NASA’s Artemis II mission has returned safely to Earth after a historic 10-day journey around the moon – further than man has ever travelled before.

The mission was designed to validate systems for future lunar landings and reignited attention on space exploration, amid growing commercial activity from high-profile figures, such as Elon Musk and Richard Branson.

For investors, however, the opportunity lies less in moonshots and more in the ecosystem behind them, including satellites, defence systems and data infrastructure.

Against this backdrop, Trustnet asked fund selectors which strategies could give investors targeted or indirect exposure to the space industry within a diversified portfolio.

One of the most direct ways for UK investors to gain exposure is through Seraphim Space Investment Trust, a London-listed vehicle dedicated to investing in space technology.

The portfolio is highly concentrated, with its largest holding – Finnish satellite company ICEYE – representing almost 40% of net asset value (NAV) as at the end of December 2025.

The trust takes a venture capital-style approach by investing heavily in private, early-stage businesses, with holdings spanning satellite communications, earth observation, navigation and defence applications.

Jason Hollands, managing director at Bestinvest, said: “This gives investors access to parts of the space economy that are otherwise hard to reach but it also means higher risk and greater volatility,” Hollands said.

Other companies it has invested in have since come to market, including Voyager Space, AST SpaceMobile and Astroscale.

Richard Philbin, chief investment officer of investment solutions at Hawksmoor Investment Management, said this “shows the trust has had a number of successes – and it still has a position in these firms”.

Seraphim Space Investment Trust delivered the third-strongest performance among investment trusts in February 2026 as it benefitted from an increase in investor interest in space technology. It was also one of the best-performing trusts in 2025.

The trust has £438.8m in assets and is currently trading at an almost 30% premium to NAV. Earlier this month, it announced it is considering a ‘C’ share issue fundraising.

Performance of the trust vs sector over 3yrs

Source: FE Analytics

Hollands also suggested VanEck Space Innovators UCITS ETF. The exchange-traded fund (ETF) tracks a basket of around 25-30 listed companies largely involved in the infrastructure underpinning the space ecosystem, including satellite operators, launch providers and enabling technologies.  

“As a passive ETF, it spreads risk across the theme, although it remains relatively concentrated given the modest universe of public companies in this arena and can be volatile,” Hollands said.

He noted that specialist funds provide different ways to tap into that theme but, given the risks and volatility involved, “they are best considered 1-2% punts within a diversified portfolio rather than as core holdings”.

Not all exposure to the space economy comes via specialist vehicles, however, with broader vehicles also increasing their involvement in space‑related businesses.

One such example is Scottish Mortgage Investment Trust, which accesses space-related investment opportunities primarily through its long-standing holdings in high-growth companies where space technology is central to the business model – most notably, SpaceX.

Earlier this month, it was widely reported that SpaceX had confidentially filed for an IPO, raising expectations of a potential listing as early as this summer.

Victoria Hasler, head of fund analysis at Hargreaves Lansdown, said: “Scottish Mortgage’s closed-ended structure allows it to invest meaningfully in unlisted businesses like SpaceX, giving public market investors access to private space-related assets that would otherwise be unavailable.”

Managed by FE fundinfo Alpha Manager Tom Slater and Lawrence Burns, last month it was announced the trust would be asking shareholders to approve an amendment allowing it to make up to £250m of new investments in private companies while its exposure remains above the existing 30% cap.

Hasler noted that the trust’s performance has been strong in the past 12 months, with both the share price and NAV benefitting from valuation uplifts in private holdings and improved sentiment towards growth assets.

“It has materially outperformed global equity markets over this period, reflecting renewed investor confidence in its largest growth holdings, including space-related investments,” Hasler said.

While the trust’s focus on higher-growth public and private companies can lead to strong results over time, she warned that this also means it can be more volatile and perform very differently to its benchmark.

“We would therefore suggest that it is best used as a smaller position in a broad, diversified portfolio,” she said.

Scottish Mortgage Investment Trust is trading at a 5.1% premium to NAV as at 14 April 2026.

Performance of the trust vs sector over 3yrs

Source: FE Analytics

Alongside Scottish Mortgage, Philbin noted that Schiehallion, Baillie Gifford US Growth Trust, Edinburgh Worldwide and RIT Capital Partners also all offer exposure to SpaceX.

However, Hollands said that, if SpaceX does list in the coming months, UK investors will likely eventually be able to gain exposure indirectly through global and US equity index funds they may already hold, as SpaceX “will in time likely become a constituent of major indices such as the S&P 500”.

Alongside investment trusts, selectors also pointed to a number of open‑ended funds that have been building exposure to space‑related themes within broader portfolios.

Paul Angell, head of investment research at AJ Bell, suggested BlackRock European Dynamic.

“It has been increasing its weighting in aerospace and defence companies over recent years, making up just over 15% of the fund at the end of February 2026,” Angell said.

Some of the fund’s key holdings within the theme include Safran, Airbus, MTU Aero Engines and Saab.

Angell said fund manager Giles Rothbarth impresses in how macro views are incorporated into bottom‑up stock selection.

The management team invests in businesses with strong cashflow and earnings, resulting in a quality-growth tilt to the portfolio.

“The fund can be dynamic with regards to this style exposure, however, for example rotating into more cyclical names in the second half of 2020,” Angell added.

BlackRock European Dynamic has a stellar long-term track record but struggled over one year, slipping into the fourth quartile of the IA Europe ex UK sector.

Performance of the fund vs sector over 3yrs

Source: FE Analytics

Finally, Hasler also pointed to the £296.9m FTF ClearBridge UK Mid Cap fund, which invests in aerospace and defence-related companies as part of a diversified portfolio.

“The managers [Richard Bullas, Daniel Green, Marcus Tregoning and Courtney Westcarr] focus on bottom-up stock selection within the FTSE 250, where aerospace and defence-related companies form part of the UK’s mid-cap industrial universe,” she said.

“Exposure is not driven by a dedicated aerospace or defence theme but arises where individual companies meet the managers’ quality, valuation and long-term growth criteria.”

British multinational Serco Group is one such portfolio holding highlighted by Hasler, with the business delivering services across defence and aerospace operations under long-term government contracts that offer high revenue visibility and defensive cashflows.

Hasler acknowledged that UK mid-caps “have been a difficult place to invest over the past few years”, however noted that the fund’s 12-month performance to the end of March 2026 was a little stronger “as sentiment towards UK equities became a little more positive”.

Performance of the fund vs sector over 3yrs

Source: FE Analytics

The escalation of military tensions with Iran has led to supply disruptions across key energy and commodity markets, including oil, liquified natural gas (LNG) and other critical resources moving through the Middle East.

While a ceasefire in early April has pointed the way to a potential resolution, its success is far from certain and Iran’s control over the Strait of Hormuz suggests tight energy markets will continue.

Renewed inflation pressures now resonate globally as higher energy, transport and input costs flow through supply chains.

In this environment, infrastructure assets continue to be resilient because many operate under regulatory frameworks or long-term contractual structures that allow inflation and cost increases to be passed through to end users over time.

As a result, while higher interest rates and macro volatility may create short-term valuation pressure, the underlying cashflow characteristics of infrastructure assets provide inflation protection during periods of geopolitical-driven commodity shocks.

North American utilities

We are seeing increased global commodity price volatility driven by geopolitical tensions, which is already placing upward pressure on power costs in some international markets and highlighting utilities’ exposure to fuel prices.

While US natural gas prices have remained relatively stable to date, a sustained increase would place upward pressure on electricity costs and affordability.

North American utilities are, however, largely insulated through cost-of-service regulation, which allows fuel and other operating costs to be recovered through customer tariffs.

While higher input costs can create short-term pressure, the regulatory framework provides mechanisms for recovery, and allowed returns may adjust over time as capital market conditions change.

European utilities

Elevated oil and gas prices linked to Middle East tensions are increasing energy costs across Europe and adding to inflation pressures. In response, European governments are rolling out subsidies and targeted support measures to ease affordability pressures for households and industry, while sustaining energy demand for utilities.

At the EU level, policymakers are considering additional actions such as reducing energy taxes and subsidising gas-fired generation, with a dual focus on preserving industrial competitiveness and advancing energy independence.

For regulated utilities operating within frameworks where returns on the regulated asset base are periodically reset, higher inflation and funding costs can be reflected in future tariffs.

While there may be a lag before adjustments occur, regulatory structures typically allow inflation to be passed through to customers over time, helping preserve long-term asset value even in periods of energy-driven inflation.

As such, there is dual protection in the current environment; policy support underpins demand, while regulatory frameworks allow inflation to be reflected in pricing over time, supporting earnings resilience even if inflation persists.

North American pipelines

Energy infrastructure may be one of the more direct beneficiaries of current geopolitical disruptions. Higher oil and gas prices driven by supply uncertainty in the Middle East will likely trigger major importing countries to diversify their sources of energy.

Following the 2022 Russia/Ukraine conflict, US LNG exports to Europe increased significantly as Europe looked to diversify away from Russian energy reliance as part of its REPowerEU initiative.

In the current environment, we would expect Asian importing countries such as Japan and Korea to increasingly look to North American sources of oil and gas to reduce their reliance on the Middle East.

In that context, projects such as LNG Canada Phase II and the Transmountain Expansion have enhanced business cases. We would expect these demand-pull infrastructure projects, combined with a higher netback (profitability) environment for producers, to stimulate additional production activity across North America.

This would translate to higher volumes handled by energy infrastructure assets such as pipelines, processing facilities and storage.

Regarding inflation, many pipeline assets operate under cost-of-service structures or long-term take-or-pay contracts with inflation escalators, providing a degree of protection from rising costs while benefiting from stronger volumes if global supply chains shift toward more stable producing regions.

Toll roads

The effects of recent oil price volatility driven by the conflict in Iran has a less pronounced impact on toll roads due to the mechanisms by which inflation is passed through for those assets.

Many concession agreements allow tolls to increase in line with CPI or have predefined escalation mechanisms that capture the impact of higher energy prices, which are a component of this inflation.

Concerning demand impacts, higher fuel prices may temporarily dampen discretionary travel. However, this typically represents the smallest segment of an urban toll road’s revenues at only 15%-30%, with business and freight travel less sensitive to cost pressures.

Ultimately, revenue resilience remains strong, as inflation-linked pricing structures and fixed cost bases enable operators to offset macroeconomic headwinds and protect margins over time.

Airports

Airports are exposed to the current environment through higher aviation fuel costs and potential short-term impacts on travel demand (including reduced travel to regions affected by the conflict), particularly amid elevated cost-of-living pressures and oil price volatility linked to Iran.

However, historically, the long-term trend of air travel demand has proven inelastic to both cost-of-living pressures and economic and price shocks (with the exception of Covid).

Many airport revenue streams are either regulated or contractually linked to inflation, supporting resilience in the current inflationary backdrop. Aeronautical charges are often set using CPI-linked formulas, while commercial revenues such as retail, parking and property leases can adjust with passenger spending and pricing power.

This combination provides a mechanism to gradually pass inflation through to airport revenues despite near-term volatility in passenger volumes driven by higher fuel costs.

Contracted renewables

Renewable energy assets primarily operate under long-term fixed-price power purchase agreements (PPAs), which incorporate inflation expectations as part of the pricing assumptions at the outset. These assets are structurally less exposed to short-term volatility in fossil-fuel prices.

While the agreements do not typically contain inflation pass-through mechanisms, sustained inflation-driven increases in oil and gas prices ultimately improve the relative competitiveness of renewable energy, resulting in increased demand for new projects and the potential for improved project returns.

While Middle East tensions lift energy and transport costs and keep inflation risks elevated – it is uncertain whether the current ceasefire will hold, and a normal flow of ships through the Strait of Hormuz seems unlikely soon – many infrastructure businesses are designed to absorb and pass through higher costs via regulation, CPI-linked concessions and long-dated contracts.

Across utilities, pipelines, toll roads, airports and renewables, this blend of inflation-linked pricing and durable demand helps support cashflows through commodity-driven shocks.

Shane Hurst is a portfolio manager at ClearBridge Investments. The views expressed above should not be taken as investment advice.

The debate between buying open-ended funds or investment trusts is a long-running one, often framed in binary terms of: Which of the two structures produces better investor returns? The question, however, has no easy answer.

A sector-by-sector comparison of average returns between Investment Association (IA) funds and their investment trust (IT) equivalents produces mixed results: investment trusts tend to pull ahead over longer timeframes but only in sectors where their structure can be fully exploited.

Open-ended funds expand and contract with investor flows, which can force managers to buy or sell underlying assets at inopportune times. Investment trusts, by contrast, are closed-ended, allowing managers to take a longer-term view and invest in less liquid areas without having to meet redemptions. They can also use gearing, which can enhance returns in rising markets but amplify losses in downturns.

However, trusts trade on the stock exchange, meaning shareholder returns can diverge from net asset value (NAV) due to discount or premium movements – an added layer of complexity not present in funds.

Investment trust sectors can have very few portfolios in the peer group. Below, we have looked at the six sectors with at least eight trusts that also have a comparable Investment Association peer group, as well as UK All Companies funds and trusts, which are included for reference despite only five trusts populating it.

Across the dataset, the clearest patterns emerge over longer timeframes.

Daniel Lockyer, senior fund manager at Hawksmoor, said: “It is better to focus on three-year and beyond numbers, given that should be the minimum time horizon for investors in most sectors”.

Short-term data, meanwhile, is too volatile to draw meaningful conclusions from, with recent returns shaped by sharp market swings. Over one year, differences between funds and trusts are often marginal or inconsistent across sectors. In several cases, such as UK All Companies, the gap is effectively negligible.

In the UK Equity Income sector, investment trusts have a slight edge over 10 years, returning 101.2% compared with 93.6% for their open-ended peers.

The top strategy over this timeframe was Law Debenture, which returned 249,9% under FE fundinfo Alpha Manager James Henderson and co-manager Laura Foll; compared to the 174,2% of Man Income, which is run by Alpha Manager duo Henry Dixon and Jack Barrat.

Over shorter periods, however, the gap narrows or reverses, with funds marginally ahead over one, three and five years.

A similar picture can be seen in UK All Companies. Over one year, there is effectively no difference between the two structures, with funds returning 22.2% and trusts 22.1%. Over three years, trusts move ahead more decisively, delivering 43.1% compared with 31.2% for funds.

However, this advantage does not persist consistently: over five and 10 years, funds regain a slight lead. The best fund for 10-year returns was Artemis SmartGARP UK Equity (255.1%), managed by Alpha Manager Philip Wolstencroft; in the closed-ended space it was Fidelity Special Values (179.4%), run by Alpha Manager Alex Wright.

It is in less liquid parts of the market that the closed-ended structure appears to make the most difference. In UK Smaller Companies, investment trusts outperform across every measured timeframe, with a particularly wide gap over five and 10 years.

Trusts returned 10.7% over five years compared with a loss of 10.2% for funds, and 102.9% over 10 years versus 69.7%. The standout strategies here were Thesis Stonehage Fleming AIM for the open-ended space (154%) and Harwood Capital
Rockwood Strategic in the trust world (314.3%) – however the second-best trust here, JPMorgan UK Small Cap Growth & Income, returned half of that (158.6%).

It’s a similar story in global emerging markets: while funds are ahead over one year, trusts dominate over longer periods, returning 80.4% over three years and 84.8% over five years, compared with 50.2% and 29.1% respectively for funds. Over 10 years, the gap remains significant, with trusts returning 185.2% versus 128.2% for funds.

Lockyer said this is consistent with how the structure is intended to be used. “It should be the case that an investment trust uses the closed-ended structure to the full benefit by investing in illiquid assets such as smaller companies,” he said.

“Therefore the UK Smaller Companies sector makes sense that the trusts outperform the funds. The same goes for emerging markets.”

In more liquid, developed markets, the advantage is less clear-cut. In the global sectors, funds lead over one, five and 10 years, while trusts are ahead over three years.

The differences, while notable, are not as pronounced as in smaller companies or emerging markets, suggesting that the structural edge is less relevant when underlying assets are highly liquid.

Outside of pure equity sectors, the comparison becomes more difficult and Lockyer cautioned against drawing firm conclusions from these sectors.

“Other than the equity sectors, the others are not necessarily like for like,” he said, pointing to the differing compositions within flexible investments and infrastructure.

In the former, funds outperform across all measured timeframes, with a particularly strong lead over 10 years (95.2% versus 73.3%). However, this sector contains a wide mix of strategies, from capital growth funds to more defensive approaches, making like-for-like comparisons challenging.

A similar issue arises in infrastructure, where funds are ahead over all longer timeframes, returning 103.2% over 10 years compared with 59.8% for trusts. But the underlying exposures can differ materially.

GQG Partners Global Equity fell 9.5% in 2025, the worst result in the 555-strong IA Global and an exceptionally poor return against a sector average gain of 11.2% and a benchmark return of 13.9%.

The culprit, by deputy manager Sid Jain’s own admission, was maintaining too defensive a positioning, which kept the fund from benefiting when markets recovered.

“We exited the AI trade too soon in early 2025,” he said. “We were also too defensively positioned due to concerns around tariffs early in the year. That positioning worked initially but we did not pivot back to risk-on when conditions changed.”

However, GQG had called it right once before. In spring 2021, the firm sold out of technology entirely and rotated into energy – a move that looked painful for a few months before the 2022 tech bear market vindicated it. The fund returned 4.4% that year, when the IA Global sector fell 11.06%.

GQG's technology exposure remains near zero and his case rests on three things: the scale of capex being deployed, the return of leverage and retail mania.

“Allbirds was very popular shoe company a few years ago. It almost went bankrupt, but instead of selling shoes, it announced it is going to build data centres. A shoe company has become a data centre company. And the stock went up 600%. The meme stock phenomenon is fully back, similar to what you saw in 2021. This never ends well," he said.

Below, Jain explains why GQG is sitting out the AI boom again, where it is finding opportunity instead, and what’s it like working alongside his father, FE fundinfo Alpha Manager Rajiv Jain.

Performance of fund against sector and benchmark over 5yrs

Source: FE Analytics

What is the process behind GQG Partners Global Equity?

We are a concentrated, long-only fund, that is benchmark agnostic and, unlike a lot of our peers, we move around our book quite aggressively.

We like quality companies but most managers look at quality in a rear-view mirror – has this been a good company in the past? We phrase this as forward-looking quality.

The second differentiator is a truly flexible mandate. We’ve been anywhere from 65% tech all the way down to zero, energy up to 30%, emerging markets up to 30%.

The third is downside protection. In 2022, where most of our peers struggled, we were down low single digits because our focus is cutting losses aggressively when things change.

You’re now at around 1% in tech. What has shaped that view?

Hyperscalers today are spending more capex per dollar of EBITDA than the energy sector at the peak of the 2014 bubble and the telecom bubble in the late 1990s. It’s blown through historical levels. You’re also seeing leverage come in, the growth in private credit, trillions of dollars floating around.

We’re not permanent bears on technology. For most of our history we’ve been very overweight. In early 2023 we were one of the biggest institutional buyers of Nvidia stock – it’s the largest winner in our firm’s history. But these companies cycle and we believe you’re late in the cycle.

Where are you finding opportunity instead?

Utilities is one area. The structural story is that growth is accelerating because there has been underinvestment for decades. Regulators in the US, Europe, Brazil and India are becoming more favourable, allowing more capex and higher returns on equity.

A large position for us is American Electric Power – the largest wires company in the US, fully regulated transmission and distribution. Historically it grew about 6% a year. Now earnings per share are growing 9% and you get a 3% dividend yield, so 12% total return. Tariff or no tariff, recession or war, it doesn’t matter.

India is another significant overweight. Our internal mantra is that earnings are like gravity. We like India because it is delivering some of the best corporate earnings growth outside the US. We’re very bullish on Indian banks – earnings growth should be mid-teens, three to four times faster than US banks, but they are trading at around 13 times earnings.

What was your best call over the past 12 months?

Energy. We’ve been structurally bullish for five years and it has paid off, especially over the past 12 months. Exxon is up about 45% including dividends over the past 12 months.

And the worst?

Progressive, the US auto insurance company, is down about 27% year over year. The stock has done poorly, but earnings have been fine – the multiple has contracted, which is less concerning than if earnings were deteriorating.

We still like it. It’s one of the best-run financial businesses in the world. It’s a risk-off asset and in a strong market people don’t want to buy insurance companies. We saw the same in the late stages of the dot-com bubble, after which these stocks rebounded strongly. Progressive is trading at its biggest discount in history to the S&P 500.

When does the fund out- and underperform?

We perform best in the middle of the cycle and in bear markets. We underperform early in recoveries and late in cycles when valuations are ignored and markets become driven by momentum and speculation.

Why should investors pick this fund?

First, the 30-year track record. Many managers today started after the financial crisis and haven’t experienced multiple cycles. The ability to navigate cycles and outperform over rolling five-year periods is rare.

Second, downside protection. Markets are at high valuations with a lot of froth. Our strategies are currently uncorrelated to the broader market – recently, the beta of our global strategy has been close to zero, which is unusual for a long-only manager.

Third, the ability to adapt. The 2022 performance is a case study of exiting tech and pivoting to other areas. That ability to navigate cycles is a key differentiator.

What’s it like working alongside your father?

He’s very competitive and has high expectations for everyone, especially family. That was clear before I joined, so I knew what I was signing up for.

What do you do outside of fund management?

I enjoy hiking, especially now that the weather is improving in New York. I go hiking with my girlfriend and I enjoy outdoor sports like tennis and swimming. I grew up in Florida, so I’ve always liked the outdoors.

Tax-savvy investors who had previously been able to enjoy 30% tax breaks on investments in venture capital trusts (VCTs) will get a less generous 20% this year after changes announced in last year’s Budget came into effect from 6 April.

The remainder of the rules are the same: the tax break applies immediately for the financial year in which the investment is made but investors must hold the shares for a minimum of five years or pay HMRC back the tax.

Towards the end of last year there was outrage, with Jason Hollands, managing director of Evelyn Partners, calling it a “retrograde move” that will “decimate fundraising”.

VCTs invest in young UK businesses and have been viewed by governments as a way to encourage people to back young British businesses.

The tax relief was a way to incentivise people to do this, with the added benefit that any dividends earned are free from tax and there is no capital gains tax to pay when the shares are sold.

However, there is a rather large part of the equation that the industry has failed to make good on: returns. After all, what good is it to say there are no capital gains to pay if an investment makes a loss anyway?

Over the past five years, VCT performance has been disappointing at best. On average, funds in the IT VCT Generalist sector have made just 5.9%, while those in the IT VCT AIM Quoted peer group have lost investors a whopping 36.6%.

These figures can be skewed by the relatively poor performance of the largest constituents, so I have also pulled out some different numbers.

Of the 41 funds (across both sectors) with a five-year track record, 17 (or 41.4%) have lost investors money, with a further five making single-digit returns.

But often overlooked is the opportunity cost associated with investing in VCTs. One obvious comparator is the FTSE All Share – an index of the main UK market. While VCTs are not designed to mirror listed markets, the gap is stark.

The index has made 69.3%, a return that no VCT has matched. The figures look even worse when compared against better-performing markets such as the US.

When including the 30% tax relief, the bar is admittedly much lower. Investors are effectively paying 70p on the pound when they invest (with the 30% relief), meaning trusts only need to return 18% to match the 69% made by the FTSE All Share. Even with this lower bar, only 15 trusts (around a third of the total) have achieved this.

These funds are supposed to invest in young companies that have the potential for strong growth, yet the returns have not been able to justify investing – in many cases even with the 30% tax relief.

Yes, a drop to 20% will reduce the appeal of VCTs. From a business perspective it will limit the flow of money going to upstart UK companies that desperately need the funding.

But it also may save investors from being locked into a poor-performing fund for a minimum of five years.

So while fund managers may bemoan the drop in the tax relief and the relative lack of appeal they will offer to investors looking to avoid their money ending up in the hands of the tax man, I would argue they should focus on producing better returns in the first place.

Imagine if investors could get tax relief and good returns. Wouldn’t that be something?

Investing has never been easier for retail investors, with the rise of commission-free investment platform such as Trading 212 making investing more accessible.

One of the firm’s features is "pies" – a portfolio-building tool that lets users divide their investments into slices across multiple assets. Users can also make their pies public, allowing others to copy them wholesale with a single tap.

Some of those shared pies have attracted significant followings. The most popular ones are made up of passive trackers only, but a few also include active funds.

One of these is the "Ultimate Monthly Income pie", which at the time of writing roughly 4,000 Trading 212 users have replicated. The stated aim of the portfolio, as its designer explained across a series of Youtube videos, is to generate £2,000 a month to cover bills.

The asset allocation is regularly updated and accompanied by detailed video commentary in which each holding is assessed and swapped if something better has come up. Investors who have copied the portfolio can then decide whether they want to replicate the changes or stick with the original weightings.

But does this amateur portfolio hold up under professional scrutiny? We put it to two fund selectors without telling them who built it or why. Here is what they found.

The portfolio is ‘interesting and purposeful’ but lacks ‘true defensive ballast’

While the portfolio spans many different products, the underlying risk is very concentrated, said Darius McDermott, managing director at FundCalibre.

Much of it traces back to US large-cap growth and mega-cap technology, often with covered calls layered on top. That structure produces strong income but caps upside in rising markets and leaves the portfolio exposed when risk appetite fades.

"There's also limited exposure to true defensive ballast," he said. "Long-duration treasury option strategies and precious metals overlays add variety, but they are still income-enhanced trades rather than core stabilisers. What's largely missing is a traditional fixed income anchor or dividend-growth sleeve that can compound steadily without relying on volatility harvesting."

For investors who want to strengthen diversification without sacrificing income, McDermott suggested a core bond allocation through something like Jupiter Monthly Income Bond or Artemis Global High Yield Bond, both offering attractive yields with differentiated credit exposure.

On the equity side, he pointed to the City of London investment trust, M&G Global Dividend or Jupiter Asian Income as ways to extend income beyond US large-caps. For inflation-linked cashflows that behave differently from equities, he highlighted TM Gravis UK Infrastructure Income.

As a satellite income sleeve, the portfolio is “interesting and purposeful”, McDermott said. “But as a standalone diversified core, it needs broader risk drivers – particularly high-quality bonds and genuine dividend growth – to make the income more resilient across market cycles.”

The capital erosion risk is the bigger concern

Rupert Silver, director at Credo, acknowledged that on the surface the portfolio ticks several boxes: equity exposure, commodities, some fixed income, monthly distributions, a blended expense ratio of roughly 0.5% and a weighted yield comfortably in the mid-teens.

Below the surface, however, Silver identified three problems. First, more than 80% of assets are concentrated in the US, with technology and communication services accounting for a disproportionate share of sector exposure.

Second, around 80% of the yield comes from option writing – covered calls on indices, sector funds, commodities and individual stocks. Attractive in the short term, but with “meaningful capital erosion risk”.

"Distribution rates well into the twenties can quickly turn from selling points to red flags," he said.

Third, Silver pointed to asymmetric risks within specific positions.

“The single-stock exchange-traded options on semiconductor names introduce significant concentration risk, where a sharp drawdown in one company could materially impair capital.”

The 8% position in Main Street Capital, he added, as a business development company lending to lower-middle market businesses across cyclical sectors, remains “vulnerable to rapid credit deterioration in a downturn” and should, in his view, be balanced with a more conventional fixed income fund.

"The portfolio is over-engineered," Silver said, "and the complexity masks several significant risks." He added that the trade-off becomes even more questionable in the UK, where after-tax returns matter.

A regular income stream is often welcomed, but a sell-down of capital typically produces better after-tax outcomes for most investors.

"Whilst many of the positions are individually attractive," he said, "we would advocate for a notably more balanced approach."

The Trading 212 ‘social pies’ feature

Silver and McDermott's analysis points to a portfolio built around a single objective – maximum monthly income – with limited account taken of capital preservation, geographic diversification or after-tax efficiency.

For investors whose circumstances, time horizons or tax positions differ from the creator's, copying it wholesale may mean taking on risks they have not fully priced in.

Silver said: "As a libertarian, I believe copying should be allowed," he said. "I also believe, however, risk warnings must be significant, appropriately visible and descriptive, as there will undoubtedly be people following strategies that are highly unsuitable for them and their specific circumstances."

He added that an appropriate fee paid to a competent manager is, in his view, money well spent in the long run.

Trading 212 did not respond to a request for comment and attempts to contact the portfolio designer directly were unsuccessful, as his social media and community links appear to be inactive.

In the updates the creator shares on YouTube, he flags his worst positions, acknowledges the volatility of individual holdings and is explicit that this is his portfolio, designed to pay his bills – not financial advice.

The videos are also premised: “All the content on this channel is for education or entertainment purposes only. It does not constitute financial advice. Always remember to conduct your own research.”

Emerging markets remain one of the most diverse and volatile areas of global equities, shaped by different political regimes, economic cycles and local policies.

As a reflection of this, funds that invest in this side of the world are more volatile, too.

To assess which delivered high returns consistently, Trustnet compared the discrete annual returns of these emerging market funds against the sector’s most common benchmark, the MSCI Emerging Markets index, over the past decade.

The analysis found that six actively managed funds outperformed the index in at least seven of the past 10 calendar years, with Artemis SmartGARP Global Emerging Markets Equity beating it in nine.

Source: FE Analytics. Figures highlighted in red represent years in which a fund underperformed MSCI Emerging Markets.

The Artemis strategy is the second-strongest long-term performer in both the table above and the sector, posting a 234.9% 10-year return to the end of 2025.

While it beat the MSCI index in nine years, it was the only fund in the table to fall short in 2020, with a loss of 0.4% as the Covid-19 pandemic took hold.

However, the fund has also demonstrated resilience when global equity markets have suffered. In 2022, a difficult year for global equity markets, the Artemis fund limited losses to 5.2% while MSCI Emerging Markets shed 10%.

RMSR analysts said the strategy has been vulnerable at market inflection points or during periods of economic stress, although “the management team have now refined the process to reduce the impact of rapid changes in market sentiment”.

Managed by FE fundinfo Alpha Manager Raheel Altaf since its 2015 launch, the £2.6bn strategy applies Artemis’ SmartGARP quantitative process, screening for companies that are undervalued relative to their growth potential, with a strong emphasis on earnings revisions, momentum and macroeconomic trends.

As such, its portfolio is currently tilted toward themes such as technology innovation, infrastructure improvement and the rise of domestic brands, with Samsung Electronics, Taiwan Semiconductors (TSMC) and Taiwanese cloud-infrastructure company Wiwynn some of its largest positions.

Artemis SmartGARP Global Emerging Markets Equity has been recognised by fund selectors as a strong option for emerging market exposure and was one of the most bought strategies in 2025.

However, top of the sector table for total 10-year return over the assessed period was Nomura Emerging Markets, gaining 257.3%. It also beat the MSCI Emerging Markets index in eight of those years and was the best-performing fund in the table last year.

The £155.8m fund’s ‘I’ share class was converted from a UCITS structure to a SICAV in 2020 and since then, it has been managed by Liu-Er Chen. However, its track record stretches back to 2009, when it was originally launched.

The next strongest long-term performer is the £1.3bn Invesco Global Emerging Markets (UK)  fund, which gained 215.8% over the assessed 10-year period. As the table shows, it is also one of the most consistent, beating the index in seven of those years.

The strategy is co-managed by Alpha Managers Charles Bond and William Lam, alongside Ian Hargreaves and Matthew Pigott. The team targets undervalued companies in unloved areas of the market, with a preference for cash-generative businesses with strong balance sheets. This approach has generated a portfolio of 58 stocks with a weighted average market capitalisation of £208.5m.

Its largest position is in TSMC, although the fund remains slightly underweight relative to the index.

Analysts at Titan Square Mile noted that significant inflows in 2025 led to the management team raising both their market cap threshold and minimum daily liquidity requirements when selecting positions, pushing the fund “toward larger, more liquid names and reducing its ability to take meaningful positions in smaller, higher-conviction ideas”.

The analysts said it remains an attractive value-oriented strategy for long-term investors seeking exposure to emerging markets.

Looking at performance in the shorter-term, Principal GIF Origin Global Emerging Markets posted one of the strongest 2025 returns in the table, gaining 40.2% – a top-three return in the whole sector last year.

The small fund, which has £53.3m in assets and is co-managed by Chris Carter, John Birkhold and Tarlock Randhawa, has similar holdings to the previous two funds mentioned and has also committed to the AI build-out through its exposure to TSMC, Samsung Electronics and South Korean semiconductor company SK Hynix.

This focus on AI is similarly expressed through its sector allocations, in which the largest weighting is to information technology.

The other two funds in the table are GAM Sustainable Emerging Equity and Allianz Emerging Markets Equity.

The former has been highlighted as one of nine in the sector to deliver top-quartile returns over one, three, five and 10 years.

Meanwhile, the £153.5m Allianz strategy boasts a 250-stock portfolio and can invest up to 20% in developed markets.

Finally, not all funds in the sector have 10 years of data but have still managed to consistently outperform – for example, Pacific North of South EM All Cap Equity has beaten MSCI Emerging Markets in eight years since its inception in 2017.  

Performance of the funds vs sector, 2016-2025

Source: FE Analytics

The years 2018-2020 were bleak for quantitative managers. A shift in Federal Reserve monetary policy upended traditional quant factors, while a market frenzy for growth stocks led to a value drawdown.

Covid worsened quant investors’ plight, with fiscal stimulus and easy monetary policy further concentrating market winners and culminating in a momentum meltdown.

The quantitative investing landscape has enjoyed a remarkable revival since this ‘Quant Winter', but questions linger about whether it could experience another spell in the deep freeze.

To answer these questions, it is important to understand why Quant Winters occur in the first place.

Looking at past bouts of underperformance, our research identified two primary drivers: first, adverse macro environments and the sensitivity of traditional quant factors to them. This means factors can be vulnerable to regime shifts, policy changes and broader economic dislocations.

During stress periods, macro factors often become the dominant driver of factor returns, putting bottom-up company fundamentals in the shade.

Second, crowding – and not just in raw factor exposures. Our analysis of live manager returns shows that the portfolio construction process itself amplifies the problem.

Sector constraints, liquidity screens, and similar rebalancing schedules push managers into correlated positions, increasing macro sensitivity beyond what raw factor returns alone would suggest.

The result is that during Quant Winters, much of the diversification benefit investors expect from allocating across multiple quant managers disappears.

This tendency has led traditional quant approaches to become very similar in their exposures just when diversification is needed most.

To address these core structural vulnerabilities, in recent years some quant managers have sought to create new sources of alpha generation and risk management. These encompass three dimensions.

Alternative data

Recognising that a reliance on conventional financial data creates systematic vulnerabilities, the industry has embraced alternative data sources that operate independently of traditional financial metrics.

The number of alternative data models has nearly tripled in recent years, spanning diverse datasets including geolocation and foot traffic data, patent filing information, credit card transaction data, satellite imagery and social media sentiment analysis.

These sources provide real-time insights into business fundamentals before they appear in financial statements.

For example, satellite imagery of retail parking lots or credit card data can reveal individual company performance that diverges from broader retail sector trends.

Additionally, the high frequency, breadth and diversity of these sources mean managers are less likely to converge on similar macro exposures.

Machine learning is a key pillar here as its pattern-recognition capabilities far exceed conventional statistical approaches. This can reduce correlations to significantly below the 70-80% common between traditional systematic approaches, which have a shared reliance on traditional financial data.

A more dynamic approach

Traditionally, quant management combines factors using static weights, with set percentages for value, momentum and size, for example. However, this approach creates vulnerabilities during changes in macro regimes, maintaining predetermined exposures that become suboptimal and causing unnecessary volatility while failing to capitalise on well-positioned factors.

Today, some managers have developed factor selection models that can continuously evaluate changing market conditions and factor relationships to optimise combinations in real time, moving beyond backward-looking metrics to embrace predictive analytics.

As one component within a comprehensive investment process, these models can notably reduce drawdowns by adjusting exposure away from underperforming factors and toward those better positioned for the specific macro environment.

Macro regime resilience

Perhaps the most critical evolution in systematic investing is the development of macro regime resilience. This final dimension focuses on creating approaches that maintain effectiveness across different macro regimes.

Traditional approaches often treated macro sensitivity as an unavoidable characteristic of factor-based strategies, accepting that certain macro environments would create systematic headwinds. This reflected the limitations of static, backward-looking methodologies that could not adapt to changing conditions.

However, systematic approaches can now be designed to be effective across different macro regimes, including periods of crisis/recession, recovery, expansion and late-cycle/overheating.

This capability represents a key aspect of the systematic investing evolution, combining diversified inputs with robust methodologies designed to create more inherently resilient investment approaches.

Through a sophisticated understanding of regime dynamics, adaptive positioning strategies can respond to changing macro environments.

This addresses the core vulnerability that created previous Quant Winters stemming from reduced macro sensitivity through alternative data sources, enhanced diversification across uncorrelated alpha sources and the incorporation of sophisticated understanding of macro dynamics into the alpha modelling process.

A foundation for the future

While it remains to be seen whether ‘this time is different’, the opportunity for transformation is compelling. The systematic investing industry now has the tools to address its core vulnerabilities.

By embracing a more sophisticated, adaptive, and resilient methodology, some managers have built a strong foundation for navigating future conditions. We believe this evolved quantitative approach is better suited for the challenges ahead.

Our performance analysis confirms that modern approaches can maintain effectiveness across different economic environments, fundamentally addressing the regime dependence that created historical vulnerabilities.

The integration of alternative data, machine learning, and regime awareness has created what we believe is a new foundation for systematic investing – one that maintains the benefits of quantitative approaches while finally addressing their historical flaws.

Ori Ben-Akiva is the director of portfolio management, and Valerie Xiang a portfolio manager, both at Man Numeric.

UK GDP surprised to the upside in February before the start of the Iran war, with growth of 0.5% much faster than had been anticipated, according to figures from the Office for National Statistics.

Industrial production and services rose sharply, although this was partly offset by contracting manufacturing activity. Retail sales fell after a stronger-than-expected January while the property market remained subdued.

Growth was also revised higher for January, up to 0.3%, suggesting the UK economy was starting to recover before the outbreak of war in the Middle East, which has caused oil prices to spike and inflation concerns around the world.

Lindsay James, investment strategist at Quilter, said the true fallout from the Iran war is “yet to be felt” but the figures are a “welcome relief to the Labour government”.

However, “unfortunately for the government, the worst is yet to come,” she added, with expectations that “headwinds will build from here on” after a strong start to the year, which is already 0.8% higher than at this time in 2025.

The figures come after the International Monetary Fund (IMF) slashed its growth forecasts for the UK from 1.3% to 0.8% in 2026 this week, the worst revision within the developed world.

Luke Bartholomew, deputy chief economist at Aberdeen, said today’s figures feel “very dated” given the change in the macroeconomic picture since February.

“As the IMF recently pointed out, the UK economy was very exposed to the shock from the Iran war as a large energy importer with weakly anchored inflation expectations and an already very soft labour market.”

The return to growth could be short-lived, added Scott Gardner, investment strategist at JPMorgan Personal Investing, who noted that the impact of the conflict is starting to filter through into the March figures, with PMI data pointing towards “a softening in services activity”.

GDP will impact the Bank of England’s decisions on interest rates moving forward, with James noting that the market still expects it to cut at least once this year.

“A fairly strong start to 2026 may give it enough cover to do so,” she said, but with growth now forecast by some to stall completely, the BoE is going to have to make a call on how much to look through any inflation spike and focus on the potential growth implications that are to follow, she noted.

“The UK economy has started 2026 well, but finds itself in a weakened position now, and any hikes could just cut off any green shoots that do survive this period.”

Veteran emerging markets investor Mark Mobius died on 15 April at the age of 89 in Singapore.

Often referred to as the ‘father’ of emerging markets investing, Mobius was one of the earliest investors in the asset class and was known for travelling around the region to gain first-hand experience of the markets he invested in, the statement read.

He spent much of his career at Franklin Templeton, helming the Templeton Emerging Markets Investment Trust (TEMIT). He left in 2018 and he co-founded his eponymous fund house Mobius Capital Management, before officially retiring in 2023.

A statement from the firm said: “We are deeply saddened to learn of the passing of Mark Mobius. Mark was not only one of the founders of MCP but also a cherished mentor, partner and source of inspiration to all of us.

“His influence on the emerging markets investment landscape was extraordinary and his vision helped shape both our firm and the industry more broadly.”

Mobius Investments partners John Ninia and Eric Nguyen will take over leadership responsibilities at the firm.

Others also paid tribute to the former star manager after his passing. Jenny Johnson, chief executive of Franklin Templeton, said: “Mark opened the world's eyes to emerging markets and inspired generations of investors to think more globally, more boldly and with greater imagination about what's possible. He changed how we invest and how we see opportunity across the world.

“But for those of us lucky enough to know him personally, Mark was so much more than his incredible accomplishments. He was generous with his time, thoughtful with his advice and genuinely fascinated by people and cultures everywhere he went.”

James Carthew, head of investment company research at QuotedData, said Mobius had been the face of emerging markets investing for decades and his “enthusiasm for the asset class, even in the face of the dramatic sell-off in the late ‘90s and the many twists and turns since, was infectious”.

Pharmaceutical giants AstraZeneca and GSK are the most-owned stocks among funds in the IA UK All Companies sector, with more than half of the peer group making the companies a top 10 position.

The UK market has been shrinking over the past few years due to a rise in mergers and acquisitions (M&A) combined with a lack of initial public offerings (IPOs). This could cause herding, with managers owning similar stocks as the pool of options reduces.

Earlier this month, Trustnet looked at the most-owned stocks among funds in the IA UK Equity Income sector. In that review, GSK took the top spot but here AstraZeneca is the more common selection.

AstraZeneca is the largest company in the UK, with a 9% weighting in the FTSE 100 and 8% in the wider FTSE All Share index. Its shares have been on a strong run, doubling over five years – twice as much as the two indices above.

Performance of stock vs indices over 5yrs

Source: FE Analytics

In a recent interview, FE fundinfo Alpha Manager Anthony Lynch explained how the stock is such a large part of the index that betting against it is a big risk.

“We don’t like AstraZeneca that much, but we also don’t want to take a huge bet against it. It’s expensive versus GSK, but AstraZeneca has an incredibly strong R&D track record and no obvious patent cliffs. It can surprise with a blockbuster, so for risk‑management reasons we keep that one nearer neutral,” he said.

The stock makes up a top-10 position in 120 funds in the 209-strong IA UK All Companies sector, or 57.4% of the peer group. This figure may be significantly higher, however, if accounting for funds where the stock appears outside the top 10.

Given its large index weighting, the funds with the highest allocation to the stock are broadly passives. L&G UK Equity UCITS ETF and iShares MSCI UK UCITS ETF have a 10% and 9.7% allocation respectively.

However, it is a top weighting in some active funds too, including Liontrust UK Growth (9.6%), Schroder UK Alpha Plus (9.5%) and CT UK Sustainable Equity (9.3%). In total, 11 funds have a position of more than 9% to the stock.

Source: Trustnet

In second place is its rival GSK, which is a top 10 position in 106 funds – or 50.7% of the sector. Despite being the eighth largest stock in the FTSE All Share index, it is the second-most popular among fund managers.

Unlike AstraZeneca, the funds with the largest weightings are active. CT UK Growth and Income, BNY Mellon UK Opportunities (Responsible) and FTF ClearBridge UK Rising Dividends all have more than 6% of their portfolios invested in the stock, more than double its index weighting. A further 13 names have a 5% or higher allocation.

It is slightly more popular among income funds, however, as it was a top-10 holding in 76.9% of funds in the IA UK Equity Income sector.

The two pharma giants are the only stocks where more than half of fund have taken a top 10 position, although oil major Shell is close at 45.5%. It was the more common choice ahead of BP (33%), although both are less owned among more general UK funds than their income peers.

Liontrust UK Growth has the largest weighting to Shell of any fund in the sector at 9.8%, while JOHCM UK Growth is the most bullish on BP, with a 6.2% position.

Over the year, BP shares are up 65.6% and Shell 43.4%, both rising more than 20% over the past three months as the oil price rallied following the war in Iran.

Despite being the second-largest stock in the UK, HSBC was the fourth-most owned among UK funds, with 94 (or 45%) taking a top 10 position in the banking group.

Of the 15 funds to take a position of 9% or higher in the stock (which makes up 7.6% of the FTSE All Share and 8.6% of the FTSE 100), the majority are passive funds.

Unilever is more popular among IA UK All Companies funds than the income peer group, with 93 (or 44.5%) taking a top 10 position in the stock.

Last month, it was announced that the consumer staples giant is in talks to sell its food brands (including brands such as Hellman’s mayonnaise) to McCormick, the owner of French’s Ketchup.

It sold its ice cream division last year, with Russ Mould, investment director at AJ Bell, noting that the presence of activist investor Nelson Peltz on the shareholder register since 2022 has “led to consistent pressure on Unilever’s management to streamline the business”.

Ninety One UK Special Situations has the largest stake in the stock at 8.4%, while it accounts for more than 5% of four other portfolios, including Artemis UK Select and JOHCM UK Dynamic.

Mining firm Rio Tinto was the only other company backed by more than a third of IA UK All Companies funds (34%), with banking groups Barclays and Lloyds both appearing in the top 10 holdings of around a quarter of the peer group.

Cigarette maker British American Tobacco, jet engine maker Rolls-Royce and software company Relx rounded out the table above.

The easing in the war between the US and Iran has sparked a rally in risk assets, with investments that sold off the most during the conflict – such as momentum stocks, gold and European equities – making the best returns, Trustnet analysis shows.

The US and Israel launched Operation Epic Fury on 28 February 2026, striking nearly 900 targets across Iran in 12 hours, killing supreme leader Ali Khamenei and triggering a wave of retaliatory missile and drone attacks. Iran’s closure of the Strait of Hormuz on 2 March caused the largest oil supply disruption in history, pushing prices to above $100 a barrel.

Global equity markets sold off sharply as the conflict escalated, with momentum stocks and European equities among the hardest hit as investors rotated into energy and safe-haven assets. A 48-hour suspension of strikes beginning 27 March, followed by the tentative Islamabad Accord on 6 April, gave the market room to recover.

Performance of asset classes since 27 Mar 2026

Source: Finxl. Total return in sterling between 27 Mar and 15 Apr 2026

Since 27 March, the MSCI AC World index has gained 6.9% in sterling terms, while commodities (represented by the S&P GSCI index) have fallen by 4.8%. This is a reversal of previous trends, when stocks tanked and commodities surged after the conflict started. This trend is also apparent on a more granular look at markets.

Within global stocks, the MSCI World Momentum index is the best-performing investment factor, with a total return of 10.9% since the ceasefire was announced. March 2026 had been its worst month since the 2008 global financial crisis, analysis by Trustnet found, after falling 10.2%.

Conversely, energy stocks have been the worst-performing global industry post-ceasefire, with the MSCI World Energy index shedding 8.7% as the oil price has come down from the highs it reached during the conflict.

Gold – which had been selling off despite the geopolitical backdrop seeming like it would be in its favour – has gained 5% since 27 March.

Peter Spiller, manager of Capital Gearing Trust, said: “One thing can be said, which is that the reaction of gold to an actual crisis in the form of the Iran War has been quite disappointing. So, it was negatively correlated on a daily basis with the oil price and positively correlated with the Nasdaq. At least in the short term, it had become a risk-on asset.

“Some of this may have been a general scramble for liquidity in difficult times. But nevertheless it called into question the motive for holding gold. It is fair to say that gold now trades in response to technical analysis rather than any fundamental judgement. We do not know what the future price of gold will be any more than we know what the future price of Bitcoin will be. But it is clear that it is not a secure haven in times of trouble.”

European stocks had also been hit hard during the conflict as investors worried about the impact of higher energy costs and took profits on previously strong assets, but have outperformed in recent days. However, the same cannot be said of UK, emerging market and Japanese stocks, which had been in similar boats to Europe.

Performance of fund sectors since 27 Mar 2026

Source: Finxl. Total return in sterling between 27 Mar and 15 Apr 2026

Since 27 March, the best-performing sector in the Investment Association universe has been IA Latin America, where the average fund has gained 9.7%. Latin American stocks have benefitted from the falling oil price and the weaker US dollar.

The best performers in the peer group are iShares MSCI EM Latin America UCITS ETF (up 10.3%), Liontrust Latin America (10.1%) and Barings Latin America (9.8%).

IA Technology & Technology Innovation is in second place with an average return of 9.5%, led by Amundi MSCI Semiconductors (up 17.4%), Liontrust Global Technology (16.6%) and Polar Capital Global Technology (16.5%).

Tech stocks had sold off during the conflict, but not as much as some other areas. Some analysts have said that this is now an attractive entry point after the Iran sell-off blew the froth off the valuations of the more expensive tech names.

The three European equity sectors can be found towards the top of the best-performing peer groups, with Premier Miton European Opportunities (up 17.1%), State Street SPDR MSCI Europe Industrials UCITS ETF (12.2%), State Street SPDR MSCI Europe Financials UCITS ETF (11.9%), CT European Select (11.7%) and CT Select European Equity (11.7%) boasting the highest returns.

Source: Finxl. Total return in sterling between 27 Mar and 15 Apr 2026

On individual funds, the two strongest post-ceasefire strategies are run by Danish asset management house Skagen: Kon-Tiki Verdipapirfond and Global Verdipapirfond, both of which have made more than 20% since 27 March.

Kon-Tiki Verdipapirfond, which is managed by Fredrik Bjelland and Espen Klette, is a value-based emerging markets equity fund, despite residing in the IA Global sector. Global Verdipapirfond is a global equity strategy, with managers Knut Gezelius and Midhat Syed looking for undervalued “structural winners”.

Funds that invest in ‘strategic’ or precious metals – such as WS Amati Strategic Metals, Quilter Investors Precious Metals Equity and BlackRock Gold & General – are another common theme among the funds making the highest returns under the Iran ceasefire.

As noted above, gold has rallied since 27 March but it’s not alone: silver has gained more than 10%, copper close to 7%, aluminium around 5.5%, zinc 4.7% and nickel 3.5%. Many of these metals are seen as critical to electrification, defence systems, AI data centres, power grids or battery technology, and all benefit from the decline in the US dollar.

However, some funds have lost money since the conflict was paused, with the most common theme being a focus on energy stocks. Xtrackers MSCI USA Energy UCITS ETF is down the most, losing 10.8%, followed by State Street SPDR S&P U.S. Energy Select Sector UCITS ETF, iShares S&P 500 Energy Sector UCITS ETF, iShares Oil & Gas Exploration & Production UCITS ETF and GS North America Energy & Energy Infrastructure Equity Portfolio.

Global equity income funds play an important role for investors seeking diversified sources of dividends and long-term total returns. Their appeal has been reinforced by the IA Global Equity Income sector’s top-quartile performance against all Investment Association sectors over three, five and 10 years to the end of March 2026, suggesting the approach has held up across different market environments.

Among the most established options in the sector are Artemis Global Income and Guinness Global Equity Income – two funds with long track records but notably different ways of capturing global income opportunities.

Artemis Global Income has been managed by Jacob Tusch-Lec since launch in 2010 and co-managed by James Davidson since 2020. It blends income and capital growth, creating a portfolio tilted towards financials, industrials and emerging markets.

It has delivered the stronger short-term performance of the two funds, with first quartile returns in 2021, 2024 and 2025 – although its longer-term record includes several fourth-quartile years.

This is indicative of the Artemis strategy’s higher volatility profile with its 10-year volatility of 14.3% placing it in the most volatile quadrant of the sector. However, this higher-octane style has supported strong upside capture overall, with previous Trustnet analysis identifying the fund as a standout performer across multiple metrics over the past three years.

In contrast, the less volatile Guinness Global Equity Income, co-managed by Ian Mortimer and Matthew Page since 2010, has produced a more consistent long-term pattern of returns, sitting in the first or second quartile in most of the past 10 years – though it lagged in 2025 while the Artemis strategy excelled.

Performance of the two funds vs the sector over 10yrs

Source: FE Analytics

The Guinness strategy’s high-conviction, quality-focused philosophy emphasises companies with high returns on capital and a preference for dividend growth over high yield. The portfolio has big exposures to industrials, consumer staples and the US.

In addition, it is slightly cheaper with an OCF of 0.77% compared with 0.83% for Artemis Global Income and offers a marginally higher yield of 2.6% versus 2.4%.

But which is the better option for investors’ portfolios?

Kate Marshall, lead investment analyst at Hargreaves Lansdown, said the investment platform currently favours Artemis Global Income – a fund which features on its Wealth Shortlist.

“The Artemis fund has an excellent performance track record,” Marshall said, noting that, since the inception of each fund, the Artemis strategy has grown by 627.2% compared with 336.2% for the Guinness strategy.

“We like that income from the Artemis fund is generated through a variety of sources – from mature, reliable dividend payers to lower quality, higher yielding companies,” she added.

She said that the management team has “stayed true” to their philosophy during tougher periods but has also shown flexibility depending on market conditions.

Meanwhile, Darius McDermott, managing director at FundCalibre, said choosing one over the other depends on an investor’s style preference.

“If you expect value to continue leading, Artemis Global Income is an excellent option,” he said. “If you favour quality-growth, then Guinness Global Equity Income is among the strongest in its class.”

On balance, McDermott suggested that the Artemis strategy “has the edge” in the current environment, which is reflected in its superior three-year performance.

“With higher rates and more normalised inflation supporting value-style investing, that process has been well rewarded,” he said.

This doesn’t mean Guinness Global Equity Income should be overlooked, however.

“If the next phase of the market favours resilience, pricing power and balance sheet strength – particularly against a more uncertain geopolitical backdrop – Guinness’ portfolio looks increasingly appealing,” he said.

Scott Heaney, investment research analyst at Titan Square Mile, said there is currently a place for both in a portfolio – a choice that he has made for his personal investments.

“The Guinness fund, with its quality bias, matched up with the Artemis fund, with its value, contrarian style, work really well together,” he said.

Heaney noted that the Artemis Global Income managers are “really good at creating a macro overlay for the fund and thinking about where the obstacles in the road ahead could be – positioning the fund accordingly”.

He pointed to the fund’s high allocation to financials and industrials – two sectors that have outperformed in recent years – as an example.

However, he noted that the fund is “probably more volatile and could face larger drawdowns”.

Heaney said this is where the Guinness strategy comes into its own as a more “all-weather” strategy which “invests in companies that can endure through economic conditions, applying a strong quality filter”.

“The Guinness strategy is low turnover, low transaction costs – definite positives,” he said.

“However, the concentration of around 35 equally weighted stocks does increase individual stock risk. If one holding suffers, it has a noticeable impact.”

A different fund in the sector appealed to Dzmitry Lipski, head of fund research at interactive investor. If he had to select one fund, his preferred option is Fidelity Global Dividend – a more cautious strategy with lower US concentration and a focus on sustainable dividends.

“However, blending the Fidelity strategy with Artemis Global Income and Guinness Global Equity Income reduces reliance on any single driver – whether value rotation (Artemis), quality-growth leadership (Guinness) or broad diversified income (Fidelity) – and creates a more balanced global income allocation within a portfolio focused on both income and long-term capital growth,” he said.

McDermott also suggested a more flexible strategy could be utilised to bridge the gap between the styles targeted by the Artemis and Guinness funds, such as the high-conviction global growth portfolio offered by Nutshell Growth.

Credit markets are entering a more nuanced phase. While spreads remain relatively tight by historical standards, yields have moved higher, providing a more supportive starting point for returns. This reflects both higher underlying rates and some repricing of risk.

Valuations are therefore less stretched than they were at the start of the year but not compelling enough to rely on carry alone.

More importantly, the market environment is shifting. After an extended period of unusually low volatility, markets are beginning to exhibit more frequent and pronounced swings.

Macro uncertainty, evolving central bank expectations and geopolitical developments are contributing to a more dynamic backdrop, marking a move away from stable, one-directional conditions.

Equity markets, while still resilient, may also become more sensitive to changing expectations, with greater divergence emerging beneath the surface.

Equity prices & credit spreads

Source: Bloomberg data as of 7th April 2026. ICE BofA BB-B US High Yield Constrained Index (HUC4), ICE BofA BB-B Euro High Yield Constrained Index (HEC4). S&P 500 Index and EuroStoxx 50 Index. Indices selected by Muzinich as best available proxies for the respective asset classes.

For investors, this shift changes where returns can be generated. In low-volatility environments, credit returns are largely driven by carry, with limited differentiation across issuers and sectors.

As volatility rises, pricing becomes more dispersed, creating both risks and opportunities. A similar pattern is emerging in equities, where index stability can mask increasing divergence at the stock and sector level.

A traditional long-only approach remains inherently dependent on market direction. Even with higher yields, investors remain exposed to shifts in sentiment and potential spread widening.

While carry provides some cushion, it may be insufficient in a more volatile environment. The key question is therefore not just whether yields are attractive, but whether returns are resilient to changing conditions.

A credit market-neutral approach offers an alternative by shifting the focus from market direction to relative value. By constructing portfolios of paired long and short positions, returns are driven by changes in relative pricing rather than overall market moves.

As volatility rises, dispersion increases and pricing becomes less uniform, creating dislocations between similar credits, sectors and regions.

These inefficiencies, often driven by technical factors or investor flows, are difficult to exploit in long-only portfolios but sit at the core of market-neutral strategies.

The current rate environment further supports this approach. With cash rates no longer near zero, market-neutral strategies can generate a natural carry component broadly aligned with risk-free rates, before any additional alpha from relative value trades.

These strategies draw on multiple return sources. Basis trades exploit discrepancies between cash bonds and derivatives, relative value trades capture differences across similar credits or regions, and intra-capital structure trades seek inconsistencies within an issuer’s debt stack. All tend to benefit from periods of higher volatility and dispersion.

Market neutral does not mean risk-free, but risk is managed differently. Portfolios are built from many smaller positions, reducing reliance on any single outcome, while leverage is used to balance exposures rather than to take directional bets.

The result is typically lower volatility and shallower drawdowns than long-only credit, while still benefiting from positive carry.

For investors, this has clear implications. Market-neutral credit is not a replacement for long-only exposure, but a complement, providing a return stream driven by pricing inefficiencies rather than market direction and helping to diversify portfolios alongside traditional credit and equity allocations.

Jamie Cane is a portfolio manager at Muzinich & Co. The views expressed above should not be taken as investment advice.

Recent market volatility, stubborn inflation and signs of cooling labour market conditions have raised concerns that economic momentum is slowing.

In this environment, high-quality companies with resilient cashflows and strong balance sheets should be better placed to withstand tougher conditions.

Trustnet asked fund managers which companies they believe are best placed to hold up if growth weakens.

RELX

Alan Dobbie, co-manager of Rathbone Income, highlighted British analytics business RELX, a company which spans scientific and medical publishing, legal content, and risk and analytics.

“For more than a decade, RELX has built a reputation as one of the UK market’s most reliable defensive growth stocks,” he said.

He noted that customers are usually tied in through multi‑year contracts and recurring subscription revenues and, once RELX’s datasets are embedded into the workflows of legal or financial institutions, switching costs are high.

“That resilience has translated into steady high‑single‑digit revenue growth, supported by high and gradually improving operating margins,” he said.

“Strong cash generation, disciplined reinvestment and regular share buybacks have helped deliver dependable, repeatable earnings and dividend per share growth, reinforcing RELX’s appeal as a defensive compounder.”

Sentiment toward RELX weakened earlier this year on fears that AI could commoditise information or pressure pricing power, prompting a sell-off in early February. Dobbie said these concerns are “overdone”.

“[RELX’s value] lies in carefully curated, verified and legally defensible information, combined with workflow integration and regulatory credibility,” he said, adding that AI is more likely to enhance its products than undermine them.

Stock total return and share price performance over 5yrs

Source: FE Analytics

Linde

Industrial gases company Linde manufacturers atmospheric and process gases that are required in a wide variety of industries, including energy, healthcare and steel. It also provides engineering solutions and decarbonisation technologies.

Mark Peden, co-manager of Aegon Global Equity Income, said: “Given the oligopolistic nature of the gases industry – with effectively only three players now controlling the market – and a reliance on long-term, inflation-linked take or pay contracts that numb the sensitivity to downturns in industrial production and provide unrivalled cashflow visibility, the stock is a fantastic defensive compounder.”

He noted that the company has beaten earnings-per-share (EPS) estimates in every quarter since 2018 and has grown the dividend every year for 33 years.

“Although the company is strongly shielded from economic downturns, it also provides nice upside capture in the good times, too, as gas volumes grow when industrial activity picks up,” Peden added.

He pointed to consistent revenue growth, gradual margin expansion, an active share buyback programme and a growing dividend, adding that the stock offers an attractive lower-beta total return across cycles.

Arthur J. Gallagher

Matthew Page, co-manager of Guinness Global Equity Income, pointed to portfolio holding Arthur J. Gallagher as a high-quality, defensive compounder with a durable competitive position in the mid-market.

The insurance broker earns commissions and fees for placing coverage and has maintained “a highly recurring, non-discretionary revenue base with client retention rates above 90%”.

Page said the firm has impressive operating performance, with strong free cashflow generation, expanding margins and a steadily compounding dividend.

“The firm also targets double-digit revenue growth through mid-single-digit organic expansion and disciplined tuck-in merger and acquisition (M&A) of small regional agents and brokers,” he said.

While this introduces some integration and competition risks, Page said Arthur J Gallagher’s long track record of disciplined execution gives confidence in the long-term strategy.

LVMH

Nikki Martin, senior portfolio manager in global equities at Sarasin & Partners, suggested luxury conglomerate LVMH as a high-quality, cash-generative company that can preserve capital through weaker cycles.

She noted that LVMH is “supported by exceptional brand power and pricing ability, enabling it to sustainable margins even as volumes soften”.

“Its diversified portfolio and strong cashflow provide flexibility to invest through downturns,” Martin added.

She noted that the cyclicality of luxury demand is a risk to performance.

Indeed, LVMH’s latest quarterly sales numbers missed expectations, falling by 6% in the first months of the year. The company noted that the Middle East conflict has a 1% negative impact on organic growth in the first quarter of 2026.

Martin said this is ultimately manageable due to the company’s strong balance sheet, cash generation, global scale and entrenched market position.

Tesco

UK supermarket chain Tesco has significant scale, with market share of around 29% , which makes it all the more attractive in a softer economy, according to Callum Abbot, co-manager of JPMorgan Claverhouse Investment Trust.

“Food retail is one of the most resilient sectors in the market, as it sells everyday essentials that people simply can’t go without,” he said.

“If inflation remains elevated, retailers such as Tesco are also typically able to pass on at least some of those higher costs, supporting revenue growth.”

Abbot said the company is in a strong financial position, with an investment-grade balance sheet and reliable cash generation, which has allowed it to return cash to shareholders through a growing dividend as well as share buybacks.

In addition, the chain’s ‘Clubcard’ loyalty scheme allows it to offer target discounts and promotions that smaller competitors struggle to match – although Abbot noted a renewed price war within the sector is a potential risk.

“Tesco has gained market share for 32 consecutive four-week periods in a row,” he said.

“That momentum, alongside its strong competitive position, suggests it is well placed to continue outperforming many of its peers in a tougher environment.”

Stock price performance over 5yrs

Source: Google Finance

Royal Bank of Canada

Turning to financials, Greg Eckel, portfolio manager at Canadian General Investments, said Royal Bank of Canada is an “all-weather franchise”.

“It has paid a dividend every year since 1870 and has not cut it in the modern era, demonstrating the strength of its earnings through multiple cycles,” he said, adding that this consistency is “underpinned by a diversified business model”, with franchises beyond Canada in the US and UK.

This includes a personal banking division which delivered a 26.3% return on equity in the first quarter of this year, while its wealth management division oversees C$1.5trn in assets and C$5.3trn in assets under administration.

“This diversification helps smooth returns across different environments,” Eckel said.

“Market volatility, for example, can weigh on lending activity but often supports trading and capital markets revenues, reinforcing overall resilience.”

He said the bank has continued to deliver “robust profitability” through multiple cycles.

Brixmor Property Group

Vince Fioramonti, manager of Allspring Global Equity Enhanced Income, pointed to Brixmor Property Group, which owns and operates a large portfolio of over 350 open-air shopping centres.

Fioramonti highlighted the company’s stable and predictable cashflows, high occupancy above 95%, strong portfolio quality and low earnings volatility.

He added that the tenant base further reinforces this defensiveness, as Brixmor works with over 5,000 retailers, including Kroger and Publix.

The company generates attractive income, with a dividend yield of around 4% and 6% average dividend growth.

Fioramonti said Brixmor’s portfolio has shown greater stability than more economically sensitive sectors, supported by essential tenant demand and disciplined asset management.

“Robust leasing activity and low bad‑debt expectations – projected at just 75 to 100 basis points of total revenue – reinforce confidence in cashflow durability,” he said.

In February, company management projected that funds from operations (FFO) will increase by more than 4% versus 2025, “suggesting continued growth even as the macroeconomic backdrop becomes more challenging”. 

Stock price performance over 5yrs

Source: Google Finance

Private credit has been “in the eye of the storm” recently, with investors making “big assumptions” about a potential “doom loop” that may never materialise, according to Schroder Strategic Bond fund manager Martin Coucke.

It is for this reason he is positive on the asset class, despite some US private credit companies bringing redemptions to a halt.

The rise of AI has fuelled a rise in private credit, which is highly exposed to tech and software companies, said Coucke.

“Ultimately, you decide if private credit is a risk depending on your view about the software sector,” he said. “If you think that this sector is going to default overnight, then yes, it's going to be a problem and you're going to see some losses.”

However, he doesn’t think the issue is systemic and that a default wave will ensue. While “some [companies] obviously will go under”, others will be able to “thrive with the help of AI”.

He views the asset class as part of the high-yield spectrum, noting there is no real distinction between public and private markets in this regard.

To gain exposure, he lends money to business development companies (BDCs), funds which provide private credit to unlisted companies. Here, “very short-dated credit” is offering “attractive spreads”.

These companies borrow from creditors and then lend that money at higher rates. For example, he noted that many are taking out debt at around a 200 basis-point spread and then lending at 600 basis points.

“Overall, when you lend to a private‑credit fund you have a pretty large buffer before you actually experience some losses and we are quite comfortable with that,” he said.

“My feeling is a lot of people don’t really know what they are actually talking about when they talk about private credit funds. Most of these funds tend to be relatively well‑diversified – they will hold hundreds of positions, different names, different sectors, and so on.”

At present, he added that these companies are “not overly levered”, meaning there is a lower risk than the market is appreciating. BDCs would need to see default rates of 20-40% before being impacted, which he described as “a bit extreme”.

“So when you're saying private credit is going under and you’re going to see a large amount of defaults, you’re making a big assumption that is not necessarily true,” he said.

“Growth looks pretty decent. We’re not seeing meaningful increases in defaults in public markets, which usually will correlate with what's happening in private credit markets. Something needs to give to actually see this private‑credit doom loop that most people are talking about.”

Part of the appeal of private credit is a lack of opportunities in the investment-grade space. The Schroder Strategic Bond fund is highly invested in the top end of the quality curve (AAA and AA) and in the high-yield space, but has limited exposure to the middle portion of the investment grade universe.

“BB and BBBs are relatively expensive. We would rather be in safe‑haven assets like agency MBS [mortgage-backed securities], treasuries or cash, rather than being invested there,” he said.

Coucke is also taking selective opportunities in the high-yield sector on areas such as debt with a B rating, where there are “some interesting stories with attractive yields”.

One area that could have potential in the investment grade area is European real estate, which has underperformed recently as interest rate expectations have risen.

Following the US/Iran war, energy prices rocketed as the Strait of Hormuz was effectively closed, pushing energy prices higher and creating inflationary pressures around the world.

This changed investors’ projections of interest rates, which were expected to keep falling this year as inflation weakened and growth stalled but are now anticipated to remain at their current levels (or even rise if the Strait remains closed for any extended period of time).

European real estate performed “relatively well through the 2022 crisis” when central banks meaningfully increased interest rates.

“Should that happen again, we think the sector should be able to weather the storm quite easily,” he said.

Part of this is because European real estate companies can pass inflation through the rent, which is often contractually linked to higher prices, making them “well‑equipped for this kind of environment”.

“Obviously, you have to be selective – not all real estate companies are great. The office sector is under pressure. So you have to actually do the work and make some decisions based on that. But that’s one thing we like,” he said.