Copper and gold have been standout performers this year.

The Bloomberg Commodity index lost money over three years, but both S&P GCSI Gold Spot and S&P GCSI Copper Spot made over 100% and 30% over the same period, as shown in the graph below.

Performance of gold and copper vs index over 3yrs

Source: FE Analytics

The BlackRock World Mining trust has reaped the benefits, with the two precious metals being its biggest drivers of returns this year. Copper and gold accounted for nearly 60% of the portfolio as of the end of September 2025 – at 20.6% and 37.3% respectively.

While co-manager Evy Hambro remains constructive on their outlook, he argued that the broader commodities universe remains largely untapped, with investors risking missing out on critical minerals and rare earths in particular.

Performance of the trust vs sector over 10yrs

Source: FE Analytics

The main push behind gold’s outperformance in recent months has been currency aversion, Hambro said.

“People generally are worried about the rate of government spending and balance sheets, so they are looking to allocate away from cash and government bonds, which is leading them into things like gold or real assets – even crypto,” he explained.

“Until governments can show an action plan to tackle some of the challenges they face, it is going to be very difficult to change the direction of this trend.”

Meanwhile, copper remains an essential component in future-proofing the world’s energy supplies – whether that is moving away from fossil fuels to renewables or looking to power the rollout of AI and data centres, he added.

“You cannot do any of that without copper,” Hambro said.

Is a commodity boom on the horizon?  

However, while copper and gold are outperforming today, Hambro expects to see a broader commodity boom in the near future. The last boom in the asset class harkens back to the early 2000s, following a drastic upscaling of construction activity and urbanisation in China.  

Gaining access to other commodities across the critical minerals and rare earths universe certainly forms a dominant part of government policy, but the same cannot yet be said for investment portfolios.

Hambro’s theory for lack of investor interest is that most of these materials and earths are “invisible” in everyday life – rarely noticed by consumers and therefore overlooked by investors.

“If the price of copper goes up or down, this does not change the everyday person’s life – not like you see with the price of food or when you fill up your car with petrol,” he said.

The term ‘critical minerals’ refers to materials essential for modern technologies and national security, while ‘rare earths’ are a more specific subset of these – a group of chemically similar elements used in high-tech applications like magnets, batteries and defence systems. China has an around 90% market share of the latter group, with the remainder largely in Australia.

“The technology drive of today, with hundreds of billions of dollars being spent on data centres and being funnelled into the grid, is incredibly commodity intensive – driving demand for both critical minerals and rare earths – but many investors have not yet made the mental jump to look upstream,” said Hambro.

“There is a complacency issue there and investors aren’t building exposure in their portfolios. But this is the biggest mistake they are making.”

It has been a core theme for BlackRock World Mining Trust, Hambro said, noting that the portfolio has had exposures to rare earths alongside critical minerals.

“It may take one of the big-tech CEOs announcing they have to slow down growth plans because they cannot access enough rare earths to get investors’ attention – this will cause the price to jump up and we are probably not too far away from that,” he said.

“After all, if governments are worrying about [supply], then companies are, too.”

Sat here in London, a stone’s throw from both 11 Downing Street and the Houses of Parliament, we await the chancellor’s upcoming Budget with the same feeling one might have before a trip to the dentist – we know it will be a painful and expensive experience.

Sadly, this feeling is all too familiar and has come round again all too quickly. It is unfortunately ‘that’ time again.

As the chancellor struggles to find ways to keep to her self-imposed fiscal rules without cutting spending significantly, consumers and corporates alike anxiously wait to hear how they will be asked to pay for both current spending and the rising cost of funding our previous spending.

We all know that the government’s balance sheet is not in a great place, and yields on 10-year UK government debt are now around 4.4%. Five years ago, they were around 0.4%.

Fortunately, we don’t invest in the UK government’s balance sheet. Not directly anyway.

The picture for consumers and corporates is very different and much healthier – despite a tax burden that is forecast to hit an 80-year high by the time of the next general election.

UK households have spent years strengthening their balance sheets, with debt relative to income falling both consistently and materially.

A large part of this improvement has come in the past few years as the inflation that was inspired by government responses to Covid has lifted nominal wages and led to a rapid rise in interest rates that have discouraged borrowing. Unlike the government, the UK consumer is not addicted to debt-funded spending.

Source: Tyndall Investment Management

UK corporate balance sheets have been in good shape for a relatively long period now. The 2008 banking crisis lives long in the memory with a subsequent list of crises that has included Brexit, Covid, tariff wars and actual wars, to serve as a reminder of the importance of prudent financial planning.

The net debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) ratio of the UK stock market is currently around 1.4x, which is lower than most European stock markets.

While it is higher than the US, they have a small number of very large companies that have amassed cash piles that even our government would struggle to spend quickly.

Corporate profits can be volatile and the denominator can drop significantly in times of crisis, but it is unlikely that current profit forecasts have reached the top of the cycle yet after years of somewhat sluggish profit growth.

It is the weak government balance sheet that generates the headlines and creates such high levels of anxiety, but that is not the balance sheet we are investing in.

We are investing in corporates with strong balance sheets and businesses exposed to consumer spending, which is backed by strong household balance sheets.

Where we do have exposure to government spending, it is in areas such as construction, where spending levels are currently low due to, among other things, an overly burdensome regulatory regime, which could be improved as a relatively pain-free way to (try and) boost growth and help meet those fiscal rules.

The issue for consumers and corporates is that they don’t have the confidence to use these balance sheets because they fear what will happen in the upcoming Budget, the one after that and so on.

Consumer confidence has remained low despite the improving position of their finances. The long-running GfK consumer confidence survey shows that consumers feel more confident about their future finances and the climate for making major purchases than on average over the past 30 years and yet they are still choosing to save their money.

Savings rates are at or near long-run highs as they remain concerned about the economic situation – not entirely without reason. Likewise, corporates in the UK are hardly splashing the cash in a positive, pro-growth way.

Corporate cash generation is largely being used to pay dividends and, increasingly, buy back shares as opposed to making large acquisitions or significantly expanding capital expenditure.

To the best of our knowledge, no UK corporate has yet announced plans to spend hundreds of billions of dollars to build data centres in rural Texas – maybe that is where we are going wrong.

Government finances are important and they do affect the spending patterns of consumers and corporates, but they are only one factor in the wider investing environment.

The anxiety over the national balance sheet is one of the key reasons why UK equities have been shunned and, as a result, valuations are outright cheap, both in relation to their own history and in comparison with other global equity markets.

And in the more domestically focused areas of the market, such as mid-caps, the valuation is even more attractive. The forward dividend yield of 4.3% on the FTSE 250, ex investment trust index, is much higher than most global benchmarks, whilst typically being backed by stronger balance sheets.

It is also higher than that of the more internationally focused FTSE 100, which is historically very unusual. The economic environment in the UK might not be the best in the world, but it is certainly not the worst and it doesn’t need to be the best to generate healthy equity returns from these valuations.

Our regular appointment with the chancellor is coming shortly and the anxiety is building but we feel confident that any pain is unlikely to hurt the balance sheets that matter to us.

James Bowmaker is deputy manager of the VT Tyndall Unconstrained UK Income fund. The views expressed above should not be taken as investment advice.

The leading active exchange-traded funds (ETFs) of 2025 so far have been from ARK Invest’s innovation-based range as well as those investing in European or emerging market equities, FE fundinfo data shows.

An active ETF is an exchange-traded fund managed by investment professionals who make decisions on asset selection in real time. Unlike passive ETFs tracking an index, active ETFs aim to outperform the market through stock selection.

In recent years, active ETFs have gained traction in the UK and across Europe as regulatory changes and investor demand for flexibility have aligned. Asset managers have responded by launching more actively managed products across asset classes, including fixed income and thematic equity.

In this article, Trustnet looks at the active ETFs that have made the highest returns over 2025 so far. As there is no dedicated active ETF universe, we’ve compiled the underlying list of funds from the Global ETF universe, using those that have indicated they are allowed to be sold in the UK and do not take a passive or smart beta approach to portfolio construction.

Source: FinXL. Total return in sterling between 1 Jan and 24 Oct 2025

At the top of the active ETF performance table is ARK Innovation UCITS ETF, with a 47.4% total return (in sterling terms).

This strategy seeks to capture long-term growth by investing in companies involved in disruptive innovation. It targets companies that ARK Invest believes are leading technological and scientific developments across five areas of innovation: artificial intelligence (AI), robotics, genomics, energy storage and blockchain.

ARK Innovation’s top holdings include electric vehicle manufacturer Tesla, trading platform Robinhood Markets and cryptocurrency exchange Coinbase, all of which have posted strong returns over 2025.

In a recent note, ARK Invest argued that a “remarkable convergence” is taking place in the five innovation areas the fund invests in and predicted this will “reshape industries, societies and the investment business in profound ways”.

“Each of the innovation platforms is significant, likely comparable to that of the internet which, since the turn of the millennium, has generated over $10trn in global market capitalisation,” the firm said. “Now, as the five platforms advance and interact, the potential for economic impact and value creation is likely to be ‘super exponential’.”

It is worth noting that while ARK Innovation is the best active ETF over the year to date, some passive ETFs have performed much better this year: nine of the 10 strongest ETFs all invest in precious metal miner indexes and have made in excess of 100%. In all, 56 passive ETFs – largely investing in areas such as commodities, Korean equities, financials, tech stocks and Europe – have outperformed the ARK ETF over 2025 so far.

ARK Invest has another two products on the list of the active ETFs with the year-to-date’s highest returns, including ARK Artificial Intelligence & Robotics UCITS ETF in second place with a 42.8% total return.

This strategy invests in companies involved in AI, autonomous technology and robotics, which have had another strong year in 2025. The portfolio’s largest holdings include Tesla, data analytics platform Palantir and chip developer Advanced Micro Devices.

AI‑focused stocks have generally performed well in 2025, with standout gains from names such as Palantir (up over 100 %) and strong double‑digit returns from established infrastructure leaders such as Nvidia (up around 50%). The gains are being driven by robust demand for AI hardware and software, investor sentiment towards the theme and strong earnings growth.

ARK Genomic Revolution UCITS ETF, which is in eighth place with a 25.9% total return, focuses on companies using technological and scientific advances in genomics to improve the quality of human and other life, offering products or services based on genomic sequencing, analysis, synthesis or related tools. They may operate across sectors such as healthcare, IT, materials, energy and consumer goods and may specialise in areas like bionic devices, bioinformatics, molecular medicine and agricultural biotechnology.

Explaining the investment case for the theme, ARK Invest said: “The plummeting costs of genomic sequencing and the rise of multiomic technologies are unlocking unprecedented opportunities in healthcare. Our journey into the molecular fabric of life itself is transforming our approach to diseases that have long evaded cure, particularly rare genetic disorders and cancer.”

Europe is another theme among the best-performing active ETFs of 2025 so far, with nine of the 25 funds in the list above investing in this part of the market. These include Tabula Janus Henderson Pan European High Conviction Equity UCITS ETF, State Street Europe Small Cap Screened Equity and iShares Europe Equity Enhanced Active UCITS ETF.

European markets have performed well this year because of their heavy exposure to the industrials, infrastructure and defence sectors, which rallied in the first half on increased fiscal spending and pledges to boost defence budgets. Also, inflation in the region has moderated and the European Central Bank has signalled a potential shift towards easier monetary policy.

Another trend in 2025’s best active ETFs is emerging markets, with Avantis Emerging Markets Equity UCITS ETF, iShares Emerging Markets Equity Enhanced Active UCITS ETF and SSgA Emerging Markets Screened Enhanced Equity among those in the top 25.

Emerging markets have underperformed the developed world for a lengthy period, leaving them more attractively valued than the US, where investors are starting to develop concerns about how expensive some stocks have become. Furthermore, a weaker US dollar and interest‑rate easing in many emerging market economies have improved the investment climate for those markets.

Of the 200 or so active ETFs we identified in FE fundinfo’s data, only six are making a loss this year: Ossiam Food for Biodiversity UCITS ETF, SPDR Bloomberg High Yield Bond ETF, PIMCO US Dollar Short Maturity Source UCITS ETF, Invesco AAA CLO Floating Rate Note ETF, JPM USD Ultra-Short Income Active UCITS ETF and SSGA SPDR Blackstone Senior Loan ETF.

US president Donald Trump has announced a reduction in tariffs on Chinese imports from 57% to 47%, following a high-level meeting with China’s president Xi Jinping in South Korea.

Trump agreed to reduce tariffs in Chinese imports in exchange for China agreeing to crack down on fentanyl trading, resume US soybean purchases and lower the blockade on rare earth exports.

Meanwhile, the Chinese president sought an easing of export controls on sensitive US technology, as well as a rollback of US port fees on Chinese vessels, which were initially introduced to combat China’s dominance in ocean freight and shipbuilding.

The two presidents met for their first face-to-face talks since 2019, reaching an agreement ahead of the 10 November deadline. Trump claimed that the negotiations were a “12 out of 10”, noting that tariffs would be reduced by halving the rate on fentanyl precursor drugs from 20% to 10%.

However, Derren Nathan, head of equity research at Hargreaves Lansdown, said further details “were thin on the ground”.

As it currently stands, only Brazil and India are subject to higher tariff rates among the US’ biggest trading partners.

The US president has also teased other deals on the table. On Truth Social, Trump wrote: “China also agreed that they will begin the process of purchasing American energy. In fact, a very large scale transaction may take place concerning the purchase of oil and gas from the great state of Alaska.”

Despite news of softening trade relations between the US and China, the FTSE 100 retreated a little at the open, following its best close of 9,756.14 on 29 October.

The US Federal Reserve’s Federal Open Market Committee (FOMC) has voted to cut rates by 25 basis points to 3.75-4% and announced an end to quantitative tightening.

Yet markets remain uncertain about the timing of the next move after chair Jerome Powell signalled a more measured stance.

The vast majority (10) of members voted in favour of the rate cut and end of quantitative tightening from 1 December, with two dissenting – one voting for no change in the policy rate and the other pushing for a 50-basis-point reduction.

The latest decision was helped along by inflation missing expectations in September, which was at 3% year-over-year – still above the Fed’s 2% target but lower than had been predicted.

Jean Boivin, head of the BlackRock Investment Institute, said: “The Fed reaffirmed that a softening labour market remains key. This fits with our view in September that a softening labour market helping to bring down inflation would allow the Fed to cut rates – and why we stuck with our pro-risk stance.”

While private sector indicators and US state jobless claims have pointed to a further softening, Boivin said this does not illustrate a “sharp deterioration that would stoke worries about a sharper slowdown”.

However, with missing economic data due to the continued government shutdown and Powell’s warning that further cuts this year are not a foregone conclusion, the implied probability of a December rate cut has fallen from 92% at close on 28 October to around 67%, according to Bloomberg data.

Nonetheless, Boivin still expects the Fed to cut rates again at the end of this year.

“We find it noteworthy that the Fed is downplaying any potential froth in risk-taking and how lower interest rates might be playing a role,” he added.

“The Fed is cutting rates into a stock market pushing to all-time highs while inflation still remains above target and doesn’t feel any need to acknowledge some risks. This suggests that loose financial conditions won’t stop it from cutting rates soon.”

As such, he said the institute maintains a pro-risk stance.

Nicolas Sopel, head of macro research and chief strategist at Quintet Private Bank, also expects the Fed to cut interest rates again in December to 3.5-3.75%.

Meanwhile, George Lagarias, chief economist at Forvis Mazars, said that markets “overplayed their bets on just how much weak employment and a pressing White House would affect the central bank’s stance on inflation”.

“It is only natural that the Fed’s chair would pour cold water on expectations for a series of rate cuts going forward,” he said.

He added that investors should celebrate the Fed’s continued affirmation of its independence, with one member even going so far as to vote against the rate cut altogether.

“An independent central bank is more likely to have a grip on inflation and would have more credibility if it needed to intervene in case the artificial intelligence-driven equity market retrenches significantly,” said Lagarias.

It is nonetheless important to note that the US government shutdown is nearing its one-month mark, with central bankers left flying blind about the job market.

For an investor not prepared to fully immerse themselves in the volatile world of equities without a life raft, allocating a portion of their portfolio to more defensive asset classes can help cushion the blow if and when markets turn turbulent.

This is where the 80/20 portfolio comes in, as it still offers high equity exposure but with a layer of protection. Below, Rob Morgan, chief equity analyst at Charles Stanley, has outlined his perfect 80/20 allocation, blending global diversification with a defensive mindset.

Source: FE Analytics

The core holding in the portfolio, with a 30% allocation, is iShares Core MSCI World UCITS ETF.

Morgan said it will offer investors “straightforward and low-cost exposure” to the world’s equity universe, including the US-based Magnificent Seven companies, thus “keeping a foot in the artificial intelligence camp for its long-term growth prospects”.

The exchange-traded fund has delivered strong returns over the medium to long term, and is in the first quartile in its sector across three years (57.9%), five years (94.9%) and 10 years (254.2%).

To diversify the passive core holding, Morgan suggested allocating 20% a piece to JO Hambro Global Opportunities and M&G Global Dividend.

The £739.9m JO Hambro Global Opportunities fund is a “blend of offence and defence” and is anchored by characteristics of both quality and value, according to Morgan.

As well as offering a concentrated portfolio, where stock-picking has a significant impact, he noted that the approach emphasises capital preservation.

“If insufficient attractive opportunities are identified, the managers are, unusually, prepared to hold some cash,” he said.

The managers, Ben Leyland and Robert Lancastle, stick to developed markets, hunting shares in high-quality businesses which they believe are underappreciated for the durability of their earnings and cashflow.

“The fund is neither growth or value-biased, instead exploring what the managers refer to as the ‘forgotten middle’ where quality, growth and value styles intersect,” Morgan explained.

Top holdings include global energy company Sempra, natural gas-only distributor Atmos Energy and CDW Corporation, an American multi-brand provider of information technology services.

Conversely to many global funds, JO Hambro Global Opportunities has nil weights to popular holdings such as Nvidia, Apple, Amazon, Meta, Broadcom and Taiwan Semiconductor Manufacturing Company, meaning it is more defensively minded compared to a global tracker, although this means the fund can be expected to lag when big tech is leading the market higher.  

Indeed, over 10 years, the fund is in the third quartile in its sector for returns, gaining 160.2%.

RSMR analysts also rate the fund for its “differentiated investment style” and relatively low risk approach.

“Its valuation-conscious approach will always swing in and out of favour on a relative basis but has been resilient during choppier market periods,” the analysts added.

Performance of the fund vs sector and benchmark over 3yrs

Source: FE Analytics

Meanwhile, the £2.4bn M&G Global Dividend fund targets dividend-yielding stocks, offering investors exposure to more value-oriented and cashflow-producing areas, a characteristic which Morgan argued “offers some resilience in any leaner period for more richly-valued parts of the market”.

“The fund offers a pragmatic, well-rounded approach that targets a blend of companies with the prospect of growing dividends significantly over time, rather than having too much reliance on those with high starting yields but more limited prospects for increasing payouts,” he said.

The fund has been managed by Stuart Rhodes since it was launched in 2008 and John Weavers and Kathryn Leonard, with top holdings including global packaging company Amcor and methanol supplier and distributor Methanex Corporation.

Again, it could prove to be more lacklustre in times where growth stocks are leading the market, although it has managed top-quartile returns over three, five and 10 years, gaining 224.6% over the decade.

“Since launch, the fund has been a competitive performer against other global equity-income funds with stock selection being the main driver of returns, rather than sector or regional allocation, although at times it can be more volatile than others in the sector, due to its willingness to include more cyclical names with high growth potential,” RSMR analysts said.

Performance of the fund vs sector and benchmark over 3yrs

Source: FE Analytics

Morgan then allocated 10% to Lazard Emerging Markets to “capture the important engines of growth outside the developed world – something absent from global passive funds and most global active manager’s portfolios, too”.

The £1.2bn fund has an FE fundinfo Crown Rating of five out of five and has managed first-quartile returns over one, three, five and 10 years.

“Investors that kept faith with manager James Donald and his team through a lean patch a few years ago have since been rewarded with excellent stock picking on top of decent returns from the asset class,” Morgan said, noting Donald’s “patient, value-based approach” that aims to buy out-of-favour stocks for the long term, while retaining a focus on quality that steers the portfolio away from governance pitfalls and value traps.

Performance of the fund vs sector and benchmark over 3yrs

Source: FE Analytics

Finally, for the 20% not invested in equities, Morgan turned to bonds – specifically, Vanguard Global Credit Bond Fund (Hedged).

“Rather than pick a somewhat narrow sterling corporate bond fund for core fixed-interest exposure, it is better to widen the opportunity set and take a global approach,” he explained.

The fund offers a diversified portfolio of global corporate bonds with a focus on developed-market investment-grade securities. However, it also has scope to buy high-yield investment-grade emerging market bonds and other asset classes.

“Vanguard’s worldwide fixed income research capability, credit and sector selection are likely to be the primary drivers of relative performance, with interest rate sensitivity kept close to that of the benchmark,” Morgan added.

Selecting the hedged unit class removes currency fluctuations from returns for UK investors, “meaning this fund can make a simple but effective building block for the fixed-interest component of a portfolio”, Morgan explained.

Inflation and interest rate sensitivity will remain an ongoing risk for the fund, given the limited tools to adjust duration, he warned.

Performance of the fund vs sector and benchmark over 3yrs

Source: FE Analytics

Investors who sold out of gilts earlier this year expecting another ‘Liz Truss’ mini-Budget crisis have reduced their allocation for the “wrong reasons”, according to veteran bond investor David Roberts.

The 30-year gilt yield hit 5.73% in September, the highest level since 1998, following concerns about chancellor Rachel Reeves’ position and the credibility of the government’s fiscal plan, leading some to question whether a 2022-style sell-off could be approaching.

However, for Roberts, this was a buying opportunity that many investors underestimated. He boosted his UK interest rate risk from near zero at the start of the year to 10%, an overweight compared to his benchmark (the Bloomberg Global Aggregate Bond hedged index).

This has contributed to the fund’s strong performance, with the Nedgroup Global Strategic Bond fund up 12.2% since it launched in March 2024, outperforming both its average peer in the IA Global Mixed Bond sector and its benchmark.

Performance of fund vs sector and benchmark since fund start

Source: FE Analytics.

He pivoted into UK gilts this year, partially because he felt many investors were “overreacting” to the news and overselling in response to short-term events.

“We had to ask ourselves, did people sell out of gilts for a good reason or a bad reason? If it is for a good reason, we wouldn’t touch it, but everyone sold out for the wrong reason,” Roberts said.

Investors had become “panicked” about Reeves’ approach, with some investors arguing that the government’s lack of a viable fiscal plan had caused them to lose almost all credibility.

However, Roberts argued this is an overreaction and overestimates how bad the UK’s position is. While the fiscal rules and manifesto pledges have placed constraints on how the government can choose to raise money, this is “not the disastrous position” that it initially seems.

Nominal growth has remained relatively positive and certain aspects of volatility, such as sticky inflation, could become more manageable over the short-to-medium term.

“The market is technically oversold, piles of people are running away from it, but the fundamentals aren’t actually all that bad.”

Additionally, while the government’s fiscal plan is “believed to be bad” by many investors, this is far better than some of the unsustainable plans of the other G7 countries.

For example, Germany plans to expand fiscal spending, while France and Italy “desperately try to rein it in”, and America “is taking as much money as it can and throwing it at people”.

This has caused government bond yields to swell across the G7 this year, he noted, as demonstrated by the fact that they are far more correlated in 2025 than they were in 2022.

Source: AJ Bell, LSEG Refinitiv. Data as of 19 September.

“It’s easy to see the UK as a bit of a basket case this year, but the playground for bond investors is much better than it initially looks,” Roberts said.

The value in gilts

There is still a lot to like in gilts, particularly their high starting yield, which currently provides an income above growth expectations, he said.

Based on recent data from the International Monetary Fund, inflation is predicted to fall to “around 2% next year”. Meanwhile, the real rate of growth is expected to decline to around 1.5%, leading to expected nominal growth of 3.5% for the UK in 2026, he continued.

“If you think you’ve got an economy where the yield on government bonds is both quite a bit higher than inflation and quite a bit higher than the rate of nominal growth, that’s usually a great opportunity for investors.”

On a relative basis, gilts also look appealing when compared to bonds in other markets, Roberts continued.

At 4.7%, the gilt yield is roughly 0.6 percentage points above the average yield from US treasuries this year. While this may not seem like a lot on the surface, over time, getting a consistent “half a percentage point over competitors will start to pay off”.

Markets have a short memory. In the rush toward everything artificial intelligence (AI), some of Europe’s most dependable companies have slipped from view. Looking through our compounding growth lens, stocks such as Roche, LVMH, L’Oréal and Deutsche Börse now represent something rare: high-quality businesses at reasonable prices.

Our philosophy is straightforward but currently unfashionable. We focus on firms with durable competitive advantages, consistent returns on capital, strong cash generation and disciplined reinvestment.

These are not the headline-grabbing disruptors of the moment. They are steady compounders that weather crises, protect dividends and grow quietly through patient execution.

Quality under a cloud

Few firms embody European quality as clearly as Roche. Its twin engines of pharmaceuticals and diagnostics create a base of recurring revenue that is hard to replicate. Yet the market has turned cold. Concerns about slowing growth and patent expirations have left the shares at multi-year lows.

Our perspective is that healthcare companies like Roche are built for resilience. They possess research depth, pricing power and balance sheets that can absorb short-term pressures.

Investors have priced Roche as if it were a cyclical manufacturer as opposed to a global healthcare leader. Meanwhile, the company continues to produce steady cashflow, maintain investment in its pipeline and pay a reliable dividend. The gap between perception and reality has rarely been wider.

Innovation hidden in plain sight

In consumer goods, L’Oréal remains an extraordinary case study in long-term value creation. The group’s blend of scientific innovation, global brands and disciplined marketing has made it the world’s leading beauty company. Despite this, its share price has softened as growth in China and travel retail has slowed.

For quality investors, that weakness is appealing. L’Oréal’s business model is built on innovation and diversity. Its dermo-cosmetics arm offers defensive growth, while luxury and professional segments deliver higher margins.

Few companies balance volume stability and pricing power so effectively. This is not a business in decline but one temporarily overlooked amid cyclical headwinds.

A luxury giant reassessed

The story is similar for LVMH. The company dominates global luxury through a portfolio that stretches from Louis Vuitton and Dior to Moët and Tiffany, but the stock has lost momentum as the luxury cycle cools and Chinese demand falters.

It is easy to forget that LVMH has weathered similar slowdowns before as its control over distribution, brand equity and pricing gives it exceptional flexibility.

The management’s focus on long-term brand stewardship, rather than quarterly targets, ensures resilience when consumer sentiment dips. The market’s impatience has created a valuation gap and, while luxury demand will ebb and flow, LVMH’s ability to sustain margins and expand into new categories makes it one of Europe’s most durable franchises.

The quiet powerhouse

The least glamorous of the group, Deutsche Börse is also among the most enduring. As the operator of the Frankfurt Stock Exchange and the Clearstream settlement network, it earns recurring fees that are largely immune to economic cycles.

Recent years have seen it transform from a traditional exchange operator into a broader financial-data and analytics business.

The 2024 acquisition of SimCorp further added high-margin software capabilities, moving Deutsche Börse up the value chain. While investors have gravitated toward faster-growing US peers, the company continues to post solid double-digit returns on capital, rising free cash flow and a reliable dividend.

It is a business that delivers quietly in the background, exactly the sort of dependable compounder the market tends to overlook.

Why the market misprices quality

Europe’s most reliable companies are being treated as yesterday’s stories simply because their growth rates are modest, despite these being precisely the businesses that protect capital when cycles turn. They do not rely on cheap financing or speculative demand and advantages are structural, not seasonal.

Our approach is to let time do the heavy lifting. By focusing on valuation, cashflow and reinvestment capacity, it seeks to hold businesses through the noise of market fashion.

Today, that lens points toward opportunity in Europe’s forgotten champions. Roche, L’Oréal, LVMH and Deutsche Börse share three qualities: strong economics, careful capital allocation and temporary neglect.

Their fundamentals remain intact but investor enthusiasm has shifted elsewhere. For those willing to wait, that combination of quality and pessimism could be a golden opportunity.

Europe’s quiet quality has not disappeared, it has simply been overlooked. And for patient investors, that is exactly where enduring value is found.

Ben Peters is portfolio manager of the Evenlode Global Income fund. The views expressed above should not be taken as investment advice.

Gifting to the next generation is an increasingly popular way of passing on wealth, and after the inheritance tax (IHT) allowance freezes and the incorporation of pensions into estates (starting April 2027), it’s a tax-efficient way too.

These past reforms could be compounded by those rumoured to be announced in next month’s Budget: rumours that the current 25% tax-free lump-sum allowance might be cut, that the £3,000 gifting allowance might be cut and that the seven-year wait time for gifts to escape IHT might be extended to 10 years.

This has triggered a flurry of activity among pension savers, who, rather than waiting and letting IHT take its share, are choosing to pass on their wealth sooner rather than later. And it is a sensible choice too. As James Corcoran, senior chartered financial adviser at Lumin Wealth, said: “The children will inherit anyway”.

By gifting some of the inheritance early, taxes reduce and “you get to see your children enjoy the money”, whether that means paying off a mortgage, buying a better home or funding their children’s education.

A prominent example of someone gifting early is James Henderson, portfolio manager of the Lowland and Law Debenture investment trusts, who said: “It makes sense for me now to gift shares in the two investment trusts I manage to my two children, who are in their 20s and 30s. I have a lot of faith in the strategies we’re using to manage these trusts. UK equities are cheap and we're finding value across the market cap spectrum.

“I have encouraged them to remain invested because I think they’ll be handsomely rewarded for doing so. Of course, I am passing on a different tax problem – capital gains tax, – but that’s for them and their financial advisers to tackle.”

Other pension savers might want to gift cash instead of shares and this has been highlighted as a way to reinvest money taken (perhaps hastily) from pensions as a tax-free lump sum. Corcoran explained that by gifting this money to children, the funds go back outside the estate and can grow tax-free, for example in a Stocks and Shares ISA.

However, there’s downsides to consider too. One could be the psychological impact – could the gift create imbalance, make the children dependent or less driven to work?

Some parents make gifting conditional on their children seeking advice, because otherwise the funds could end up sitting idle or in high-risk assets such as crypto, the financial planner noted.

There’s also long-term care to account for. “If you give too much away and later need care, you might have limited options. Or if the children divorce, that money could leave the family.” To avoid the latter problem, that’s where trusts come in: they allow parents to retain control and decide who benefits and when.

Gifting rules and allowances

The popularity of gifting has been accelerated by rumours that the gifting allowance might be cut in next month’s Budget.

As of today, each year Britons can gift £3,000 tax-free. Henderson said: “I hope the chancellor does not try to limit the level of gifting, because it will make for horrendous complexity”.

However this allowance is often misunderstood, according to Corcoran. For starters, anyone can use it – meaning both parents can give £3,000 each to their children every year. On top of that, there are separate allowances for weddings or individual gifts: £250 per person, £5,000 for a child’s wedding and £2,500 for a grandchild’s. Those don’t count as potentially exempt transfers.

Then there’s the ‘gift-from-income’ rule, which people often forget. As an example, if your income is £100,000 and you regularly spend £30,000 a year, you can gift all of the remaining £70,000 with no problem, as long as it’s from surplus income and not capital.

“People get caught up thinking they can only gift £3,000 a year. That’s not right – you can gift whatever you want. There’s no tax on the giver or the recipient,” Corcoran said.

One factor that has discouraged people from gifting is the so-called ‘seven-year clock’, under which gifts escape IHT if the giver lives on for seven years afterwards. For Corcoran, however, this isn’t reason enough to be put off.

“Even if you don’t survive the seven years, the funds are still growing in the children’s names [provided they are invested]. If your gifted £100,000 has grown to £110,000 and you don’t beat the seven-year clock, £100,000 goes back into the estate for IHT purposes, but the £10,000 growth is outside,” he explained. “Even if you don’t expect to live seven years, gifting is still worth it, if you’re happy to.”

When insurance makes more sense than an ISA

Another option Corcoran said many of his clients are now taking is whole-of-life insurance. For those who face an inheritance tax bill but can’t or won’t gift – especially if most of their wealth is tied up in property – a whole-of-life policy can be highly effective.

The big catch-22 with inheritance is that children cannot access their parents’ money until they pay the IHT bill, but they can’t pay IHT until probate has been granted. To avoid being caught in this loop, they need enough money immediately after death to unlock the inheritance – which is exactly what a whole-of-life policy provides.

“Probate takes time, selling property takes time and families are often grieving and unprepared. Having a whole-of-life policy provides an immediate lump sum to pay the tax,” said Corcoran.

The money for this insurance can be redirected for example from an ISA.

Pension savers paying £20,000 a year into ISAs may only create a portfolio that will itself attract IHT in future, but if the same £20,000 were used to fund a whole-of-life policy, depending on age and health, it could generate around £1m of cover, Corcoran explained.

“It’s not an investment – it’s protection,” Corcoran said. “But for families with high property values, it can be extremely beneficial. Once a property exceeds £1m, you’re in inheritance tax territory; above £2m, you lose the residence nil-rate band. For those people, a whole-of-life policy can be a very effective solution.”

Investors are being paid more than ever before to take a punt on companies outside of the US tech giants, according to Peter Davies, manager of the £472m Lansdowne (Lux) Developed Markets fund, but few have made any changes to their portfolio so far this decade.

“Most people I talk to haven’t changed their portfolio since the 2010s but will freely accept that the environment we are in during the 2020s is totally different,” he said. “It seems fundamentally unlikely that the same portfolio will keep working given how radically different the world is.”

While others have sat on their hands, he has built a portfolio that is very different to its peers, with just 16% in the US (and no major holdings to the ‘Magnificent Seven’) and some 73% in UK and European businesses.

This has worked wonders for his portfolio, which forms part of the asset manager's much larger Lansdowne Developed Markets Strategy. Lansdowne (Lux) Developed Markets has got off to a storming start since its launch in 2023, making a 57% return, the 12^th best in the IA Global peer group.

Performance of fund vs sector since launch

Source: FE Analytics

But the manager has not always been against the large US tech stocks, noting that in the early 2010s he was “building positions in Amazon, Google and the things that subsequently became the Magnificent Seven”.

However, he no longer holds these companies, noting that two things have “changed radically” since he saw them as priority holdings.

The first is that the companies have become more expensive, with Davies suggesting that 12 years ago they traded on price-to-earnings (P/E) multiples that were almost a third of what they are today.

The other is that they had a “very obvious growth path ahead of them with predictable returns”, something that is not the case in the current climate.

Although the artificial intelligence (AI) boom has boosted share prices, the US mega-caps face a “more capital-intensive and competitive future”, which is much riskier than the environment they have enjoyed for the past 10 years.

“The stuff that is a big part of the index looks to be a lot more complicated than it did 10 years ago,” he said. “Today, those are less attractive, I would say, and by contrast we see a plethora of opportunities, particularly in Europe.”

One benefit to investing outside the US is low valuations. Despite European stocks rallying so far in 2025 (up 29.4% versus the MSCI World’s 13.3% gain), he said they remain cheap compared with their American counterparts.

Normally, low valuations come with either a lack of growth or more risk entailed, but this is not the case, he argued, pointing to the building sector as an example.

“Things like building shares have demonstrated the ability to deal with massive rises in input costs without compromising their profitability. So they are clearly much better companies [than given credit for],” he said.

Meanwhile, the number of properties needing to be built should be higher in the next decade than in the past decade, whether it be through residential and commercial spending or even government spending. “We need to build more stuff,” said Davies.

“Europe has at least as much structural need for houses as the US does but cyclically is starting from a more depressed point. A sector like that is very cheap but, critically, that cheapness comes with both growth and less risk than you would normally take.”

Davies, who manages the Lansdowne (Lux) Developed Markets fund alongside Jonathon Regis and Nigel Hikmet, is particularly heartened by the fact that Europe’s revival has come at a time when there has been a cost-of-living crisis and war on the continent.

“What happened during the Ukraine crisis was rising energy prices and rising interest rates. What’s interesting to me is it [his portfolio] is working despite a worst-case scenario from a macro perspective,” he said. “That bodes well.”

However, he noted that investors should not think that the fund is set up to “systemically avoid the US” or to be value-biased.

Indeed, while his businesses may be listed in Europe, the manager noted that his exposure “is less pronounced economically than it is market-wise”. In other words, a lot of the companies he owns are exposed to the US economy, rather than the domestic one.

“I feel you can get the same exposure to the same economic variables more cheaply on average in Europe than in the US,” he said. “It’s a question of how much you get paid for deviating from the index, and we think you get paid a lot more today than we have ever seen in the past – and certainly a lot more compared with 12 years ago.”

Heptagon Kopernik Global All Cap Equity and Ranmore Global Equity are the best top-performing global funds to diversify from other high returners, according to a Trustnet study.

In this series, we used the FE fundinfo Crown Rating system, compiling funds with the highest score of five, then created a correlation table to see which have performed differently from one another.

A score of 1 shows the funds are perfectly correlated (meaning they move up and down at the same time). Most portfolios in the same asset class have high scores but some stand out.

Having previously looked at the main UK sectors, here we tackle the behemoth IA Global sector, which houses 575 funds, 41 of which have been awarded five crowns.

The lowest correlation between top-rated global funds is between Heptagon Kopernik Global All Cap Equity and BlackRock Global Unconstrained Equity, which has an extremely low correlation score of 0.08.

Run by David Iben and Alissa Corcoran, the former fund is the main differentiator here, with correlation scores below 0.2 to four other portfolios: Nomura Global Multi-Theme Equity (0.12), WS Blue Whale Growth (0.17), Federated Hermes Sustainable Global Equity (0.17), and Nutshell Growth (0.18).

It is a value fund, with next to nothing (0.1%) in the high-flying technology sector, giving it a much different profile to its peers.

Two platinum miners – Valterra Platinum (4.1%) and Impala Platinum (3.1%) – are among the fund’s top three holdings, split by South Korean mobile network provider LG Uplus (3.2%).

Overall, the fund is heavily overweight miners and includes old producers Seabridge Gold and NovaGold Resources in its top 10 positions. It also currently holds some 19.7% in cash.

Ernst Knacke, head of research at Shard Capital, highlighted the fund as a unique portfolio doing something genuinely different to its peers earlier this year, noting the asset management firm was a “phenomenal” house for global value.

Source: FE Analytics

The other high-flying fund proven to be a strong diversifier to other diversify other top performers is Ranmore Global Equity. Managed by Sean Peche since 2008, it is another value fund with low exposure to technology (4%). The bulk of the portfolio is invested in consumer discretionary names (33%), while it also holds a higher-than-average cash position of 11%.

Sally Beauty (2.4%) is the top holding in the fund. It is the world’s largest distributor and retailer of professional beauty products with more than 3,000 stores across 10 countries including the US, UK, Germany, Canada and France.

Barbie owner Mattel, Japanese broadcaster TV Asahi and Hong Kong-listed home appliance provider Haier Smart Home (all at 2.3%) are in joint second position.

The fund has captured 99% of the upside of the MSCI World index over the past five years, while delivering just 54% of the downside and stocks in the portfolio have an average price-to-earnings ratio of just 8.7x, more than half of the index’s 20.1x.

Analysts at Fundcalibre added the portfolio to their Elite Ratings list in February, stating it was a “differentiated global value fund” that has delivered strong performance across various market environments.

They said: “In a world where the number of value managers available to investors has started to dwindle, Ranmore stands out like a shining star. Ranmore has delivered excellent returns over a very long time period.

“Performance has been particularly impressive considering its value style and bias in favour of mid-sized and smaller companies, which have generally struggled in recent years. We think this fund is a hidden gem and should be a big consideration for those looking to add in some value exposure to balance out their portfolios.”

Ranmore Global Equity is gaining traction, however, among retail investors and so may not stay hidden for long.

It was the third most-bought fund among interactive investor clients in September and ranked in the top 10 funds bought by Hargreaves Lansdown customers with SIPPs in drawdown in the third quarter of the year.

Both Ranmore Global Equity and Heptagon Kopernik Global All Cap Equity are top-quartile performers over the past three years, with the former up 93.6% while the latter has made 76.2%.

However, despite being value funds, they do not cross over as much as investors might expect. They have a correlation of 0.46 to one another which, while above the numbers listed above, is still low.

The Labour Party has initiated the biggest change in financial advice, pensions and inheritance tax (IHT) since 2014, with HMRC already amassing a record £8.2bn worth of IHT between April 2024 and March 2025.

Levied on estates upon death, IHT is charged at 40% of an individual’s estate over the £325,000 nil rate band and the £175,000 residence nil rate band – both of which have been frozen until 2030, dragging more people into paying taxes.

On top of that, starting from April 2027, pensions will be going into people’s estates for IHT purposes.

James Corcoran, senior chartered financial adviser at Lumin Wealth, said: “Before, many of my clients had only a small IHT liability or none at all. Now, those with significant pension pots have a much more serious IHT bill and it’s really about understanding the best way to approach that and what options make sense.”

But the concerns have been centred around the upcoming Budget. Much-discussed in the media, it has been fuelling fears and prodding people to act pre-emptively to avoid the tax man – sometimes recklessly.

“Huge sums” are being withdrawn from pension schemes as tax-free lump sums, said Corcoran, on the rumour that the current 25% tax-free allowance might be cut.

The most recent FCA Retirement Income Market analysis showed a giant increase in the number of pensions from which tax-free cash was taken: from 29% between 2023-24 to 63% in 2024-25.

But people who have taken the cash without a plan might have created a disadvantage for themselves. If the money is now just sitting in a bank account, it has been moved from somewhere where it was growing tax-free into a taxable account incurring income tax on the interest.

“If someone says: ‘I want to take out my tax-free cash because I’m worried Labour will take it away,’ they need to stop and think about the implications,” he said.

For someone aged 72 who planned to take it out by 75 anyway, it doesn’t make a big difference, but for someone aged 60 wanting to take out the full amount, the planner has generally advised against it because “so much can change”.

“Pension legislation changes all the time and they could lock in only 25% of their current value when, had they left it 15 years, it could have doubled, giving double the tax-free cash,” Corcoran said.

“It’s worrying when people jump to short-sighted conclusions. That’s not to say you shouldn’t act where there’s a clear benefit, but it’s about making sure you’ve considered all the implications.”

Hargreaves Lansdown head of retirement analysis Helen Morrissey urged people not to take the lump sum just because they can, but only if they know what to do with it, for example as part of a long-term plan to pay off their mortgage, travel or to make home renovations. She also suggested to reinvest some into a stocks and shares ISA, but that’s capped to £20,000 a year.

Those who wish to take the money out now and perhaps reconsider after the Budget should make sure they don’t fall foul of pension recycling rules, which apply when HMRC believes someone has taken tax-free cash and reinvested it into their pension to benefit from extra tax relief.

“This could land you with a nasty tax charge with HMRC looking at issues such as how much was taken, the proportion of tax-free cash contributed, whether there has been a significant uplift in contributions, as well as whether it was pre-planned,” Morrissey explained.

“Being landed with a tax charge could significantly derail your long-term plans so if you’re looking to do this, financial advice can help.”

Finally, those with large estates might think about gifting their money away now, rather than leaving it to loved ones in their will to avoid a potentially higher tax bill on the estate.

What can the sport of ski-jumping teach us about investing? Not a lot, you might imagine, other than the sheer exhilaration of ups and downs or the pain of crashing. In fact, it offers one particularly useful lesson.

There was a time when keeping one’s skis parallel to each other while soaring through the air was considered not only the accepted style but the most effective. As a result, competitors were marked accordingly.

In the mid-1980s, quite by chance, a Swede by the name of Jan Boklöv discovered he could fly much farther if his skis were instead angled away from each other in a V. He was so amazed by the advantage he gained that he decided to use the technique at all times.

For several years, despite consistently outdistancing his rivals, Boklöv didn’t win any titles. He was instead repeatedly punished for his unorthodoxy. What he gained in length was lost in low scores from the judging panel, which continued to cling to the ‘skis in parallel’ ideal.

Eventually, however, the herd fell into line. In the 1988-1989 season, although still penalised for flouting tradition, Boklöv flew far enough to claim the World Cup. Acknowledging its ability to produce more lift, pretty much everyone began to adopt the V method.

By the early 1990s, with every Olympic medallist following Boklöv’s lead, the technique had become the new normal. Ski-jumping was thus revolutionised and the scoring system was changed to accommodate an era-defining shift.

The moral of the story? In every field – whether it’s ski-jumping, investing or any other endeavour we might care to mention – there’s often much to be said for daring to be different.

Looking beyond the big names

In the investment sphere, of course, this takes us into the realm of contrarianism. Yet contrarianism is a word that must be treated with care because it can come with negative connotations.

There’s strictly limited merit, for example, in being contrarian for the sake of it. Choosing B simply because A is all the rage is less a bona fide stock-picking philosophy and more an exercise in knee-jerk defiance.

It may be better to think of contrarianism in terms of suitably informed investment decisions. Ideally, it’s a question of identifying opportunities that escape the wider market’s attention.

This can be among an investor’s greatest and most rewarding pleasures, not least when everyone else belatedly clambers aboard the bandwagon.

But how is it done? In essence, it requires a readiness to look beyond the obvious. There may be no better illustration than the domain of global equities, which happens to be the stomping ground of the fund I co-manage.

Many investors seem to have been conditioned to believe the search for healthy returns need extend little or no further than multi-trillion-dollar technology companies – the so-called ‘Magnificent Seven’ foremost among them. Recently, amid the boom in artificial intelligence (AI), an even narrower lens has been applied in some circles.

Yet 2025 has already shown a reliance on a handful of stocks centred on a single sector, industry or region is rarely prudent. Passive funds now find themselves notably vulnerable to this trap, with enormous exposures to giant businesses whose valuations appear ever more uncomfortably stretched.

So if mega-cap tech titans are investing’s parallel skis – once undeniably dominant but increasingly recognised as perhaps not all they’re cracked up to be – where might we find the equivalent of Boklöv’s V? This brings us to the underappreciated attractions of small-caps.

Enablers versus architects

Wherever in the world they might be, the best smaller companies tend to outperform their larger counterparts over time. This is thanks to their capacity for long-term growth, which is usually fuelled by factors such as adaptability, flexibility and willingness to innovate.

Many of these businesses represent ‘picks-and-shovels investments’. This designation has its origins in the gold rushes of the 19th century, when thousands of prospectors dreamed of unearthing a fortune but the people most likely to get rich were those who sold the equipment necessary for mining.

Take two of our biggest holdings: Mueller Industries, which specialises in copper and copper-alloy manufacturing, and Applied Industrial Technologies, which develops fluid power solutions to maximise machine efficiency. What unites these businesses?

The answer is that they can be thought of as enablers. While they might not be universally known, these are companies that are absolutely vital to the transformation unfolding all around us.

Most investors are much more familiar with what we might call architects. These are the big-name game-changers that hog the headlines and account for the bulk of so many passive funds.

In our experience, enablers’ cumulative returns over the course of many years can easily exceed those of architects. If you want proof, spend a few minutes comparing Apple’s performance with that of some of its most important suppliers since the advent of the iPhone. It’s eye-opening stuff.

It’s true that, like Boklöv, informed small-cap investors may need to be patient. They might have to wait a while before they’re proved right. They could even very occasionally land on their backsides – an occupational hazard in any investment sphere.

Ultimately, though, like Sweden’s most celebrated high-flier, they should have a good chance of emerging as winners.

Simon Wood is co-manager of the IFSL Marlborough Global SmallCap fund. The views expressed above should not be taken as investment advice.

Artificial intelligence (AI) may be the defining technology of this decade but Brunner investment trust manager Julian Bishop is worried about how much of the enthusiasm is justified and how much is only fuelling a hype train.

The question is particularly pressing in the US, where the tech giants are committing stellar sums to AI, hoping for a return on investment at some point in the future. But with US indices increasingly dominated by these companies, the wider market’s fortunes now hinge on their ability – and AI’s ability – to deliver on the promise.

“For US stock markets to continue to flourish at a headline level AI has to live up to the hype,” Bishop said.

This echoed Harvard economist Jason Furman’s post on X, where he calculated that without data centres the annual rate of GDP growth in the US for the first half of 2025 would have been 0.1% instead of its actual 4%.

The scale of the phenomenon particularly worries Bishop, with global spending on AI infrastructure expected to range between $450bn and $500bn a year, reaching $2trn to $3trn of total invested capital by the end of the decade.

“That is an extraordinary amount of money to be spending basically speculatively on a new technology where the use cases so far have proven to be reasonably limited,” the manager said, with such a level of investment requiring “massive profits” to justify it.

“If you aim at a 10% return on invested capital, that requires $300bn in profits; 20% requires $600bn,” Bishop continued. “The architect of all this is OpenAI and its revenue at the moment are about $13bn. Even allowing for rapid growth, that’s not even close.”

Microsoft reports this week, with about 40% of its quarterly growth year on year expected to come from its cloud computing business and be driven by OpenAI’s video generation tool Sora. Bishop, who invests in Microsoft, failed to see the appeal, describing it as “just very computing-intensive novelty nonsense”.

Yet the true speculative pockets, where valuations become completely disconnected from reality, are elsewhere, according to the manager.

“Tesla is a company whose value has just no foundation in reality,” he said. “Sales are going down, it makes virtually no money and yet it’s got a market cap of $1.5trn.”

Despite the warnings, the Brunner manager isn’t completely disenchanted by the sector. True AI pessimists would point at the unrestrained spending and recognise some similarities with the past technological bust of the early 2000s, but Bishop belongs to the cohort of fund managers who think the dynamics are very different this time around.

Crucially, as James Ashworth, senior portfolio manager of the trust, noted, the spending isn’t coming from loss-making companies trading at preposterous valuations on the stock market.

Instead, much of the current AI race is being funded by the big US technology platforms with real cashflows such as Google, Meta, Microsoft and Amazon – none of which need to borrow to spend.

“It may be a misallocation of capital and it may destroy value, but it's not being funded by debt,” Ashworth said.

Another positive note is that the speculative excesses are not in listed equities, with “a lot of the frothiness appearing to be in private markets”.

OpenAI is a good example of that, as the reported value has gone from $100bn to $500bn in the last year or so, the manager noted.

“These companies have no public shareholders, so that means that, to a degree, we won't really see when value is declining in the same way that we would with a public stock.”

While wary of risks, Bishop still sees opportunities within the AI supply chain and invests in Taiwan Semiconductors, the foundry that manufactures virtually every chip for Nvidia, AMD and Broadcom.

“Taiwan Semiconductors is a sort of agnostic play on whoever manufactures AI chips,” he said.

The team’s broader positioning reflects the same balance between innovation and valuation discipline that defines the trust. “We’re slightly underweight the US versus our benchmark,” Bishop said. “Whenever you look at globally comparable businesses, the US tends to be a fair amount more expensive.”

Beyond Taiwan Semiconductors, Brunner’s largest holdings include Microsoft, Visa, InterContinental Hotels Group, Auto Trader, Shell and GSK in the UK. It also holds DNB in Norway – “generally regarded as one of the safest banks in the world” – and Bank of Ireland. The portfolio spans developed markets across Australia, Japan, Korea, the US and Europe, reflecting what Bishop called “a natural source of diversification”.

In the past 12 months, the trust struggled to keep up with its competitors, as the chart below shows, but performance is better over the longer term, with Brunner topping the IT Global sector over the past three and five years.

Performance of fund against index and sector over 1yr

Source: FE Analytics

Four in 10 people globally are at least a decade short of their retirement goals, according to data from Fidelity International, with 35% of Britons chronically underestimating how far their pensions will stretch.

Most people plan their retirement pot around the average life expectancy, accounting 15 to 20 years in retirement, taking them to between 80 and 85 years old if they retire at 65.

However, many may need an income for much longer, particularly as life expectancies continue to increase.

“For married couples, the chances that at least one will live beyond the average life expectancy are even higher due to the added potential emotional, social and financial support that also can manifest in better physical health,” Fidelity International researchers found.

Average life expectancy is also on the rise, estimated to increase by 4.9 years in males and 4.2 years in females between 2022 and 2050, potentially widening the retirement savings gap further.

Additionally, by 2050, 3.67 million people are expected to reach the age of 100, an eightfold increase from about 451,000 in 2015, according to Pew Research Center, meaning many will live far beyond national averages.

When measured against a potential 100-year lifespan, the percentage of people who were underprepared for retirement by 10 years or more doubled to almost 80% of respondents. In the UK, seven in 10 (74%) are unprepared, as the below chart shows.

The research was conducted by surveying almost 12,000 people over the age of 50 who were either pre-retirement or had finished work.

Source: Fidelity International

Stuart Warner, global head of platform solutions at Fidelity International, said: “People are living longer than ever, but too many are preparing for retirements experienced by their parents and grandparents.

“This mismatch between life expectancy and savings horizons risks leaving many underprepared. With the right planning, longer lives can be a positive reality, but it requires a new mindset and earlier action.”

The single most powerful determinant of retirement wealth is time, specifically starting early and allowing cash to compound. The longer someone saves and the more they put away, the greater their options in retirement.

“Early contributions, even modest ones, create a foundation that grows exponentially, while delayed savings demand ever higher rates of return to meet a specific goal,” the report said.

This is especially important as people are worrying more about whether they will be able to rely on state support, with the stagnation or decline of public pension benefits (such as in the UK where the state pension triple-lock is under threat and tax thresholds remain stagnant), meaning more costs will have to be paid from private pensions.

“Globally, only 28% of people feel assured that their government will provide adequately for them in later life. In the UK, 60% are not confident,” the report found.

Katie Roberts, global head of client solutions at Fidelity, said there are two options to mitigate longevity risk without having to work for longer.

The first is to save more, while the second is to invest to optimise retirement assets. However, while respondents expected an annualised investment return of 4.9%, nearly two-thirds said they held their retirement pot in cash, with just a third of people invested in equities. A fifth had some exposure to bonds.

Source: Fidelity International

For those in the accumulation phase of their pension, she said a diversified portfolio that includes growth assets, such as stocks, property and higher-yielding bonds, is crucial.

People already drawing on their pension must contend with a different set of risks that are “not as well known”, such as making withdrawals during market downturns, which she described as “devastating” to pot sizes.

“Withdrawals do not need to be a fixed amount throughout retirement. Spending typically peaks early as travel and leisure dominate and may decline later in life,” said Roberts.

“The glide path to retirement cannot be based only on age. It must be linked to factors such as spending needs, health risks and family responsibilities. If paying off a mortgage is a priority, then retirement savings should include assets that can be liquidated flexibly. If legacy is a concern, then savings should include illiquid, longer-term assets that deliver capital growth.”

However, financial stability is only one portion of the equation when it comes to retirement, the report found, with physical health, emotional wellbeing and social connectivity all “vital elements” to enjoying later years.

Yet finances are a large part of the puzzle. As Warner noted: “When finances are secure, people can invest in their health, maintain social connections and approach retirement with confidence. When they’re not, the entire structure is weakened.”

Just five equity income funds have paired top-quartile total returns with a yield above cash, a recent Trustnet study has found.

Cash has been a viable alternative to dividends in recent years as interest rates rocketed after the pandemic. Although they have started to come down, the annual equivalent rate (AER) of easy access savings accounts currently stands at 4.75%, according to data from Moneyfactscompare, a healthy hurdle rate for any equity income portfolio.

Indeed, just 22 strategies in the IA UK Equity Income and IA Global Equity Income sectors delivering a higher yield.

Of these, just a handful of funds managed to pay out more than cash while also posting a top-quartile total return within their peer groups, as seen in the chart below.

Source: FE Analytics. Data to end of September. Table sorted by highest yield.

Topping the chart is the £881m Schroder Income Maximiser fund, which paired a yield of 6.9% with a total return of 122.5%, the sixth-best in the IA UK Equity Income sector.

Due to the income focus, the portfolio is currently overweight consumer discretionary and consumer staples compared to the benchmark, while underweighting popular financial stocks. For example, it holds supermarkets Sainsbury’s and Tesco in its top 10, while the largest stock in the market, HSBC, does not appear.

Performance of fund vs sector and benchmark over 5yrs

Source: FE Analytics. Data to end of September.

The fund targets a 7% yield by investing in UK stocks, with covered call options (or derivatives) used to enhance the income by sacrificing some of the capital gains.

Despite this, it has not sacrificed performance, with top-quartile returns over the past one, three and 10 years. However, investors should be aware that much of this performance was under the leadership of Nick Kirrage, who departed the team earlier this year, and his long-time co-manager Kevin Murphy, who joined Brickwood Asset Management in 2024.

Income investors may also be drawn to the Man Income fund, which is yielding 5% and has a strong track record, making a total return of 108.8% over the past five years.

Led by FE fundinfo Alpha Manager Henry Dixon, the fund aims to achieve an income above the FTSE All Share over one-year rolling periods, with capital appreciation above the market over five-year rolling periods.

Analysts at FE Investments said Dixon takes a “disciplined investment approach”, screening the universe for companies trading at “distressed levels”. They added that the fund could also invest in bonds that are more compellingly valued than shares to help boost the income.

Since 2020 this approach has paid off with the fund capturing outperformance “from overweighting energy and financial names at the right times”, such as in 2024 when it was a top-quartile performer, despite favouring mid-caps which “sold off harshly”.

Performance of fund vs sector and benchmark over 5yrs

Source: FE Analytics. Data to end of September.

Clive Beagles and James Lowen’s JOHCM UK Equity Income fund has delivered the third-best performance in the IA UK Equity Income sector over the past five years and a yield of 4.9%.

Performance of fund vs sector and benchmark over 5yrs

Source: FE Analytics. Data to the end of September.

The strategy has a strict dividend yield discipline, targeting shares yielding above the FTSE All Share on a forward-looking basis.

Analysts at RSMR rate the fund highly, noting that it is led by a “well-established team who have demonstrated a tried and tested process over many cycles”.

Due to the strict focus on valuation and yield, the fund will tend to hold more small-caps than most other UK equity income funds, which “have the potential for significant share price gains over time”.

However, analysts said investors should prepare for “lumpy performance” as the tendency to buy out-of-favour stocks means the portfolio’s holdings can “languish” for extended periods.

Another fund providing a cash-beating payout and top-quartile return is the £1.6bn Jupiter UK Income fund. Led by Adrian Gosden and Chris Morrison, the strategy has posted a five-year return of 114.3% and has beaten the yield on cash by 0.07 percentage points (4.82%)

It invests in around 45-60 names, with an emphasis on the sustainability of businesses' free cashflow generation, according to analysts at Titan Square Mile. While the strategy is designed to pay a premium yield, the managers are careful to “not put capital at risk” to get there, which the Square Mile team praised.

They also pointed to the “small but experienced and capable team”. Gosden has almost 30 years of investment experience and has previously run “highly successful” strategies such as Artemis Income, while Morrison serves as a “good complement” to Gosden.

“We view this as a solid option for investors seeking exposure to a relatively high conviction portfolio of income-generating stocks, managed by a highly capable investment duo.”

Gosden and Morrison’s other fund, Jupiter UK Multi-Cap Income, completed the chart with a 5.22% payout and a 104% five-year return.

Performance of funds vs sector over 5yrs

Source: FE Analytics. Data to end of September.

Reckitt Benckiser, Rolls-Royce and Halma were identified by global managers as compelling UK stocks to consider.

The UK market has surged this year, with the FTSE All-Share delivering a 19.5% total return over the year to date, but most remain pessimistic about the domestic outlook. James Harries, manager of the STS Global Growth and Income Trust, attributed this nervous stance to sticky inflation, middling growth and concerns over tax rises in the upcoming autumn Budget.

Harries has just 6% of his strategy exposed to the UK on an underlying revenue basis. “I’m not really that optimistic about the UK economy”, he said. Nevertheless, “you don’t need to be particularly optimistic on the UK economy to find opportunities in UK assets”, particularly in globally oriented FTSE 100 names.

One example is consumer giant Reckitt Benckiser.

It has strong pricing power and very consistent sources of revenue, due to owning a portfolio of “high-quality health care brands” including cough medicine Strepsils and indigestion remedy Gaviscon.

“The thing about consumer health is, when you’re not very well, you tend to be brand loyal, you don’t really care how much something costs,” Harries said.

This means Reckitt Benckiser has an extremely reliable customer base, who will continue to buy its products even when the UK economy itself might be underperforming, he explained.

While the share prices took a slide in 2024, following lawsuits in the US over the formula being used in some of Reckitt’s products, Harries said this was an “overreaction” that caused the stock to become extremely cheap. The stock is up 22.1% over the year to date.

Share price performance of Reckitt Benckiser over past 3yrs

Source: FE Analytics.

Simon Edelsten, investment manager at Goshawk Asset Management, agreed that certain UK stocks are “world-class solutions” in areas such as defence that are difficult to find anywhere else.

For a prime example of this, he pointed to Rolls-Royce. Since 2020, the stock has surged 1225% in share price, which he partially attributed to the new management team and a recovery in air travel after the pandemic, increasing demand for its plane engines.

Share price performance of Rolls-Royce over past 5yrs

Source: FE Analytics.

But Rolls-Royce has much further to run, making it compelling for even more pessimistic global managers, according to Edelsten.  

Partially, it remains attractive because it is one of the major European defence companies, with the UK “clearly a supplier of increased European defence spending”. The ongoing international conflicts and pledges to increase defence spending from many countries have all been supportive for Rolls-Royce and have made it one of the top stocks in the FTSE 100 this year.

Additionally, it has potential in the future of energy provision, Edelsten said. The nuclear power plants they use for submarines are often repurposed for mini nuclear reactors, which “seem likely to play a role in future power grids” when renewables are less productive.

Finally, David Harrison, portfolio manager of the Rathbone Greenbank Global Sustainability fund, pointed to safety equipment company Halma.

The company provides safety technology for several purposes, ranging from fire suppression to eye surgery. This makes it a “global leader in highly niche and regulated markets”, where competitors are in very short supply, giving it significant pricing power.

It has consistently acquired new businesses over the past decade, such as fire detection business Ampac, which has allowed it to take more market share and contributed to strong returns.

While it did suffer a downturn in 2021, over the past decade, these acquisitions have pushed the share price up by 364.7%.

Share price performance of Halma over the past 10yrs

Source: FE Analytics.

While the company's price-to-earnings ratio “never looks cheap” (currently sitting around 44x), judging it by just this metric undermines the wider strength and global growth potential of Halma’s products, Harrison argued.

“Looking globally, there are few businesses that can compare in terms of end market opportunities and quality of management,” making it a great choice even for more pessimistic investors, he concluded.

Geopolitics, eh? What a hoot. Most of us – fund managers and investors alike – have probably never felt so compelled to pay such close attention to what happens on the international stage.

It almost goes without saying that many of the twists and turns unfolding before our eyes have at their heart a certain D Trump, currently of 1600 Pennsylvania Avenue, Washington DC. He is a busy man, to say the least.

Even in the emerging markets of Asia, where the fund I co-manage does much of its investing, the president’s influence looms extremely large. Take recent developments in India, the world’s fourth-largest economy.

It is only a few months since Trump and India’s prime minister, Narendra Modi, gave every impression of being good friends. While perhaps not as pally as a few years previously, they appeared to be on excellent terms. But then Modi irked Trump by defying a request to stop buying Russian oil.

The upshot: 50% tariffs on around two-thirds of India’s exports to the US. Now Modi seems happier in the presence of two new chums – Vladmir Putin and Xi Jinping – and is showing no signs of yielding to the White House, with some reports even suggesting he is refusing to take calls from the Oval Office.

So a key question is inevitably this: Do the tensions between Trump and Modi mean we should rethink how we invest in India? Without in any way wishing to add to the confusion, I am afraid the answer is yes and no. Let me try to explain.

Big-picture lens versus on-the-ground insight

The reality is that dramas such as this regularly occur in multiple markets. While they might be especially numerous and headline-grabbing right now, the importance of the macro picture must always be acknowledged.

It is therefore perfectly logical – not to mention eminently sensible – to take another look at our holdings in India in light of the tariff situation. This is the ‘Yes’ side of the answer.

Crucially, though, it would be quite wrong to tar the whole country with the same brush. This is the ‘No’ side, and it is somewhat less appreciated.

Ultimately, wherever they play out, the vicissitudes of global relations should very seldom compel us to embrace or disregard a particular economy in its entirety. They should instead remind us why there is much to be said for taking a more granular approach to investment decisions.

For instance, since tariffs are imposed only on exporters, it ought to be prudent to explore the brightest prospects among businesses with a domestic focus. This is likely to steer us towards the lower end of the market-capitalisation spectrum.

Although routinely under-researched by the wider investment analyst community, smaller companies are key to long-term growth in many Asian markets.

They have frequently outperformed their large-cap counterparts over time, yet these hidden gems routinely attract the attention only of specialist investment teams that are able to benefit from on-the-ground insight.

Informed decisions versus sweeping generalisations

Three of Aberdeen Asia Focus plc’s 10 biggest holdings are Indian businesses that fit this bill. Our team believes each represents a compelling example of domestically focused growth.

The first is Aegis Logistics, which is the country’s number-one oil, gas and chemicals logistics company. Founded in the 1950s, it is also India’s main importer and handler of liquified petroleum gas – a crucial component of the shift to cleaner energy.

The second is KFintech. Based in Hyderabad, the nation’s principal technology hub, it is tapping into India’s tech-enabled financial revolution by offering an array of financial infrastructure services and digital solutions to local asset managers.

The third is Affle, a consumer intelligence platform that completed its IPO six years ago. Drawing on India’s newfound hyperconnectivity, it helps marketers engage with target audiences and drive transactions.

In our view, the fact that these companies are unlikely to be affected by outbreaks of trade conflict merely adds to their appeal. They tick the box both in terms of what we look for at a more granular level – quality, excellent leadership, capacity for growth – and in terms of the macroeconomic backdrop.

Adjusting portfolios in response to external events is part and parcel of active management. Volatility and uncertainty can demand caution or create opportunity, so it is wise to be flexible.

But knee-jerk, sweeping generalisations rarely prove to be the best course of action – even amid the non-stop thrills and spills of the Trump 2.0 era.

Gabriel Sacks is co-manager of Aberdeen Asia Focus plc. The views expressed above should not be taken as investment advice.

Every asset class and region offers both reasons to buy and reasons to sell right now, with bullish and bearish views pulling investors in opposite directions.

Europe has been no exception. Optimism earlier this year was supported by Germany’s expansive fiscal stance, greater defence spending and investment in renewable energy; more recently, however, political uncertainty in France, weak earnings and rising valuations have reignited caution.

Several large managers, including BlackRock, are still positive on the region but struck a more cautious tone, while others such as Neuberger Berman outright believe Europe has already had its moment in this sun.

Taking the opposing view, JPMorgan Asset Management head of multi-asset strategy John Bilton said he was “very enthusiastic” about the region’s prospects in both the short and long term – highlighting three key points that made him more comfortable with the region.

Performance index over the year to date

Source: FE Analytics

The first was the household savings rate of 15.7%, which is the highest it has been outside of the pandemic years.

“The average over the past 25 years is around 13.5%, so European households are already saving more than they need to,” he noted.

Secondly, Bilton is expecting a flow of earnings upgrades in 2026 on the back of greater liquidity across the euro area.

“We are seeing massive money-supply growth and we know that props up the Purchasing Managers' index (PMI), which itself leads to upwards earnings revisions,” he said.

“The explosion we’ve seen in liquidity and the very positive credit impulse point to upgrades coming for European earnings as we move into calendar year 2026.”

He also viewed the widespread scepticism around Europe as a positive sign in itself. Despite fiscal tailwinds and improving data, many investors still dismiss the region, which for Bilton created a classic contrarian setup.

“People still say ‘Europe, really?’, but I’d far rather look at an opportunity like that because I can see positive catalysts,” he said.

One such catalyst is the NextGenerationEU fund, the stimulus package designed to boost the European economy (among other goals). With a lot of capital to deploy, around a third of the allocated funds remain unspent at present, he said.

“There’s a lot to look forward to for Europe, and I still think that with people writing the region off, it’s an interesting opportunity.”

That said, Bilton acknowledged that European politics can be distracting for investors, with “a lot of political machination in front of our eyes”. But once investors get used to that and look through it, it’s “surprising how well Europe operates despite all the detail we perhaps don’t really want to see”.

While his focus was on the near-term data and cyclical opportunity, Karen Ward, chief market strategist for EMEA at JPMorgan Asset Management, viewed Europe’s appeal as increasingly structural.

“Our long-term optimism about Europe has been growing since the pandemic. Europe is best in a crisis and when it’s got a common adversary. President [Vladimir] Putin’s invasion of Ukraine galvanised the region into action on many fronts. The thought of a fiscal union was seemingly impossible, yet we had the recovery fund come out of nowhere. Structurally, we’re certainly more positive now.”

The US taking a more aggressive approach towards the rest of the world through tariffs has helped too, kick-starting “some pretty good things here in Europe,” she added.

US president Donald Trump, for example, was “completely right” to remind Europe of the need to spend on its defence capability and countries such as Germany that they cannot keep exporting all of their goods to the rest of the world and needed instead to create their own domestic demand.

“That’s a real silver lining – that some countries that had relied on others’ demand are being forced to step up and provide their own.”

Patience is required before the next phase of stimulus feeds through and investors will need to look through political machinations in France, which hit the euro but Ward said was not something to be concerned about.

“Don’t worry about France. If you wait for the French political situation to be sorted out before you invest in Europe, you’ll miss it all. If we could add a little peace in Ukraine, that would also be very helpful,” she concluded.

Just four Asia-Pacific funds with a high ongoing charge figure (OCF) have delivered top-quartile returns over the past five years, according to recent research from Trustnet.

These are Fidelity Asian Smaller Companies, Jupiter Merian Asia Pacific, MI Polen Capital Asia Income and Allianz Oriental Income.

In this series, Trustnet looks at the funds in each Investment Association (IA) sector that have paired top-quartile returns with OCFs above 1%.

Source: FE Analytics. Performance in sterling. Data to end of Sep 2025

The Fidelity Asian Smaller Companies fund, led by Nitin Bajaj and Ajinkya Dhavale, took the crown for performance. Over the past five years, it has surged 73.8%, the fifth-best return in the IA Asia Pacific excluding Japan peer group, despite a 1.08% charge.

It is a value-tilted stock picking strategy targeting smaller companies with valuation anomalies, with a smaller company defined as a business with a market cap under $8bn, but the managers are willing to invest in companies that do not fit this criteria. For example, the fund’s largest holding is semiconductor chip-making giant Taiwan Semiconductor (TSMC), which has a market cap of more than £1trn.

The fund posted top-quartile results in five of the past 10 years, but bottom-quartile returns in another four.

Performance of fund vs sector over 5yrs

Source: FE Analytics. Performance in sterling. Data to end of Sep 2025

Another expensive fund that justified its higher cost is the Jupiter Merian Asia Pacific fund, led by FE fundinfo Alpha Manager Amadeo Alentorn.

Its 59.2% five-year return is the fourth-best performance in the IA Asia Pacific excluding Japan peer group. It came at a 1% OCF.

Performance of fund vs sector and benchmark over 5yrs

Source: FE Analytics. Performance in sterling. Data to end of Sep 2025

The strategy is well regarded by experts, with analysts at Titan Square Mile awarding it with their ‘A’ rating.

Analysts noted that the managers aim to be “fairly style neutral” by avoiding skewing towards rapidly growing or very cheap companies. After a period of underperformance during the global financial crisis, the fund shifted to a more quantitatively driven strategy that analysts believe has paid off in recent years.

The analysts pointed to 2020 as an example of this, with the fund's new strategy being “properly tested by the pandemic lockdown”. The fund coped well, with a 21.9% total return, outperforming the MSCI AC Asia Pacific benchmark.

“Ultimately, we like the fact that the team are willing to evolve the process over time,” analysts noted.

Third on the short list is the MI Polen Capital Asia Income fund. With just £20.5m of assets under management (AUM), it has posted a stellar five-year return of 53.3% in the IA Asia Pacific excluding Japan sector.

Performance of fund vs sector and benchmark over 5yrs

Source: FE Analytics. Performance in sterling. Data to end of Sep 2025

Its three- and one-year returns are also impressive, with further top-quartile results to justify its 1.44% OCF, one of the highest charges in the peer group. However, it should be noted that Polen Capital only took over in early 2024; before this, it was run by Somerset Capital.

The fund aims to deliver an annual net income of “at least 110% of the yield of the MSCI AC Asia Pacific excluding Japan index”. At the time of writing, the index yields 2.24%, with the fund yielding 3.4%.

Finally, Allianz Oriental Income also made the list.

Led by Stuart Winchester, the £972m portfolio has delivered a 53.2% total return over the past five years with a 1.1% charge.

Performance of fund vs sector and benchmark over 5yrs

Source: FE Analytics. Performance in sterling. Data to end of Sep 2025

The strategy invests at least half of its total assets in stocks, of which 80% must be in companies in the Asian Pacific region. However, it is not confined to purely equities, with managers willing to invest the remainder of the assets in fixed income (currently it has just 1.6% in fixed income).

As the only strategy from the IA Asia Pacific including Japan sector to appear on the shortlist, it invests 31% of its assets in Japanese equities.

The fund has a 19.8% overweight to industrials compared to the benchmark, with stocks such as engineering company Mitsubishi Heavy and manufacturing company Hoya Corp appearing in its top 10 holdings.

Over the year to date, the strategy is up 17% compared to an IA Asia Pacific Sector average of 7.3%, marking it as the top fund in the peer group.

Previously in this series, we have examined the Global, US, UK, European, Multi-asset and Emerging Markets.

Over the past five years, with a global pandemic, rising geopolitical tensions and economic uncertainty, fund managers have faced a true test of skill as they worked to outperform their benchmarks.

While some funds may have benefited from being in the right place at the right time, others delivered consistent outperformance that points to genuine manager skill. So how can investors tell the difference?

In a new series, Trustnet is looking for funds with the highest information ratio in their sector, starting with IA Global.

The ratio takes the portfolio’s active return (the difference between the portfolio return and the benchmark return) and divides it by the tracking error (the standard deviation of the active return). A score of 0.5 or higher indicates a better risk-adjusted performance.

Although individual funds select their own, to allow for comparison we have selected the most common index for the sector – MSCI World – against which to calculate scores.

Below, are the seven actively managed funds in the sector which managed a score of 0.5 or higher over the assessed five-year period.

Source: FE Analytics

Ranmore Global Equity topped the table with an information ratio score of 0.7 over five years, paired with a total return of 172.1%.

The fund has an FE fundinfo Crown Rating of five out of five and has been managed by Sean Peche since 2008.

In contrast to many other global funds, Ranmore Global Equity maintains a comparatively low allocation to the US equities at just shy of 24%, with a broader sweep across Japanese equities (16.5%), UK equities (13.4%) and money market funds (11.1%).

The top holding is nonetheless an American company, with 2.4% allocated to specialty retailer and distributor of professional beauty supplies Sally Beauty Holdings.

With Peche at the helm, the fund has consistently delivered over the medium to long term, delivering top-quartile returns over one, three, five and 10 years – gaining 273.8% over the decade.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

With the joint highest information ratio score of 0.7, Royal London Global Equity Select also managed a total return of 130.1% over five years, with top holdings including notable US mega-cap tech names, such as Amazon, Nvidia and Microsoft.

The popular fund also has top holdings in more defensive financials, such as Visa and Banco Santander.

It is important to note that the portfolio has only been managed by current managers Francois de Bruin and Paul Schofield since late last year, following the departure of former FE fundinfo Alpha Managers Peter Rutter and James Clarke, alongside Will Kenney.

The fund managed top-quartile returns over three and five years but dropped to the third quartile over one year, gaining 7.9%.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

At 251.9%, the best five-year returns in the sector were delivered by Schroder ISF Global Energy, which also managed an information ratio score of 0.5.

However, the road to getting those returns was the most volatile of the seven funds at 29.2%, which can be explained by the fact that the $314.4m thematic fund targets companies in the energy sector, which are sensitive to commodity price changes, geopolitical factors and regulatory and policy shifts.

Mark Lacey has been the lead manager since 2013, with co-managers Alex Monk and Felix Odey joining in 2021. Lacey previously worked as an energy specialist and investor across firms including Goldman Sachs, JPMorgan and Credit Suisse Asset Management.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

In contrast, Allianz Best Styles Global AC Equity was the least volatile of the seven funds at 11%, with an information ratio score of 0.5 and a five-year gain of 112.9%.

Erik Mulder has been the lead manager of the £224.1m fund since 2017, with Andreas Domke joining the management team in 2022.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

Meanwhile, MI Thornbridge Global Opportunities managed an information ratio score of 0.6. The £395.3m fund has been managed by Robert Oellermann since 2022. Before that, Anthony Eaton had been managing the fund since 2005 – originally under JM Finn before it was sold to Thornbridge.

Top holdings in the fund are a mixed bag of growth and value stocks, including Microsoft, AstraZeneca, Bank of America and Shell.

Despite the change in management, the fund has maintained top-quartile returns over one, three, five and 10 years.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

MFS Meridian Contrarian Value, which has been managed by Anne Christine Farstad since 2019 and Zahid Kassam since 2021, also achieved an information ratio score of 0.5.

The $2.8bn global equity fund focuses on contrarian value investing by identifying companies the management team deems to be trading significantly below their intrinsic value due to adverse sentiment, operational challenges or transitional phases.

This includes Italian branded beverage provider Davide Campari-Milano, multinational shipping and delivery company DHL and French tyre manufacturer Compagnie Generale Des Establissements Michelin.

Performance of the fund vs sector over 5yrs

Source: FE Analytics

In seventh place was Jupiter Merian Global Equity, with an information ratio score of 0.5, total return of 108.9% over five years and volatility of 11.7%. It has been managed by Alpha Manager Amadeo Alentorn since 2008.

RSMR analysts rate the fund for its diversified approach, well-defined and consistently applied investment process.

“The philosophy of the team is that markets are not efficient and so stock prices often diverge from their fundamental value due to investors’ behavioural biases,” the analysts said.

“The strategy therefore seeks to exploit these inefficiencies through a dynamic model which aims to tilt the portfolio of stocks towards capturing favourable price movements and to build a style agnostic portfolio with sustainable returns.”

Performance of the fund vs sector over 5yrs

Source: FE Analytics