.

Source: AIC, Morningstar. Individual trust data for companies with a market cap above £100m.

Temple Bar Investment Trust has been the biggest beneficiary, moving from an historic discount of 4.9% on average to a premium of 1.5%.

Schroder UK Mid Cap (six percentage point difference), Diverse Income Trust (5.7), Fidelity Special Values (4.6) and Rockwood Strategic (4.6) round out the top five that could be considered more expensive based on their own history.

All are now on a premium apart from Schroder UK Mid Cap (4.7% discount) and Fidelity Special Values (0.2%).

With Elon Musk’s intergalactic venture SpaceX set to start trading publicly from 12 June, everyone will be able to join the space race – from enthusiasts with the dream of going to Mars and building AI infrastructure in space, who are actively seeking exposure; to more grounded owners of index trackers such as the Nasdaq and the FTSE Russell, who will see SpaceX enter their portfolio via the passive route.

(S&P has refused to fast-track the stock into the S&P 500, meaning S&P index funds won't be forced buyers on day one.)

For the initial public offer (IPO), SpaceX is seeking just short of $1.8trn valuation, which would make it one of the world's most valuable companies. Yet it is still losing money, having recorded a $4.9bn loss in 2025 on $18.7bn in revenue.

Whether you are team Musk or team Muskn’t, this is almost certainly having an impact on your investments – perhaps inadvertently if you, like me, own an investment trust whose position in SpaceX has climbed the portfolio to a top holding.

As investors swing between greed and fear, so did I. My first instinct was to add to the position and ride the IPO momentum. But I'm naturally more fearful than greedy and quickly hesitated. What if I timed it wrong? What if the price surged on listing and then came back to earth? Have we forgotten when Musk threw himself into Donald Trump's Department of Government Efficiency (DOGE) and the consequences that had for Tesla? European sales fell and the stock dropped sharply. SpaceX has the same person behind it, with even more concentrated control, and is valued at a significantly higher price.

But there is also another side to the story: SpaceX isn’t actually going public – not fully – because of something called dual-class shares, whereby public share classes carry significantly fewer voting rights.

Public investors will receive one vote per share, while Musk – who will simultaneously serve as CEO, CTO and chair, and retain control of the election of directors – will have 10 votes per share, meaning he will control around 85% of voting power while holding approximately 41% of the stock.

Around 44% of US tech IPOs now use some version of this structure, which is designed to remove possible tensions between the vision of the founder and investors trying to hold them accountable.

The concentration of power in a single visionary figure – one whose judgment cannot be formally challenged and whose continuity is built into the legal structure – has a long history outside markets as well.

I feel uneasy around the rhetoric that strong men get things done, move fast and achieve what committees cannot, because when things go wrong, there is no mechanism to correct course. But that’s the direction markets are going.

SpaceX is simultaneously a launch provider, a global satellite internet business and an AI infrastructure play. Three capital-intensive businesses, each unproven at the scale being priced in, and a fourth narrative arriving via the Golden Dome defence contract.

Which of these are you paying $1.8trn for? Backing all of them requires an enormous number of things to go right, run by one person who cannot be removed.

As for me, I haven’t bought my investment trust specifically to get access to SpaceX, so I decided – perhaps cowardly – not to add or sell. My investment case in the trust is long-term and goes beyond this IPO.

I would like to know how you are preparing for this historic event. Email me at matteo.anelli@fefundinfo.com to keep the conversation going and check back on Trustnet for our upcoming SpaceX coverage.

Matteo Anelli is deputy editor at Trustnet. The views expressed above should not be taken as investment advice.

The Lowland trust has a long list of stocks: 118. That is a lot for an active fund, as many choose to take a high-conviction approach to investing, picking relatively few stocks and hoping their choices will perform better than the average.

“This isn’t conviction management,” said James Henderson, manager of the trust. “I don’t know how one can be truly convinced by things. There are too many variables and too much difficulty out there.

“But you can think, on the balance of probabilities, that something’s cheap and worthwhile – and then try to make it count within the portfolio.”

That is how he runs Lowland, taking bigger positions in companies where he sees more upside but including a long list of stocks that should mitigate the fact that the managers will be wrong “some of the time”.

The portfolio is benchmark-aware but is not driven by the index, he explained, with Henderson and co-manager Laura Foll willing to avoid large index stocks such as British American Tobacco and AstraZeneca where they feel there are better options elsewhere.

“Not owning the concentrated list of big-cap stocks allows us to have a much greater variety of things,” he said, which includes investing in a large range of mid- and small-caps.

While his top 10 largest holdings are all large-cap names, a good chunk of the portfolio is invested lower down the market capitalisation, as these stocks have more room to grow.

Henderson said: “A small company of £250m is more likely to become a £2.5bn company than a £2.5bn company is likely to become a £25bn company.”

The area has been challenging for Lowland in recent years, with mid- and small-caps underperforming their large-cap peers. However, the trust has been a top-quartile performer in the IT UK Equity Income sector during this time, despite the poor performance at an index level.

Performance of trust vs sector and indices over 3yrs

Source: FE Analytics

While mid- and small-caps have underperformed at an index level, there have been several companies bid for in the past year. In the Lowland portfolio, he highlighted chain maker Renold and credit products and insurance services provider IPF as lucrative examples.

Smaller companies remain out of favour, with investor meetings “still quite lonely” for Henderson, who said there are “not many people turning up for them”.

“At the moment, the brokers have to work quite hard to get much interest going,” he said, but noted that this is why he remains positive – arguing it is usually a bad sign for the market when there is too much interest, as this often signals the top.

“We’re 12 or 13% geared at the moment. And we’re getting cash in from these takeovers. It’s not taking us long to find good value homes for that cash, so it’s an interesting time,” he said.

Below, Henderson explains the parallels between investing and gardening, why the UK has an investing problem and how politics rarely has an impact on markets, despite a lot of discussion about it.

What is your process?

We have an emphasis on income and growth. I’ve always believed that the way to grow the income is to grow the capital first, so we never chip away at the capital and pay it out as income. And then we aim to get sustainable income growth coming through too.

We’re more value and contrarian-driven than some funds. One way we look at it is turnover to the market cap, adjusted for debt. That gives a feel for the size of the business. Then we ask: ‘Will it get a better margin on that turnover by the actions management is taking, by us helping them, or some other means?’

There are different risk metrics in different sectors. For the general capital goods companies, turnover is a good one. For property companies, for instance, the obvious one is discounts. But it’s not just one number.

Does the UK have an investing problem?

There is definitely a problem getting money into productive investment. For me, the biggest issue was UK pension funds leaving the market. [New] initiatives to try and get people back are interesting but they won’t get very far. They’re not going to be a big help.

I think what brings investors back to the UK is performance – another period like we’ve had over the past couple of months or so. We are seeing real interest. It’s at the margin, but we are seeing interest.

Do you worry about politics?

If I could have all the time of my life back that I’ve spent discussing politics, I’d be able to do something [useful] with it. We debate politics a lot but it rarely has much effect on the market at the end of the day.

I don’t think there’s any correlation between a change of party and stock market returns. Actually, there’s very little correlation between GDP growth and market returns as well. After all, you’re not buying the UK economy, you’re buying individual companies with individual management teams that do their own thing and find their own way with the problems they face.

Good management teams and reasonable valuations are much more important than worrying too much about politics. That’s why we don’t spend a lot of time debating politics.

What have been your best and worst stock picks in recent years?

Over the past two years the greatest contributors have probably been the banks, with Standard Chartered up around 175%, Barclays 116% and HSBC 100%.

Another big driver of performance has been from companies being bought at substantial premiums. In two years, we’ve lost seven companies to acquisition. IPF was taken over at a considerable uplift to the undisturbed price last year, for example.

Conversely, Marshalls is one of our biggest losers – down 55% in two years. It’s a well-run company that’s been dragged down by economic woes, but we think it will come good eventually.

What do you do outside fund management?

I have an interest in gardening. I joke about it being like this job – needing variety in the garden and not wanting everything out at once. You need things coming into flower at different times.

Investors often gravitate towards funds that do exactly what they say on the tin – a clear style, a defined region, a set benchmark or a neat sector silo. There is comfort in knowing exactly what you are buying.

But there is also something to be said for managers who aren’t boxed in. In a global market that has become dominated by a handful of mega-caps, the ability to roam freely across geographies, sectors, market caps and themes can be a genuine advantage.

As such, Trustnet asked fund selectors to highlight the ‘go anywhere’ funds and investment trusts they believe offer true flexibility and high-conviction stock picking.

Rob Morgan, chief analyst at Charles Stanley, identified the £1.1bn BlackRock Global Unconstrained Equity as a “punchy global option”.

The fund has been co-managed by Alister Hibbert – who Morgan said is “best known for his success in unconstrained European equity funds” – and FE fundinfo Alpha Manager Michael Constantis since its launch in 2020.

“The managers search for the ‘growth compounders’ of the coming decade and beyond, among mostly larger global companies, with no regard for any benchmark,” he said.

The portfolio has a notably higher price-to-book ratio of 9.29x and price-to-earnings (P/E) ratio of 34.56x. The ongoing charges figure (OCF) is currently 0.90%.

“This is a pure stock picking fund [with 22 portfolio holdings and] an uncompromising, unconstrained approach in the hands of accomplished managers,” Morgan said.

It has posted a first-quartile return in the IA Global sector thus far in 2026 and was highlighted by Trustnet as a strong performer in the wake of the initial sell-off following the outbreak of conflict in the Middle East and subsequent rally.

The fund is also in the first quartile for its five-year return to the end of May 2026, gaining 79.5%.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

Morgan also suggested the $1.5bn Atlas Global Infrastructure fund, which is co-managed by a team of five: David Bentley, David McGregor, Peter Hyde, Rod Chisholm and Matthew Lorback.

“Markets often misprice infrastructure assets, which creates opportunities for skilled active management with deep experience and understanding of the sector,” Morgan said.

The fund – which is slightly more expensive than the BlackRock strategy with an OCF of 1.08% – aims to provide investors with exposure to a concentrated selection of high-quality infrastructure equities across developed countries.

“In contrast to many funds in the sector, which are quite widely spread, the managers undertake extensive due diligence to narrow the field down to only around 20 stocks,” he noted, adding that “this produces a genuine ‘best ideas’ portfolio with no regard for the benchmark”.

The fund has posted a first-quartile return in the IA Infrastructure sector over one, three and five years, gaining 75.9% over the half-decade.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

In contrast, Hassan Raza, portfolio manager at CG Asset Management, turned to investment trusts, first suggesting the £1bn AVI Global Trust, managed by Joe Bauernfreund.

“It is an unconstrained portfolio of companies that is not afraid to rotate geographic exposure to pursue opportunities – over the years, we have seen the trust move with agility across the world based on its fundamental bottom-up research,” Raza said.

The trust currently has the biggest geographic exposure to Europe excluding the UK at 28%, followed by Korea (18%) and Japan (17%). Raza noted that the trust has added around 15% to Korean equities over the past eight months to capitalise on the amendments to shareholder rights, which should make corporate activism in the region easier.

AVI Global Trust was trading at an 8.7% discount to net asset value (NAV) as of 2 June 2026. Its net asset value (NAV) increased by 6.1% in April 2026, while the portfolio’s weighted average discount stood at 42%.

“AVI Global Trust’s NAV has delivered 11.5% per annum net of fees since 1985,” Raza said.

“As they [the managers] deepen their bench with Nicola Takada Wood bolstering the Japan sleeve, we think they offer a global ‘go anywhere’ equity product that diversifies investors away from richly priced US-centric portfolios, at a relatively low cost for genuine active management.”

Performance of the trust vs sector over 5yrs

Source: FE Analytics

Raza also highlighted BH Macro – a $1.9bn feeder fund into the Brevan Howard Master hedge fund.

“The fund takes a global macro approach where portfolio managers can trade across geographies and asset classes,” Raza explained, noting it has delivered strong returns during challenging market swings, including Covid (when it gained around 42%) and the 2015 China bubble (where it gained 9%).

“It can play a diversifying role for a broad portfolio that can tolerate a less transparent approach and some volatility,” he said.

Raza added that these periods of strong performance typically coincide with material discount narrowing, with the board “taking a more vigorous approach to buybacks”.

“At wide enough discounts, we think BH Macro is a cheap way to access global macro exposure compared to eyewatering fees in fund-of-fund structures.”

The trust’s discount to NAV currently sits around just shy of 6%.

Performance of the trust vs sector over 5yrs

Source: FE Analytics

Also looking at investment trusts, Ben Yearsley, director at Fairview Investing, pointed to Baillie Gifford’s Scottish Mortgage Investment Trust – a £13bn vehicle that invests in a combination of global private and public companies deemed innovators among their peers.

“Many may disagree with my choice here, as it does tend to invest only in high-growth companies,” Yearsley said.

“However, the managers are simply looking for any company that can at least double in value over the next five years – quoted or unquoted and regardless of sector. It’s ultimately unconstrained and will go anywhere.”

This includes investing in pioneering private businesses like Anthropic and SpaceX.

FE fundinfo Alpha Manager Tom Slater and deputy manager Lawrence Burns typically hold investments for long periods with limited turnover.

It has posted a first quartile return in the IT Global sector over one, three and 10 years to the end of May 2026, gaining 513.2% over the decade.

Performance of the trust vs sector over 10yrs

Source: FE Analytics

All markets and businesses have cycles, but when companies are going through drawdown phases it can be painful for investors and difficult to know what to do.

Kartik Kumar, part of the investment team on the Aurora UK Alpha trust, said investors tend to make mistakes when positions fall into the red, but these can be avoided.

To start with, it is important to know what a typical business cycle looks like. Kumar split it into six main sections. The first is the asset growing and a company’s price tracking higher as a result.

Next comes the start of the drawdown, usually when bad news hits. Here, the price falls far faster than the underlying value of the asset before reaching a floor, before then stabilising as investors appreciate that the news is not going to get worse – it does not necessarily have to be getting better either at this time.

Then there’s the turn, often triggered by marginally positive news that produces a disproportionate re-rating, followed by consolidation. In the last stage, the cycle begins again with price and value rising together.

This phenomenon comes from Richard Thaler's work in the early 1980s, which found that "prices fluctuate more wildly than value," Kumar said. More precisely, share prices move about 13x more than the discounted future cashflows that underpin them.

Each part of the cycle above is distinctly different and can last an unspecified amount of time. Kartik used Netflix as an example. The streaming service enjoyed rapid growth in 2021 and before tumbling just six months later. It then rebounded again quickly and enjoyed strong performance until the start of 2026.

Share price return (%) of Netflix over 5yrs

Source: Google Finance

At the opposite end of the spectrum, Phoenix holds Barratt among other housebuilders, which have long been falling and have yet to reach the floor, something that is taking “a lot longer than we would have anticipated”, said Kumar.

These episodes can mean companies get stuck at the bottom – or continue to fall – long after they perhaps should have. One reason for this is that people are “effectively wired like a smoke detector”, said Kumar. He compared investors selling at the first sign of trouble to a smoke detector bleating out when toast is burning. It is safer to take action just in case, although may not always be necessary.

Second is ‘anchoring’, where investors base their expectations on what has just happened rather than what is likely to happen next.

Kumar explained it is like driving by looking in a wing mirror: “What's in your wing mirror is a valid reflection of reality. It's just pointing in the wrong direction if you're trying to see what's coming.”

The third is career incentive: “Being wrong with the crowd is acceptable. Being wrong without the crowd is usually career-ending," he said.

Here he used the example of European banks at the start of the decade, which were viewed as capital-intensive, low-returning and uninvestable businesses.

Things have turned around in recent years and they have been one of the best-performing asset classes on the planet.

““But if you sat there in 2020 saying 'I think 13 trillion dollars of debt at a negative yield is irrational, and I think one day banks will earn a return from the spread on their deposits' – you wouldn't have had a job by 2022,” said Kumar.

All of these are real issues for the Aurora UK Alpha trust. The fund is down 10.7% year to date and 5.6% over one year and is therefore going through its own form of drawdown.

Performance of fund against index and sector over 1yr

Source: FE Analytics

This is compounded by the trusts’ underlying holdings, such as Barratt, which have been weighed relative to the benchmark.

Yet he is content with his portfolio’s positioning, noting that he and the team are anchoring their approach to intrinsic value rather than short-term price changes, which is making it easier to hold stocks currently falling.

He used the example of Frasers, where £20,000 worth of shares currently buys around £48,000 of assets and wealth. This frame of mind has helped the team to retain conviction in Barratt despite multiple price drops. Having bought at £3, at around £2.40 he has given up 60p so far, but is “looking forward to that nine-pound gain” he expects from the company’s intrinsic value. “I can't predict when it will happen, but I know it will,” he said.

For his own portfolio, he estimated that the net asset value stands at around 243p versus an intrinsic value of 760p.

“The upside to intrinsic value on price is 220%, which is truly an extraordinary level in our history. There's a very significant margin of safety,” he concluded.

Every investor seems to know and accept that AI is changing the world. But what many seem to be overlooking is the speed of change in AI itself.

The release of ChatGPT towards the end of 2022 felt like a watershed moment, blurring the lines between science fact and fiction. Every day since then has seemingly brought news of yet another industry, company or business model at risk of disruption from AI.

The irony is that the list now includes the AI companies themselves. ChatGPT’s revenues have recently fallen behind those of rival Anthropic, with data suggesting Anthropic’s subscriber growth is coming at the expense of ChatGPT, meaning many customers are just switching.

This raises an important question: if AI is changing the world as we know it, and AI itself is changing even quicker, why are investors’ portfolios the same?

Valuations up, cashflows down

At the end of January 2023, the top five constituents of the MSCI World, at 12.5% of the index, were Apple, Microsoft, Amazon, Alphabet and Nvidia.

Fast-forward to today and the top five constituents of the MSCI World are Nvidia, Apple, Microsoft, Amazon and Alphabet – but at an even more concentrated weighting of 19.0%.

You could argue I’m being disingenuous here as, beyond Nvidia, only a tiny fraction of these companies’ revenues are directly generated by AI. However, while AI is not responsible for how these companies make their money, it now overwhelmingly accounts for how they spend it.

Microsoft, Alphabet and Amazon – plus Facebook owner Meta, which sits just outside the top five – plan to spend close to $725bn on AI infrastructure in 2026, a figure we expect to hit $1trn by 2030. This is up from just $150bn in 2023.

As a result, not only do these companies’ free cashflow yields sit below where they were in that year, they also sit below where they were a decade ago.

If such capital expenditure starts to generate healthy returns, or if a clear winner emerges among the so-called hyperscalers, this may turn out to be a shrewd use of investors’ capital. Until that time, we are happy to take an underweight position in this sub-sector of the market.

We are not bearish on AI

This does not mean we are bearish on AI. Although we have pivoted away from the companies collectively set to make a trillion-dollar investment in the technology, we have pivoted towards the loose body of industries and businesses set to benefit from it.

A key tenet of our investment process involves seeking out stocks where the potential upside outweighs the potential downside by a factor of two to one.

Among the beneficiaries of AI spending, this has frequently led us towards companies where demand for their product or service is outstripping supply. That $725bn is an enormous amount of money to attempt to push through the economy in a single year and, unsurprisingly, it has led to bottleneck after bottleneck.

A couple of years ago we would have probably named semiconductor designers (such as Nvidia) and manufacturers (such as Broadcom) as the only real beneficiaries of this trend. These companies have high incremental margins (meaning any increase in revenue results in an exponential increase in profitability) so their cashflows spiked just as those of the hyperscalers were beginning to collapse.

But, since then, we’ve learnt that AI data centres need to be wired up in a fundamentally different way, leading to a surge in demand for Coherent’s components. Storage has gone from a sickly industry that only made hard drives for desktop PCs to suddenly becoming a limiting factor in AI content generation and cloud growth. Hence, Seagate’s results continue to surprise to the upside.

And it’s not just tech. At a more mundane level, labour provider Comfort Systems is seeing a net retirement of electricians, welders, plumbers and pipe fitters, meaning there are more tradesmen leaving the industry than are coming in. If you're Meta or Alphabet, you’re desperately trying to pay these guys as much as you can to carry on working.

This supply/demand imbalance has allowed many companies in the AI value chain to generate super-normal profits. We see nothing to suggest this trade will come under threat any time soon – especially if the hyperscalers’ spending commitments remain in place.

Opportunities amid AI disruption

Of course, every investment has its price and with these bottleneck beneficiaries having already re-rated, there may come a time when another sector or theme offers a better trade-off between risk and reward.

Counterintuitively, this may eventually lead us to the sectors currently deemed most at risk of AI disruption. Fears of obsolescence have pushed down valuations in areas such as software and consultancy, even though earnings growth has in many cases outpaced that of the market.

Should these fears turn out to be misplaced, investors will reappraise these as fast-growing companies generating healthy levels of free cashflow and a re-rating will likely follow. 

We are currently a long way from knowing which companies in these sectors will prove immune to the threat of AI. But we will continue to monitor them for clues that suggest their business models are more robust than previously thought.

The point is, things change. And so should your portfolio.

Cormac Weldon is head of US Equities at Artemis. The views expressed above should not be taken as investment advice.

Asset manager Aberdeen, IT provider Computacenter and investment bank Investec will all enter the FTSE 100 index of UK large-caps on 19 June, FTSE Russell has confirmed.

Going the other way, housebuilder Berkeley Group, packaging firm Mondi and online property portal Rightmove will all fall to the FTSE 250, where there are nine changes overall.

Fund managers agreed that the number of changes was higher than usual. Tim Service, manager of the Jupiter UK Mid Cap fund, said this is likely due to some big swings in share prices over the past three months caused by "big macro crosscurrents in markets".

These include rising energy costs, the shift in the inflation/interest rate outlook, UK political turbulence, AI capex spending and potential AI disruption, he said.

Anthony Lynch, who co-manages the Mercantile and Claverhouse trusts as well as the JPM UK Equity Plus fund, said: "Index reshuffles tend to become more dramatic when markets are volatile. And that's exactly what we've seen in recent months, particularly following the escalation of tensions in the Middle East."

Indeed, the UK market has experienced volatility of around 14% so far this year, according to James Goodman, co-manager of the Schroder Prime UK Equity fund, "reflecting greater dispersion and disruption across sectors in the UK market".

There are some big themes investors can take away from the latest rebalance, the managers all agreed. Goodman noted that there has been a divergence between internationally exposed companies and more domestically sensitive areas of the UK economy.

"Higher interest rates and the slow pace of planning reform continue to weigh on housebuilding activity and broader repair, maintenance and improvement spending," he said.

Meanwhile, the "noticeable trend" of successful AIM-listed businesses moving into the main market indices is another theme worthy of note.

Lynch added that stocks exposed to currently 'hot' structural growth themes seem to have been promoted at the expense of housebuilders.

"Demand for AI infrastructure, data centres, digital connectivity and the commercialisation of space continues to attract investor capital, reflecting confidence in long-term structural growth opportunities despite a more uncertain economic backdrop," he said.

Below, fund managers highlight their key takeaways from the latest reshuffle.

Source: FTSE Russell

Housebuilders

Starting with housebuilders and other property-related stocks, these companies have been battered in recent months and have dropped down the indices.

Thomas Moore, manager of the Aberdeen Equity Income Trust, said it was the "most striking theme on the demotions list", noting that the backdrop for the sector could "hardly be more challenging".

"Government plans to drive up housebuilding volumes have so far failed, despite some easing in planning restrictions, as gilt yields hit new highs due to rising inflation, record public sector borrowing and political uncertainty," he said.

Names in the list above include Berkeley, Rightmove, Ibstock and Marshalls, which Lynch said have fallen out of favour as investors price in stickier inflation, weaker consumer confidence and the prospect of interest rates staying higher for longer.

Service noted that he has a short position in Ibstock, the brick manufacturer. Despite being a "well-managed" company with a "decent market position", it is an energy-intensive process to produce bricks.

Meanwhile, on the demand side, "its customers are mostly volume housebuilders, who are under enormous pressure from higher mortgage rates, rising build costs and lacklustre demand", he noted.

"Volumes are down and may drift down further, potentially exacerbating balance sheet concerns."

Technology and AI

Another key theme is the rise of technology, highlighted by the inclusion in the FTSE 100 of IT provider Computacenter. The firm specialises in helping customers source, transform, and manage their technology infrastructure by reselling both hardware and software. This includes data centre infrastructure, which has been in the headlines in recent months.

Goodman said the stock "stands out positively as one of a relatively small number of UK-listed technology businesses that has successfully expanded into the US market".

Service also highlighted the stock, noting it is one of the top positions in his Jupiter UK Mid Cap and the Jupiter UK Specialist Equity funds.

"The business is a classic mid-cap long-term compounder, with a stellar record since it listed 25 years ago. It is one of the world's leading resellers of IT to large corporations, with especially strong positions in the UK, Germany and North America," he said.

"It is well positioned for the AI capex boom, both directly selling to some of the US hyperscalers, and also the secondary demand that's coming from companies in non-tech sectors looking to upgrade their existing technology stacks to prepare for AI integration."

Investment trusts

Another benefiting from the rise in technology is Seraphim Space Investment Trust, which is to enter the FTSE 250 later this month. Kevin Glover, investment director on the diversified assets team at Aberdeen, said it reflects the stock's "extraordinary run" this year, in which the company has tripled its market capitalisation.

"[This] speaks both to underlying portfolio progress and a significant awakening in investor sentiment towards the space theme, driven in part by high profile events like the SpaceX IPO and Artemis II," he said.

This hasn't all been due to the share price, however, with Glover noting that the trust's £137m share raise was the largest in the investment trust sector for several years.

He said the rationale for investing was "less about short-term excitement and more about the market starting to take space tech seriously", although he noted that the speed of the rerating matters. With shares now trading at a "meaningful premium", current momentum will only be sustained by "disciplined capital deployment" and the "continued delivery from the underlying companies".

Cordiant Digital Infrastructure is also on its way into the FTSE 250 after its move to the main market, benefiting from the interest in digital infrastructure brought about by the rise of AI and the need for more data centres.

“The company has evolved over the past few years and has been steadily delivering on its ‘buy, build, grow’ strategy – building out a diversified portfolio of assets, supporting organic growth and adding bolt-ons where appropriate,” said Glover.

“That’s now translating into a more established track record, with consistent NAV [net asset value] progression and solid operational performance across the portfolio.”

Capital Gearing Trust is proposing a 10-for-1 share split while cutting its annual dividend by 35%.

The board has recommended a final dividend of 66p per share for the year ended 31 March 2026, down from 102p the previous year. At the same time, it is asking shareholders to approve a subdivision of the trust's ordinary shares, which would reduce the price from around £50 to approximately £5. Dealings in the new shares are expected to begin on 23 July 2026, subject to approval at the annual general meeting.

The share split is designed to lower the barrier to entry for smaller investors, monthly savers and dividend reinvestment programmes – groups the board says have been disadvantaged by a share price that has risen sharply since the trust's launch.

As for the dividend cut, the board pays out broadly what the trust earns in dividends and interest, and income fell in the year to March 2026. Of the 66p total, 43p is designated as an interest distribution and 23p as a dividend – a structure the trust uses to take advantage of UK interest streaming rules, which reduce its corporation tax liability when income comes from interest-bearing assets.

The trust delivered a net asset value (NAV) return of 5.8% over the year, against Consumer Price Index (CPI) inflation of 3.3% – a real return of 2.5 percentage points. The share price returned 6.4%. Over 10 years, the NAV total return stands at 68.6%, against CPI of 40.7% over the same period.

Performance of fund against index and sector over 1yr

Source: FE Analytics

The 12-month period ending in March opened with US tariff announcements and closed with the outbreak of war between the US, Israel and Iran. In the sell-off that followed the tariff shock, the MSCI World Index fell 18% from peak to trough; Capital Gearing's NAV fell 2%. When the Iran conflict began, global equities fell 7%; the trust’s NAV again fell around 2%.

The trust's resilience in both episodes reflects its large allocation to inflation-linked bonds, which stood at 46% of the portfolio at the year end, split between US Treasury Inflation-Protected Securities (25%) and inflation-linked gilts (21%). The managers sold all of the trust's gold in February at $5,105 per ounce, ahead of a 17% fall in the gold price following the start of the Middle East conflict.

Equities contributed 2.3 percentage points to the gross return, the largest single component. Among the trust's investment trust holdings, Blackrock Energy & Resource Income Trust returned 73%, Fidelity Emerging Markets 61% and Monks 32%. Finsbury Growth & Income Trust fell 16% and Mobius Investment Trust fell 12%. North Atlantic Smaller Companies, the largest equity holding, returned -4%; the board says it is engaging with the company on corporate governance.

The share split, if approved, will not affect the value of existing holdings. A shareholder with one share at 4,985p would hold ten shares at a theoretical 498.5p each immediately after the subdivision.

Ongoing charges rose marginally, from 0.56% to 0.59%, as buybacks shrank the asset base. The trust repurchased 2,272,529 shares during the year at a total cost of £111.2m – fewer than the 4,067,965 bought back the previous year for £194.5m. The average discount over the year was 2%, and the shares ended March at a 2.3% discount to NAV.

Investors piled into bond and multi-asset funds in May, which both enjoyed their strongest month in almost three years, according to data from Calastone.

Fixed-income portfolios took in £877m in net new money last month, the biggest monthly intake since June 2024 and the sixth-best month on record, as yields surged.

More defensively minded investors seemed to take the opportunity to switch out of money market funds as their defensive asset of choice. Around £669m was puled out of these cash-like funds last month.

Edward Glyn, head of global markets at Calastone said: “Bond markets bottomed out in the middle of the month as yields touched highs last seen before the global financial crisis.

“This offered an enticing opportunity to switch out of safe-haven money-market funds whose returns mirror central bank policy rates and to lock into those multi-year high yields for the longer term.”

Multi-asset funds meanwhile raked in £2.7bn of net inflows, the second-best month on record behind the record £3.3bn of inflows last month, which Calastone attributed to a rise in demand for diversification.

Among equity funds, there was a rare inflow into UK portfolios, which enjoyed net inflows for the first time since November 2024 after more than a year and a half of consistent selling.

They bucked a trend, however, with investors mainly choosing to remove money from equity funds last month. The biggest loser was the emerging markets, with a net £390m removed.

These were followed closely by Asia-specialist (£232m withdrawn) and European funds (£213m). Global portfolios were flat on the month while US equity funds were the biggest winners, taking in £238m in net new money.

“Equity flows reflect that same caution – modestly reducing risk by withdrawing capital and then being picky on where to place it. Investors continued to favour the US, while pulling back from emerging markets, Europe, and Asia,” said Glyn.

“The inflow to UK equity funds is encouraging and may indicate sentiment towards domestic assets is becoming less negative, but it was narrowly focused, therefore it’s too soon to call it a broader trend. Overall, May looked less like a return to risk and more like a carefully managed re-entry into markets.”

Outflows from UK property funds also slowed markedly in May to £15m, the lowest monthly level since June 2024, thanks in large part to a reduction in sell orders, rather than an uptick in new purchases.

Investors who bought an index-linked gilt fund five years ago hoping they would serve as an inflation hedge have been left disappointed. Over this time the average fund in the IA UK Index-Linked Gilt sector is down 36%, with the best performer losing 30.9%.

It could have been worse if investors bought at exactly the wrong time. If they did so at the end of 2021, by the end of 2025 they would have almost halved their money.

Yet some fixed-income specialists still back them as a viable instrument – provided that investors understand duration and buy the right part of the market.

Index-linked gilts (“linkers”) are UK government bonds where the income rises in line with inflation. Unlike conventional gilts, which pay a fixed coupon, linkers adjust both the coupon and the face value in line with the Retail Prices Index (RPI) (replaced by the Consumer Prices Index (CPI) from 2030, due to recent reforms).

That inflation-protection is a huge attraction in eras when prices rise, but the asset class is much more complicated than assuming these bonds will do well when inflation increases.

Take the iShares GBP Index Linked Gilts ETF – a widely held exchange-traded fund among retail investors – which has a duration of around 14 years. This means it is highly sensitive to changes in long-term real interest rates.

When real rates rose sharply in 2022 and 2023, the ETF fell by roughly half. Today, it has partially recovered but remains down about 35% in total-return terms, as the below chart shows.

Performance of fund against index and sector over 5yrs

Source: FE Analytics

Investors who therefore assumed they were buying protection against rising prices ended up, inadvertently, with a large bet on real rates falling.

As Trustnet reported earlier this year, gilts have been losing investors money for a number of years now, particularly these index-linked bonds. But has a reset in valuations now made them worth revisiting?

The case for

Real yields on index-linked gilts – the return investors receive above inflation – turned positive in 2022 for the first time in years.

Emma Moriarty, portfolio manager at CG Asset Management, says she remains firmly committed to linkers as a core portfolio holding. The Capital Gearing trust, which she works on, has its entire fixed-income allocation in index-linked bonds, with around 45% of the total portfolio in linkers, split roughly 20% in UK index-linked gilts and 25% in US treasury inflation-protected securities (TIPS), which are the American equivalent.

“If you look at our core index-linked markets – the US and UK – index-linked bonds have outperformed nominal government bonds since the turn of the century. The reason for this is that markets systematically underestimate realised inflation,” she said.

The 10-year index-linked gilt currently yields 1.62% in real terms, which Moriarty says looks attractive against the economy's long-run trend rate of growth.

Juliet Schooling Latter, research director at Chelsea Financial Services, agreed that the entry point is better now than it has been in years and so did Richard Carter, head of fixed interest research at Quilter Cheviot, who stressed that linkers offer “some protection against spikes in inflation”.

The case against

The rehabilitation of linkers as an asset class comes with important caveats, the biggest of which is duration.

Carter pointed out that the all-maturity index has a duration roughly double that of investment-grade corporate bonds.

“If bond markets keep selling off, be that due to UK domestic political problems or otherwise, then linkers could suffer further,” he said.

Moriarty agreed. While the 10-year gilt yields 1.62% in real terms, CG Asset Management has positioned its own portfolios shorter than the index due to concerns about the long end of the UK gilt curve.

Two factors are weighing on longer-dated gilts: continued supply pressure from debt-funded government spending and reduced demand from defined benefit (DB) pension schemes.

The latter were the largest structural buyers of long-duration linkers but have significantly wound down their activity following the liability-driven investment crisis of 2022, when the Truss government's mini-Budget triggered a gilt sell-off so severe that leveraged pension fund strategies faced margin calls overnight, prompting a Bank of England intervention and a subsequent industry-wide reduction in long-duration gilt exposure.

There is also the RPI-to-CPI switch to contend with. From 2030, the inflation index underpinning linkers will shift from RPI to CPI. Since RPI has historically run 0.5% to 0.8% above CPI, the inflation compensation going forward will be lower than in the past.

Carter noted the change is "well understood by market participants" and Moriarty said her modelling suggests the curve around 2030 reflects rational pricing. But for new buyers it reduces the expected compensation from holding longer-dated instruments.

Schooling Latter flagged a further complication in the middle of the curve.

“The 20-year area is arguably the most attractively valued part of the curve,” she said, “but this is a consideration for investors prepared to take on significant duration risk, rather than those simply seeking an inflation hedge.”

What investors should actually do

If retail investors want genuine inflation protection from linkers, shorter-dated instruments would be a more appropriate route.

Carter recommended one-to-10-year index-linked gilts for investors primarily seeking protection against inflation spikes rather than a long-duration rates view.

Moriarty made the same distinction, noting that the problem with broad ETFs like the iShares fund above is that investors buying them were making a long-duration bet they may not have understood, which is precisely why CG Asset Management launched the CG UK Index-Linked Bond fund with a duration of around five years.

Schooling Latter also pointed to the iShares Up to 10 Year Index-Linked Gilt fund as a more conservative option for retail investors, while noting that the iShares vehicle remains appropriate for those willing to take on duration risk at what is now a more favourable starting point.

For those wanting managed active exposure rather than a simple ETF, Schooling Latter highlighted the Capital Gearing trust.

Performance of fund against sector over 5yrs

Source: FE Analytics

Animal testing is a controversial topic and could be a line in the sand for some investors. This was evidenced by Hargreaves Lansdown’s sustainable investor survey at the end of 2025, which revealed half of its customers are uncomfortable investing in companies conducting animal testing.

However, there is a big distinction between animal testing for medical and non-medical purposes, said Dominic Rowles, lead ESG analyst at Hargreaves Lansdown. The former has led to the production of breakthroughs such as antibiotics, the polio vaccine and the Covid-19 vaccines.

Where investors could have more of a moral issue is when animals are being subjected to tests that are more frivolous, such as the beauty and cosmetics industry.

It is illegal to market or sell cosmetics in the European Union where the final product of any of its ingredients were tested on animals for cosmetic purposes. The UK kept similar rules after Brexit, although testing can occur in limited specialist circumstances.

But not everywhere has the same stringent laws, noted Rowles. In the US, for example, there is no such ban on cosmetic animal testing, although some states have outlawed it.

Meanwhile, in some countries such as China, certain products such as hair dyes or sunscreens can require animal testing before being sold.

This variation across the world means investors who wish to take a stand against animal testing must be selective. Below, Rowles outlines two UK funds that specifically invest with this in mind.

Aegon Ethical Equity

The first is Audrey Ryan’s Aegon Ethical Equity fund, which uses a strict exclusions-based approach and will not invest in companies involved in activities deemed unethical, such as tobacco and alcohol producers, munitions manufacturers and banks with significant exposure to third-world debt.

“Crucially, the fund also avoids companies that provide animal testing services, or that sell animal-tested cosmetics or pharmaceuticals,” said Rowles.

“[Ryan] aims to identify and understand the key environmental, social and governance (ESG) risks of each company, industry and sector she invests in. She believes companies that lead the way in governance and sustainability can outperform over the long run.”

This has not been the case in recent years, with Aegon Ethical Equity a bottom-quartile performer over one, three, five and 10 years.

Performance of fund vs sector and benchmark since start of data

Source: FE Analytics

The fund is just behind the FTSE All Share since July 1999 – the earliest available data on FE Analytics – although it was a long way ahead until recently, when oil and commodity stocks rallied following the outbreak of the US/Israel-Iran war.

As well as animal testing, the fund also applies several other animal-related exclusions, including companies involved in intensive farming, businesses that operate abattoirs or slaughterhouses and stocks that produce or sell meat, poultry, fish, dairy or slaughterhouse by-products.

Janus Henderson UK Responsible Income

For a fund with an income focus, Rowles highlighted Janus Henderson UK Responsible Income, which has been managed by Andrew Jones since January 2012.

Since he took charge, the fund has made 261%, the ninth-best return of 51 funds in the IA UK Equity Income sector during this time.

Performance of fund vs sector and benchmark since manager start

Source: FE Analytics

“His investment process starts with a screen that excludes companies involved in areas some investors consider unethical. He also excludes companies that aren’t compliant with the UN Global Compact [United Nations principles on human rights, labour, the environment and anti-corruption],” said Rowles.

The fund also does not invest in vitamin, cosmetics, soap or toiletries makers, unless their products and ingredients are not animal tested, but will invest in companies that use animal testing for medical purposes providing they can demonstrate best practice.

To do this, the manager has a set of guiding principles, called the ‘Three Rs’, Rowles noted: refine experiments to ensure suffering is minimised; reduce the number of animals used to a minimum; and replace animals with alternative techniques where possible.

A single person now needs a pension pot of £691,000 to achieve a comfortable lifestyle in retirement, while a couple requires £389,000 each, according to wealth manager and financial adviser Quilter.

This has been calculated against the latest Retirement Living Standards (RLS) report published by Pensions UK, which outlines the additional private pension income needed for minimum, moderate and comfortable lifestyles in retirement, based on real-world spending patterns. Its calculations assume receipt of the full state pension and no rent or mortgage costs.

According to the RLS thresholds, a minimum lifestyle now costs £13,900 a year for a single person and £22,500 for a couple. A moderate lifestyle requires £32,700 or £45,400, while a comfortable lifestyle has risen to £45,400 and £62,700 a year respectively.

With the full state pension now sitting at around £12,500 a year, this comes close to supporting costs at the minimum threshold for single people or couples of its own.

To determine the size of the pension pot required to generate an income level with each of these thresholds, Quilter based its calculations on a 6.1% escalating annuity rate for a 66-year-old – also assuming no housing costs in retirement.

For a single person, Quilter’s calculations yielded the following.

Source: Quilter

Quilter’s estimations for joint pot sizes are also shown in the table below.

Source: Quilter

Pensions UK expects 82% of the working population to reach the minimum standard of living in retirement, compared to 23% reaching a moderate standard and just 9% achieving a comfortable lifestyle.

Zoe Alexander, executive director of policy and advocacy at Pensions UK, said: “The latest update to the RLS underlines a clear reality for many people: today’s saving levels will not be enough for the retirement they expect.”

She warned that without action “too many risk facing a cliff-edge drop in income when they stop work”.

These thresholds do not match up with what pension savers expect, with the comfortable threshold for retirement practically double what people believe they need. According to interactive investor’s 2025 ‘Great British Retirement Survey’, pension savers said they believe they need to save an average of £350,000 for a comfortable retirement.

It is also important to note that the Quilter figures assume people are mortgage-free at the point of retirement – a reality that will become less common for future generations who are taking out larger mortgages with longer terms.

Jon Greer, head of retirement policy at Quilter, said: “Factoring in housing costs could push the required income higher still, making early planning and regular reviews even more important.”

Intensifying financial challenges also need to be accounted for when considering how the RLS applies to younger generations, in particular, with Gary Smith, retirement specialist at Evelyn Partners, warning that younger and middle-aged savers will need to further adjust their pension pot projections for inflation.

“If someone currently needs a post-tax income of £45,400 for a ‘comfortable’ lifestyle, they will need a lot more in 20 years’ time – if inflation averages 2.5% over the next two decades, that is roughly £74,800 by 2046,” Smith said.

There are also questions around the long-term sustainability of the state pension in its current form, he added.

“What is clear is that workers must think seriously about how much they are saving right now,” Smith said.

Recent research by AJ Bell shows the challenge for pension savers aiming for Quilter’s moderate lifestyle pension pot of £413,000 for a single person and £416,000 for a couple.

It said that a 30-year-old earning £37,000 today could build a pension pot of over £437,000 by age 67 by contributing 8% of their salary – assuming their employer also adds 3%.

However, this also assumes the individual already has £19,000 in pension savings, achieves a 5% annual investment growth before charges of 0.6% and receives a 3% pay rise each year.

For someone aged 40 with an existing pot of £39,500, they would need to contribute 11% of a £48,000 salary to get the same pot value.

For those aged 50, the task is even harder. AJ Bell assumed the saver would have an £80,000 existing pension pot, noting they would still need to contribute 18% of a £58,000 salary to reach Pension UK’s moderate living standard by state pension age.

Charlene Young, senior pensions and savings expert at AJ Bell, said: “These personal contribution figures rise to a whopping 16% (£493 per month), 22% (£880 per month) and 35% (£1,692 per month) of the respective salaries for our three age groups to get over £700,000 and into the pot range required for a comfortable living standard.

“Clearly the contribution from a worker could be lower if an employer paid in more than just 3%, but this also highlights that stark reality for self-employed people, who will not benefit from an employer top up.”

The AJ Bell research underscores how the current 8% auto-enrolment minimum is unlikely to be enough for future retirees – an issue that the re-established Pensions Commission is considering, with the body’s report expected next year.

Policy uncertainty is not helping matters, with pensions being dragged into inheritance tax from April 2027 and changes to salary sacrifice adding further complexity.

Craig Rickman, personal finance expert at interactive investor, said: “Moving the goalposts and chipping away at valuable tax incentives may disincentivise savers at a time when many need all the help, encouragement and support they can get.”

If I suggested we were investing in semiconductor companies, most people would immediately picture Nvidia. Quite understandably so. Over the past two years, the company has become almost synonymous with artificial intelligence, to the point where ‘AI exposure’ and ‘Nvidia’ are often treated by markets as near interchangeable concepts.

The reality, however, is that the semiconductor industry is vastly broader, more nuanced and, frankly, more interesting than that.

Whilst Nvidia has come to dominate headlines, the semiconductor ecosystem spans everything from hyperscale AI infrastructure and networking through to industrial automation, automotive systems, medical equipment and factory machinery.

Companies may all technically ‘make chips’, but the underlying economics, customer bases and long-term investment characteristics can look entirely different depending on which part of the market they operate in.

That’s part of the reason we’re comfortable holding exposure to businesses as different as Nvidia, Broadcom and Texas Instruments within portfolios at the same time.

Nvidia has, quite understandably, become the defining company of the current AI investment cycle. Its graphics processing units sit at the centre of many of today’s most advanced AI models and the company has become one of the clearest beneficiaries of the enormous capital expenditure currently flowing into data centres and computational infrastructure.

Broadcom occupies a slightly different but equally important role within that ecosystem, benefiting from both networking infrastructure and the growing demand for custom silicon as the largest technology companies increasingly seek to optimise their own AI capabilities.

These are businesses operating at the frontier of computational intensity and digital infrastructure. Their growth profiles have been exceptional, but so too has the level of market excitement surrounding them.

Texas Instruments, by contrast, represents a rather different side of the semiconductor world. The company specialises primarily in analogue and embedded semiconductors; the less glamorous but deeply essential components that help the physical economy continue functioning.

Its chips are used across industrial equipment, factory automation, automotive systems, power management, communications infrastructure and medical devices, often performing highly specific tasks over very long product lifecycles.

In many ways, Texas Instruments reflects the quieter reality of semiconductors. Whilst the market focus naturally gravitates toward artificial intelligence and cutting-edge computing power, much of the global economy still depends on relatively simple chips performing repetitive but mission-critical functions reliably and efficiently.

A factory production line, for example, has little interest in whether a semiconductor can generate poetry or create photorealistic images; it simply needs systems to continue operating safely and consistently.

One business is helping train large language models capable of answering existential philosophical questions at extraordinary speed. The other is making sure your car braking system, factory conveyor belt and air conditioning unit continue behaving themselves. Financially speaking, though, both can be extremely attractive businesses for very different reasons.

Although these companies all sit broadly within the semiconductor universe, they’re exposed to very different drivers. Nvidia and Broadcom are more closely linked to AI investment cycles, hyperscaler spending and the rapid expansion of computational demand.

Texas Instruments is more closely tied to industrial production, automotive content growth and the gradual digitisation of the physical economy. One benefits from explosive technological acceleration, the other from durability, breadth and long-cycle industrial demand.

We don’t necessarily view those exposures as competing with one another. If anything, they can be highly complementary within a long-term portfolio.

One of the persistent challenges during periods of technological excitement is that markets often compress nuance into a single narrative. Entirely different businesses can begin trading as shorthand for the same theme, despite having very different competitive positions, customer bases and risk profiles.

Investors saw similar behaviour during earlier phases of the internet buildout, cloud computing and electric vehicles. Artificial intelligence has merely accelerated the tendency.

In reality, technological revolutions rarely produce a single winner. They tend to create multiple layers of beneficiaries operating across different parts of the value chain, each with distinct characteristics.

For investors, that’s where portfolio construction becomes interesting. Long-term investing isn’t simply about identifying important themes, but about understanding where sustainable economics sit within those themes and how diversified sources of return can coexist alongside one another.

Eleanor Ingilby is head of high net worth at Atomos. The views expressed above should not be taken as investment advice.