Several venture capital trust (VCT) fundraising offers are at risk of closing early before the end of the tax year as investors rush to secure 30% upfront income tax relief before it falls to 20% on 6 April 2026.

These vehicles raise capital periodically by issuing new shares through fundraising rounds, which typically remain open until a target amount is reached or a deadline passes. When demand is high, popular offers can close well before their scheduled end date.

VCTs offer up to 30% upfront income tax relief on investments up to £200,000 per year, tax-free dividends and an exemption from capital gains tax on the shares. They invest in small, early-stage UK companies and are considered high-risk, but the tax incentives are designed to compensate for that risk. Shares must be held for at least five years to retain the relief.

Chancellor Rachel Reeves confirmed the cut to 20% relief in November's Budget, triggering a surge in demand from investors keen to lock in the higher rate while it lasts. Earlier today, the Unicorn AIM VCT announced that its current offer to raise £20m has been 90% subscribed and decided to utilise the overallotment facility and increase it by a further £15m in the largest fundraise in the company’s history.

The tax allowance reduction shifts the emphasis firmly onto manager quality, according to Peter Hicks, research analyst at Chelsea Financial Services. “With a smaller tax cushion, investors need proven exit discipline, sensible fee structures and genuine alignment of interests to drive returns,” he said.

As with all VCTs, investors should take a long-term view and not invest solely for the tax benefits. Against that backdrop, Hicks highlighted two below: Pembroke for alignment and shareholder-friendly charging and Gresham House for scale, momentum and track record.

Pembroke VCT

Launched in 2013, Pembroke has built assets under management to £260m and has consistently hit its 5% annual dividend target since 2021. Recent exits include a partial sale of experiential travel platform Secret Food Tours, generating a 5.3x return, and sustainable luxury womenswear brand ME+EM, which delivered a 16.2x return on its exit in 2022.

Hicks said the strongest argument for the VCT is the alignment of incentives with both investors and investee companies. Where possible, Pembroke commits capital alongside founders under the same investment terms. Crucially, the manager does not charge performance fees on unrealised valuation gains – fees are only earned when value is realised in cash.

“This is an excellent approach and one that should be commended more loudly,” Hicks said. “Pembroke's performance fee arrangements go against the grain of how most other VCTs structure their charges.”

Manager Andrew Wolfson is also “unapologetically pro-special dividend”, Hicks noted. When possible, the priority is to return capital to shareholders. “In tandem with the charging structure, this philosophy places shareholder outcomes front and centre, and is exactly what investors should demand as the tax tail becomes less generous.”

A quarter of Pembroke's portfolio companies are already profitable, with the largest holding, consumer health-tech business Lyma, recently gaining regulatory approval for use in the US. Performance over one year stands at 2.8%, with a five-year return of 13.5%. Over 10 years, the trust has delivered 49%, sitting in the middle of the VCT Generalist sector.

Performance of fund against index and sector over 1yr

Source: FE Analytics

Gresham House VCTs

Formerly Mobeus, the Gresham House VCTs are among the most popular in the sector. Their £90m fundraise in September 2024 reached capacity in eight weeks, a reflection of the track record: Gresham House Income & Growth VCT 1 and 2 are the best performing in the AIC VCT sector over 10 years, delivering tax-free total returns of 136% and 162% respectively.

Since March 2022, the VCT has made six highly profitable exits, realising proceeds of £123m against a cost of £74m. “Achieving this against the harsh economic backdrop of recent years underlines the strength of the investment process,” Hicks said. Proceeds have supported a strong dividend track record that has frequently exceeded the new annual target of 7% of net asset value.

This year's raise was brought forward due to the upcoming reduction in income tax relief. Hicks said the decision was correct: when relief was last cut in 2006, VCT sales collapsed by 65%.

Gresham House Income & Growth VCT has returned just 0.1% over one year but 33.1% over five years and 130.5% over 10 years, placing it in the top quartile of the sector.

Performance of fund against index and sector over 1yr

Source: FE Analytics

Hicks acknowledged that some investors may question the trust's cash position, which stood at £73.76m (34.3% of net assets) as at 30 September 2025. However, he argued that this liquidity places the manager "in pole position to support existing winners and capitalise on new opportunities as competitors retrench".

The rule changes accompanying the relief reduction – which broaden the qualifying universe and allow for larger scale-up investments – are a key positive that should not be overlooked, he added.

“Whilst the more headline-grabbing reduction in income tax relief is disappointing, the underlying qualifying rules are constructive.”

BlackRock's MyMap fund range has trimmed equity exposure by around 1% and cut its longstanding gold position last month but the manager remains overweight risk, arguing that stretched valuations are not concerning enough to de-risk fully when no recession looms.

Chris Ellis-Thomas, manager on the multi-asset range, said the modest reduction was driven by caution over US market valuations but stressed the funds remain constructive on growth.

“We don't think a valuation reset comes about in a vacuum,” he said. “Markets don't just reset without stress, probably a recession or an earnings downturn, which we don't forecast now.”

The portfolio changes reflect the fund's outlook for 2026, built around three themes: navigating risks, earnings taking the helm and minding the debt iceberg. In practice, that has meant staying overweight equities while moderating exposure slightly.

“On risk, we took a small amount of equity risk off the table but stayed at positive risk overall,” Ellis-Thomas said. “The simplest way to think about it is a scale from plus 2 to minus 2. We went from slightly above plus 1 to slightly below plus 1.”

The range has been overweight equities for a couple of years on the view that the economy remains sound. “We're still positive on risk because we think the economy is fine. We don't see an elevated chance of recession and haven't for a while.”

The US economy likely troughed in the fourth quarter of last year, he argues, and should reaccelerate through 2026, though only back to trend growth. That backdrop, combined with expectations that political noise around tariffs will fade and interest rates will move lower, supports an “earnings taking the helm” view.

“This upswing in growth through the year will play out through corporate earnings,” Ellis-Thomas said.

Performance of fund against index and sector over 1yr

Source: FE Analytics

US and emerging markets favoured

Regionally, the range has maintained its tilt towards the US and emerging markets while pulling back from Europe. Ellis-Thomas sees profit resilience in America driven in part by its dominance in AI.

“In the US, we see profit resilience and a continuation of the US being dominant in the majority of the things that feed into AI, which means a much higher likelihood of profit resilience and profit growth there,” he said.

Growth in Europe has recovered but not to the levels expected in the US. “Valuations are not so compelling in Europe that there would be any rationale for us to lean into that.”

Europe outperformed strongly in 2025 but the European rally was driven by specific factors around fiscal policy and interest rates rather than broad-based strength, he noted.

“This year, where we see recovery and growth coming through is mainly in the US. There hasn't been enough change in Europe for us to pivot,” he said.

The funds maintain a slight overweight to UK equities, though Ellis-Thomas noted the FTSE 100's drivers are global rather than domestic, making them “much more related to global growth and the dollar”.

Emerging markets have become less China-focused over recent years and now offer multiple tailwinds, including a weaker dollar, industrial metals prices and other factors supporting exporting parts of the market. In addition, stocks have a “much better valuation starting point than developed markets”.

Gold trimmed, bonds underweight

The fund's gold position was trimmed at the end of last year from 3.5% to 2%. The rationale for holding gold remains intact, Ellis-Thomas said, but the rapid price appreciation warranted taking profit.

“We thought, and still think, the longer-term drivers for gold probably remain in place, but it had run so hard that taking some risk off the table was merited,” said Ellis-Thomas.

Gold's role has evolved since MyMap launched in 2019. “Since bond yields have recovered, its role has pivoted slightly. It's still less correlated to equities and bonds, but there's also a narrative around de-dollarisation and central banks expanding what they hold on their balance sheets, he said.

That trend is likely to continue, he argued, though the pace of future gains is uncertain.

Elsewhere, MyMap has maintained a longstanding underweight to government bonds, driven by concerns that markets have yet to price in fiscal risks.

“We don't think markets yet price the risk associated with fiscal policy, particularly in the US,” Ellis-Thomas said. “There is a large amount of debt required to fund the fiscal trajectory under the current administration and the previous administration's plans.”

While bond yields have become more attractive, he remains cautious. “US Treasuries may not be seen as the same safe haven as in the past and market participants will likely demand a higher risk premium over the long term related to fiscal dynamics,” he said.

The fund has found better value in emerging market local currency debt, which benefits from a weaker dollar and more prudent central bank behaviour.

In an episode from the final series of the US sitcom Friends, Joey Tribbiani exaggeratedly struggles learning how to speak French in preparation for an audition for a character called Claude.

Recently, it’s been stock markets that have struggled with Claude. In this case, Claude is the family of large language models (LLMs) from Anthropic, the generative artificial intelligence start-up launched by former OpenAI engineers.

Anthropic followed the launch of Claude CoWork, a more user-friendly version of Claude Code, with a plug-in that helps automate a swathe of routine legal and compliance tasks. Investors reacted by marking down the shares of companies with legal-related applications. The UK’s Relx and Sage, Netherlands’ Wolters Kluwer and America’s LegalZoom are down anywhere from 38% to 58% from their most recent highs (at the time of writing on 2 March 2026).

It’s not just the legal niche that has come under pressure, though. Extrapolating the potential of this plug-in to other sectors could be catastrophic for all companies whose moat is centred on data analytics, no matter how proprietary. London Stock Exchange Group, Intuit and S&P Global are just a trio of other names caught in the crossfire.

The iShares Expanded Tech-Software Sector ETF, which includes Microsoft, Palantir and Oracle as top holdings, down circa 9% in the past month, taking losses to circa 30% since peaking in September.

The investment trust sector has hardly been immune. The most striking impact came on HgCapital (HGT), a private equity trust specialising in software, which initially fell as much as 25%.

HGT’s largest holding is Visma, which provides payroll, HR and accounting software products for more than 2.2m customers in 28 countries. Aside from the potential disruption AI could have on Visma, the company had also been set for an IPO in the first quarter of 2026. That now looks likely to be delayed, at least until the software slump in public markets has abated.

Some analysts downgraded HGT because of these factors, and there will undoubtedly be a negative impact on the net asset value (NAV) in the short term, but the dramatic widening of HGT’s discount to circa 30% (it was trading around par as recently as May) seems overdone.

We were heartened to see HGT’s directors buying shares on 6 February 2026, while Jupiter Fund Management and Valhalla Ventures, the holding company of Preqin founder Mark O’Hare, increased their holdings in the trust to circa 5.5% and 7.2% respectively, suggesting confidence in HGT’s long-term investment case.

The two biggest trusts in the technology sector have had differing fortunes since the news. Allianz Technology Trust (ATT) is down circa 5.5% in the past month, extending losses since its recent high to circa 7.2%. Polar Capital Technology (PCT) meanwhile is essentially flat over one month.

ATT and PCT’s share prices have generally tracked each other pretty well over the past five years, but PCT has pulled ahead since last June. Should ATT catch up, this could provide an opportunity for investors, particularly if the discount narrows.

Manager Mike Seidenberg reduced ATT’s exposure to software companies through 2025, which helped the trust to outperform over the year (ATT’s NAV was more than 400 basis points ahead of its benchmark in 2025).

Seidenberg is starting to look at software companies once more. He suspects that the current fear that many of these companies will be put out of business by AI is just plain wrong. Yet, he remains conscious of catching the proverbial falling knife – selectivity and timing will be key here.

Still, after a few years during which the Magnificent Seven outperformed and made active management difficult, AI-related disruption risk means that stock-picking will be required to outperform again. In this sense, a specialist trust such as ATT with a bias towards mid-cap tech could become attractive, particularly trading on a seemingly attractive discount in the region of 8%.

In the Friends episode, Joey’s French language strife starts when pal Phoebe Buffay asks him to repeat whole lines, such as je m’appelle Claude, back to her. Yet, Phoebe’s brief moment of success came when she broke that sentence down syllable-by-syllable.

Similarly, we suspect that investors taking a broad, market capitalisation index-led approach to investing in software, and technology more broadly, are at risk of having their investment eaten by other AI enhancements, whether they’re from Claude or elsewhere.

Specialists that are embedded in the software and technology ecosystem, such as HGT and ATT, can break the universe down stock-by-stock, get ahead of the game and potentially benefit from buying the dip. They are less likely than their passive-favouring peers to be exclaiming oh, mon dieu (or, in Joey’s failed French, oh, de foof).

David Brenchley is an investment specialist at Kepler Trust Intelligence. The views expressed above should not be taken as investment advice.

The management change at Murray Income Trust is now complete. With the move first announced in November, Adrian Frost, Nick Shenton and Andy Marsh – the trio behind the £5.3bn Artemis Income fund – have taken the reins from abrdn's Charles Luke as of last week, following a board review that concluded the trust needed a new direction after years of relative underperformance.

Over three and five years, Murray Income sat in the bottom quartile of the IT UK Equity Income sector, returning 19.1% and 32.3% respectively against a sector average of 31.2% and 49.2%. Even over a decade – where its record is a more respectable 111.2% against the sector's 102.8% – it trailed the FTSE All Share's 133.7%.

The incoming team carries a different record. Artemis Income has been top quartile over one, three, five and 10 years in the IA UK Equity Income sector and has beaten the FTSE All Share on a rolling five-year basis in 97% of monthly periods since its June 2000 launch.

Performance of fund against index and sector over 1yr

Source: FE Analytics

Initial reaction to the announcement was broadly positive, with Darius McDermott, managing director at FundCalibre, calling it “a positive move for shareholders” as there was “no reason why [the Artemis team] cannot replicate their success in the closed-ended structure.”

James Carthew, head of investment company research at QuotedData, said the pragmatic, style-agnostic Artemis approach “should help steady the ship,” though he noted the changes were not radical enough to warrant the modest share price dip that followed the announcement.

Now that the handover has completed, the question is whether the investment case has strengthened or whether the easy gains from the management change narrative are already made. Murray Income returned 15.7% in 2025, outpacing its sector, and has held up relatively well in recent weeks.

Rob Morgan, chief analyst at Charles Stanley, was constructive.

“Frost and his wider team have a very successful record of running the Artemis Income fund, which has been a go-to UK equity income cornerstone for years,” he said.

“That this team and approach is now available in closed-ended form with some gearing – as well as the potential to buy in at a discount at present – is appealing. The relatively low charges will also pique the interest of fund buyers in this competitive sector.”

Style continuity was also a plus for Morgan.

“The Artemis approach is fairly style neutral with relative performance driven mostly by stock selection rather than being skewed towards value or growth,” he said. “In that sense this is not an abrupt departure from one type of investing to another.”

Ben Yearsley, director at Fairview Investing, went further – he said he had started buying the trust both personally and for clients. However, the structural question is now more relevant than the performance one: with Frost's team running both vehicles, the choice between Murray Income and the open-ended Artemis Income fund comes down to whether an investor wants a trust or a fund.

“Murray Income and Artemis Income will end up being very similar in the next month or so – the choice is really down to structure, do you want an open- or closed-end fund?” he asked. “I have both in my portfolios but in this instance I'll favour trust over fund as there are very few core equity income trusts and the Artemis team is among the best.”

A question worth raising, however, is whether the Artemis team's exceptional record is itself a reason for caution. Artemis Income has been on a run that has spanned multiple market cycles, style rotations and economic regimes so, at some point, mean reversion is a legitimate concern.

Investors buying now could be backing a team at or near the peak of a long winning streak, in a strategy that has already re-rated on the back of the management change announcement.

Morgan acknowledged the point, noting that the style-neutral, stock-selection-driven approach had delivered returns without excessive risk – suggesting the outperformance is structural rather than cyclical – but past consistency is not a guarantee that the next cycle will be equally kind.

Yearsley was "not worried that recent performance has been good. Equity income is a portfolio mainstay that you stick with through thick and thin”.

Finally, abrdn’s Luke, who had been in charge of Murray Income since 2006, still manages abrdn UK Income Equity and abrdn Europe ex UK Income Equity but Yearsley said he’d “probably find other alternatives to his funds.”

“I just think many of [abrdn’s] UK funds have been average,” he concluded.

Gilt yields have risen sharply in recent weeks following the outbreak of military action by the US and Israel against Iran. Yields on the 10-year government bond rose from 4.23% at the end of February to around 4.7%, although they have eased off slightly to their current level of 4.58%.

At the start of the month, the US and Israel launched a massive strike on Iran as part of ‘Operation Epic Fury’, killing the Iranian supreme leader, Ayatollah Ali Khamenei.

Iran has retaliated by hitting US military bases and neighbours in the Gulf with missile and drone attacks, as well as targeting ships using the globally significant Strait of Hormuz.

Rathbones head of fixed income Bryn Jones said that while he anticipated a rise in yields, the moves in the gilt market “have been aggressive”.

Markets went from suggesting two rate cuts this year by the Bank of England to one rate hike, which he described as “exceptional behaviour from a G7 government bond market”.

Since then, rate expectations have come back slightly, with markets implying there would be no change this year in the headline Bank rate.

Much rests on the price of oil, which has spiked in recent days. Around 20% of the world’s oil travels through the Strait of Hormuz each day, trade that has almost entirely stopped since the start of the conflict.

A barrel of Brent crude has risen above $100 for the first time since 2022, threatening to bring about a spike in inflation across the world.

“A long, protracted war will have a negative impact on longer-term inflation, hence why we have seen yields rise,” said Jones. “It is difficult to predict president [Donald] Trump’s behaviours, comments and moves and this ‘Trump Bingo’ has been going on for a while.”

Gilts have felt the brunt of investors’ ire, however, noted David Roberts, head of fixed income at Nedgroup Investments, with UK government bonds hit hard both in absolute terms and relative to the like of German bunds and US treasuries.

“[This] is the problem of an open economy with a reliance on imported energy and ongoing political concerns,” he said.

“We're not surprised by the move. Shorting gilts is an easy and, to some extent, lazy trade, but can be justified on the basis that a temporary spike in CPI [the consumer prices index] from raised energy prices could stay the Monetary Policy Committee’s (MPC) hand and prevent rate cuts; indeed, there are even some who are forecasting hikes before the end of 2026.”

Inflation remains above the Bank of England’s 2% target, hovering at 3% on the January reading from the Office for National Statistics.

Is now a buying opportunity? The answer is yes

Jones said the long end of the gilt market “looks attractive”, with issuance collapsing and quantitative tightening “massively reduced”.

“Clearly, we have seen significant technical moves, going from overbought on relative strength indicators to oversold very quickly. Fundamentals though are being questioned,” he said.

The co-manager of the Rathbone Strategic Bond fund is also constructive on the shorter end of the curve in the right situation.

“The front end has also seen some aggressive repricing. If you think the inflation fed through is not going to be that bad and a conclusion to this trouble is forthcoming, then clearly there could be a lot of value,” he said.

Roberts, meanwhile, moved from neutral to double weighted last week, citing the short-term relative value to US and German government bonds.

“Also, a sharp upward move in energy prices is way better for sovereign bonds than a protracted month-on-month series of rises. Why? The so called ‘base effect’ means that in a few months' time oil may well be materially lower than current spot prices, meaning disinflationary forces are at work,” he said.

“Put in another way, we went from $60 to $100 [per barrel] almost overnight. If that goes back to $80 by May, the MPC will be able to ‘look through’ the spike and may indeed be more tempted to cut, as CPI in late 2026/into 2027 may perversely undershoot target, depending, of course, on second-round effects such as collective bargaining, triple-lock impact and general pass through to the broader economy.”

Craig Veysey, head of fixed income at Guinness Global Investors, also believes there are reasons for optimism, noting that this is not a “fiscal crisis” nor a repeat of the market frenzy that followed former prime minister Liz Truss’ disastrous mini-Budget.

“This is an inflation repricing story. Safe havens do not work in the usual way when bonds have already rallied hard, yields are near their lows and markets suddenly have to worry about inflation again,” he noted.

“At these levels, I do think gilt yields are becoming attractive again. There is clearly a risk that energy prices stay higher for longer if the conflict drags on and central banks are far too early in the process to react. But if yields move further out of proportion to the underlying UK economic data and/or energy prices begin to stabilise, my bias would be to be a buyer of gilts.”

As artificial intelligence accelerates across the global economy, markets are beginning to grapple with a new kind of uncertainty. AI promises enormous productivity gains but it also raises questions about the durability of many business models – particularly those built on software, digital intermediation and large white collar workforces.

Many investors are now being forced into an uncomfortable reassessment: what types of assets are structurally resilient in a world of faster, broader disruption?

One area gaining renewed attention right now is real assets infrastructure, specialist property and other essential services with long-term, contractual cashflows.

Whilst these businesses are not immune to macroeconomic conditions, they are far less exposed to the competitive dynamics reshaped by AI and can play a strategic role in navigating the new volatility of AI disruption.

Why real assets can steady the ship

AI has raised disruption risk significantly for asset-light sectors. software platforms, digital marketplaces and service-led businesses face potential margin pressure as AI lowers barriers to entry, accelerates automation and compresses pricing power.

Business models based on intermediation, taking a fee because humans lack time or information, look particularly vulnerable as AI agents become increasingly capable.

With the time horizon for disruption shortening, investors are reassessing where long-term visibility of cashflows can still be found.

In contrast, real assets provide contractual cashflow and resilience, benefitting from qualities such as long leases/regulatory frameworks, inflation-linked income streams, physical infrastructure assets that cannot be replaced by code and the underlying demand for services that are essential for society to function daily.

This dynamic can create a return profile that is less correlated with technological disruption and more tied to population, energy, healthcare and transport needs.

There are several great investment trust options which we invest in via the Momentum Real Assets Growth & Income fund as a play on this trend.

Primary Health Properties (PHP): Predictable income from essential healthcare

Healthcare infrastructure is one of the most stable segments of real assets. The fund holds Primary Health Properties, a large owner of modern primary care facilities.

PHP recently completed its merger with Assura, creating a £6bn healthcare property group, and has delivered 30 consecutive years of dividend growth, according to the fund’s January commentary. Rent reviews have also increased contracted rent roll, reinforcing the underlying visibility of cashflows.

In a world where AI may reshape digital industries at speed, the need for physical GP surgeries and community healthcare centres remains consistent, making PHP a good illustration of ‘AI resilient’ income.

Supermarket Income REIT (SUPR): Anchored by non-discretionary consumer demand

Supermarket Income REIT owns large-format supermarket sites. These assets continue to benefit from resilient food retail demand and strong tenant covenants.

As shopping habits evolve, whether more in-store, more online, or more click and collect, supermarkets’ omnichannel capabilities increase the strategic value of these sites.

AI may alter the digital layer of retail but households still need groceries. SUPR’s properties sit at the intersection of physical retail and logistics, and the long-lease nature of the assets supports stable income through varied economic conditions.

International Public Partnerships (INPP): Infrastructure powering the real economy

To round out the picture, one of the fund’s largest holdings is International Public Partnerships (INPP). It invests in more than 140 public infrastructure assets across energy, transport, education, healthcare and digital networks, aiming to deliver long-term, inflation-linked returns.

What makes INPP particularly relevant in an AI-disruption environment is the nature of the assets it owns. For example, offshore wind transmission links, such as the Rampion project and Beatrice offshore wind farm transmission link, form the physical backbone of the renewable energy system, an area expected to grow as both electrification and AI-driven data centre demand increase.

Another is core social infrastructure, including education, health and justice facilities across the UK, Europe and Australia, providing essential services with government-backed or availability based revenues.

These are not business models exposed to software disruption or algorithmic competition. They represent critical national infrastructure assets that enable the functioning of modern society regardless of AI adoption.

Why diversification into real assets makes sense

AI is reshaping both opportunities and risks across markets, making one thing very clear for investors: when technological uncertainty rises, the value of cashflow stability increases.

We have found that real assets provide structural demand drivers, income visibility through long-term contracts, have low sensitivity to rapid technological change and provide a differentiated return stream which is very valuable within multi-asset portfolios.

As investors look ahead to a future filled with uncertainty, shaped by both innovation and disruption, real assets provide something increasingly scarce: tangible, essential, and resilient cashflows.

Gary Moglione is a portfolio manager at Momentum Global Investment Management. The views expressed above should not be taken as investment advice.

NextEnergy Solar Fund is making strategic changes in a bid to close its persistent discount, including cutting its dividend, growing asset sales and upping its focus on energy storage investment. The trust was trading at a 41% discount to net asset value (NAV) as of 31 December 2025.

The most significant change for investors is the planned reduction in the annual dividend, shifting to a payout of 75% of operating free cash. This represents a fall from its current target of 8.43p per share to an estimated range of 4p to 4.6p for the financial year ending March 2027.

According to the trust’s strategic review, reset and roadmap, the new dividend policy is expected to free up £40m of operational free cashflows over the next five years, allowing the company to strengthen its balance sheet through additional debt repayments.

In addition, the company aims to reduce and maintain its total gearing to between 40% to 45% of gross asset value (GAV) – below its investment policy limit of 50%.

To ensure NAV growth, the company said it aims to repower existing solar assets alongside investing in co-located energy storage (situating storage units at the same location as renewable energy projects), which it argued would enable long-term asset health and performance, while also adding revenue diversification. As such, the trust will be upping its allocation to energy storage from 10% to 30% of GAV.

The trust’s capital recycling programme will also be extended, selling up to an additional 120 megawatts (MW) of solar assets offering limited near-term value enhancement potential. This follows the completion of an earlier phase that disposed of 100MW.

Tony Quinlan, chair of NextEnergy Solar Fund, said: “Following a comprehensive strategic review, the board has concluded that recalibrating the company’s strategy is essential to ensure [the trust] adapts to the evolving equity and power markets and is positioned for sustainable growth.

“This reset is designed to maximise long-term shareholder value and seize the significant opportunities emerging in the UK market.”

The trust aims to deliver a balanced total return profile between 9% to 11%.

Law Debenture's managers spent much of 2025 banking profits on stocks that delivered and are redeploying the proceeds into unloved corners of the market they think the rally has left behind.

The trust, run by James Henderson and Laura Foll of Janus Henderson, posted a net asset value (NAV) total return of 28.4% for the year, beating the FTSE All-Share's 24% and extending its record of outperformance to 21 of the past 26 years, as it announced today in its annual report.

Performance of fund against index and sector over 1yr

Source: FE Analytics

The headline portfolio move was a significant reduction in Rolls-Royce, the trust's largest holding for much of the past three years. The managers had built the position when the engineer was trading at roughly one times turnover, battered by Covid and questions over its balance sheet. They sold £24m worth of shares during the year, though retain an £18.7m position. "A few years ago you could buy Rolls-Royce for roughly 1x its turnover," they noted. "Today it trades on approximately 5x."

A similar logic applied to Babcock. Shares in the defence contractor more than doubled over the year and it was among the top five contributors to performance but the managers trimmed the holding, arguing the improved outlook for defence spending is now largely priced in.

Banks remained the single largest sector position at 13% of the portfolio, with Barclays, HSBC and Standard Chartered all featuring among the top five contributors. The managers took modest profits but held on, citing ongoing potential from dividends and buybacks.

The proceeds were directed primarily into commercial property. The trust initiated new positions in British Land and Segro, and added to existing holdings in business premises provider Workspace and developer Hammerson. Henderson and Foll also bought into two listed infrastructure trusts – Greencoat UK Wind and HICL Infrastructure – applying the same logic: shares trading at steep discounts to book value while paying attractive dividend yields. "There is currently a disconnect in the sector between the operating conditions, which are generally strong, and the share prices," they wrote.

The UK weighting edged up to 89.9% from 87.6%, with the managers describing UK equities as offering "superior value" despite the year's strong run. They remain buyers, pointing to continued M&A interest from overseas acquirers as evidence that the discount has not closed.

Not everything worked. Online sports betting and gaming operator Flutter Entertainment was the largest detractor, falling 19% as the pace of US gambling legalisation disappointed. Building materials suppliers Ibstock and Marshalls suffered from weak housebuilding activity, though the managers added to both on the expectation of an eventual recovery. Public relations firm WPP was sold at a loss in April at £5.70 after the managers concluded that rivals such as Publicis were taking structural market share. The shares ended the year at £3.38.

The trust's total dividend for 2025 was 35.5p per share, a 6% increase and the 47th consecutive year in which it maintained or grew its payout.

 ISA Season Special  ·  Part 3 of 5

Investors are looking to make the most of what they have left of their £20,000 ISA allowance before the end of the tax year on 5 April, so each week until then Trustnet is asking the UK's largest investment platforms to build model portfolios from their own best-buy lists – a ready-made starting point for investors who want a framework rather than a blank page.

This week, it is Fidelity International's turn. Investment director Tom Stevenson took a different approach from the platforms that preceded in this series: rather than prescribing fixed weightings across a set number of funds, he offered a collection of building blocks – funds that recur across investor types in different combinations – and let the balance shift depending on how much risk the end investor is willing to take.

The building blocks

Four funds appear across most or all of Stevenson's portfolios and form the core of his thinking: Fidelity Global Dividend, Dodge & Cox Global Stock, International Public Partnerships and the iShares Physical Gold ETF.

Fidelity Global Dividend, managed by FE fundinfo Alpha Manager Daniel Roberts and Tristan Purcell, appears in each of the below portfolios, from core to defensive, and its role shifts from growth engine for younger investors, income anchor for the middle-aged and resilience provider for retirees. The fund focuses on companies with high and growing cashflows and applies valuation discipline, which has produced a five-year return of 80.3% with "a relatively smooth ride". 

Performance of fund against index and sector over 1yr

Source: FE Analytics

Dodge & Cox Worldwide Global Stock is the value complement. The San Francisco-based firm's committee-driven approach – which includes fundamental research, long holding periods and a preference for good companies at attractive prices – shows up in the five-year return of 81.6%, broadly in line with Fidelity Global Dividend but built on different underlying positions. Stevenson described it as "pragmatic", noting it will own growth stocks if they are attractively valued, which prevents it from becoming a pure style bet.

Performance of fund against index and sector over 1yr

Source: FE Analytics

International Public Partnerships is the one investment trust in the mix. It provides exposure to infrastructure assets – such as roads, schools and hospitals – that generate long-term, often government-backed income streams. The trust has increased its dividend every year since 2006, though Stevenson was careful to note that income is not guaranteed. With a five-year return of just 6.7%, it is not a growth holding; it is there to dampen volatility and provide ballast, particularly in equity-heavy portfolios.

Performance of fund against index and sector over 1yr
Source: FE Analytics

The iShares Physical Gold ETF rounds out the core. Gold's role here is insurance rather than return – a hedge against inflation and geopolitical uncertainty that Stevenson described as "a useful insurance policy over a 10-year period". 

Performance of funds against index and sector over 1yr

Source: FE Analytics

Core allocation

Suitable for: Investors wanting a balanced foundation that blends growth, value and diversification without tilting too heavily in any direction.

Source: Fidelity International, FE Analytics.

For balanced investors, Stevenson added to funds to his core portfolio. Rathbone Global Opportunities, managed by Alpha manager James Thomson and Sammy Dow, is the growth engine. The fund holds 40–60 companies the managers believe can grow faster than the broader market, a concentrated approach that has returned 38.7% over five years, lagging the value-heavy alternatives elsewhere in the table. Stevenson acknowledged the fund's growth bias "can lead to periods of volatility, as seen in 2022", but stressed it focuses on proven business models rather than speculation.

The contrarian slot goes to Fidelity Special Situations, managed by Alpha Manager Alex Wright and Jonathan Winton, which has been the standout performer in this portfolio with a five-year return of 102.7% – the best of any equity fund across the entire series. It taps into valuation opportunities in the UK market, which Stevenson noted "trades at a significant discount to the US". For a core portfolio, a UK-focused contrarian fund provides both geographic diversification and a valuation cushion that a global growth fund cannot offer.

Infrastructure and gold complete the picture, providing the non-correlated exposure that stops the portfolio from moving entirely in lockstep with global equity markets.

Growth tilt for younger investors

Suitable for: Investors with a longer time horizon and a higher tolerance for volatility, looking to tilt more heavily towards growth.

Source: Fidelity International, FE Analytics.

The growth portfolio is the most aggressive of the four and the only one where the core building blocks – gold, infrastructure, Dodge & Cox – step aside in favour of pure equity exposure across four different growth themes.

Rathbone Global Opportunities appears again. Alongside it, Stevenson introduced Brown Advisory US Smaller Companies, managed by Christopher Berrier and George Sakellaris, to capture the smaller-cap opportunity he sees in the US.

"Given how dominant the largest US stocks have been in recent years, smaller companies may offer attractive long-term potential, with valuations typically less stretched," he said. The 10.1% five-year return reflects a difficult period for the asset class rather than a structural weakness in the strategy.

Fidelity Global Technology, managed by Hyunho Sohn, is the highest-returning fund in this portfolio at 98.4% over five years, yet Stevenson chose it for its underweight position in mega-cap US tech stocks, which offers "a differentiated way to access innovation" relative to a plain index tracker. At £24.7bn, it is by far the largest fund in the series, a reflection of how much investor interest the technology sector has attracted.

Lazard Emerging Markets, run by a four-strong team including James Donald and Rohit Chopra, rounds out the portfolio with geographic breadth. Its five-year return of 95.9% is the second-strongest in the series and reflects the fund's focus on quality companies at reasonable valuations with improving fundamentals – a disciplined approach that has paid off in a volatile asset class.

Growth and income for middle-aged investors

Suitable for: Those seeking a blend of growth and income, with capital stability becoming more important alongside continued participation in equity markets.

Source: Fidelity International, FE Analytics.

The income portfolio strips the portfolio back to four funds, remaining with a combination of income, value, infrastructure and gold.

Fidelity Global Dividend and Dodge & Cox sit side by side as the equity core. Roberts and Purcell at Fidelity are focused on cashflow quality and dividend sustainability while the Dodge & Cox committee is focused on valuation gaps and long-term fundamentals. Together, they cover the income-with-growth brief from two different angles.

Infrastructure and gold return in the mix. At this stage of an investor's life, Stevenson said the priority shifts from accumulation to preservation of what has already been built, and non-correlated assets become more valuable because they tend to hold up when equity markets are struggling.

Defensive tilt for PENSIONERS

Suitable for: Those seeking a blend of growth and income, with capital stability becoming more important alongside continued participation in equity markets.

Source: Fidelity International, FE Analytics.

The defensive portfolio is the income portfolio with the dial turned further towards stability. The fund list is identical but the emphasis shifts: Fidelity Global Dividend and infrastructure move to the foreground, with Dodge & Cox retained in a supporting role to ensure the portfolio does not lose all contact with equity market returns over time.

"Funds such as Fidelity Global Dividend, with its focus on cashflow and valuation discipline, may suit those seeking resilience," Stevenson said. Gold retains its place as a hedge against inflation and geopolitical risk – perhaps more relevant for a retiree drawing down a fixed pot than for a younger investor with decades of contributions still ahead.

The case for keeping Dodge & Cox even at this stage is that pure defensiveness carries its own risk: a portfolio with no equity growth engine can be eroded by inflation over a long retirement. A value-oriented global fund, held at a modest weight, helps balance income with what Stevenson called "long-term growth potential" without reintroducing the volatility of growth-style equities.

Previously in the series: interactive investor's and AJ Bell's perfect portfolio.
Next week: We continue with best-buy picks from our third platform ahead of the 5 April ISA deadline.

Gold has been on a hot streak in recent years as geopolitical instability, equity valuation concerns and lower interest rates have created a near-perfect storm for the precious metal.

The metal has tripled investors' money over five years, up 211.7%, but there has been an even quicker way to make meteoric gains: investing in miners.

SVS Baker Steel Gold & Precious Metals invests in global precious metal miners and has achieved a 243.9% return in just 12 months. Over five years, the fund is up 343.3%, more than 100 percentage points above the gold spot price.

Performance of fund vs benchmark and gold spot price over 5yrs

Source: FE Analytics

But despite this phenomenal run, director of market strategy Cosmo Sturge believes there is still plenty of room to run for gold and precious metal producers.

Miners tend to lag the gold spot price on the way up by around six months as investors wait for higher prices to feed through into company profitability.

Despite strong share price gains, he said that valuations remain relatively undemanding, noting that most major gold miners trade on a price to net asset value (NAV) of around 0.7x.

This is below both the long-term average of 0.8x and almost half of the previous cyclical peak in the late 2000s of 1.4x.

“We’re confident they're still not stretched in valuation terms,” he said, noting that miners are currently using a price in the $3,000-$4,000 range rather than the current spot price of $5,000, suggesting there could be further upside if they start to view the spot price as entrenched.

As such, gold does not need to move from its current level for miners to keep outperforming the wider market, he said. In fact, if the price stays the same, this would still be “fantastic” for metal producers, as the all‑in sustaining cost of mining an ounce of gold is somewhere around $1,600 to $1,800.

“Even if gold traded sideways in its current range, [miners] would be printing money, delivering very strong quarterly results and continuing buybacks,” said Sturge.

The gold price is hard to predict but there are factors that give Baker Steel confidence that it is well supported currently.

First is the “wide variety of investors” in gold, including central banks, financial institutions, family offices, retail investors and consumers, who are buying jewellery despite higher prices.

“Physical gold ETF flows only really started picking up midway through last year, which was a really strong lift,” he said. “Prior to that, there’d already been a year’s worth of gold rally as it was central banks and globally diversified mixes of family offices and retail investors and high‑net‑worth individuals accumulating physical gold.”

“The key for us is the return of Western investors, who tend to move both physical gold and gold‑mining equities. We think that’s only just starting,” he said, noting that Western investors had been selling gold and ignoring miners in the past few years, choosing to take profits.

Despite its strong run, gold has been more muted recently and suffered a leg down at the start of the year when US president Donald Trump nominated Kevin Warsh as the next Federal Reserve chair.

Markets viewed the nominee as more hawkish, something Sturge described as “nonsensical” given the president’s desire for lower interest rates.

Gold should therefore remain supported from a monetary policy perspective too. Historically, he noted, the precious metal hits its peak after the rate-cutting cycle has concluded.

“If you look at the Fed’s dot plot and consensus – a downward slope in rates – gold has not yet hit its cyclical peak,” he said.

Gold thrives in periods with persistent inflation, doubts about policy effectiveness and high geopolitical tension. That was true in the 1970s, the 2000s, and early 2010s, all multi-year bull cycles when gold rose 100–400%.

“Since mid‑2024, gold has risen about 170% so, in our view, we’re probably midway through a normal bull cycle. We’re not putting targets on it, but historically this would imply significant room left.”

Bonds have been back in favour over the past few years as rising interest rates have pushed yields higher, giving fixed-income investors better long-term return prospects than they have had for much of the past decade.

This rise in popularity has brought about the return of the 60/40 portfolio, which incorporates a 60% weighting to equities and a 40% position in bonds.

Yet Credo Dynamic has a positioning far more akin to those popular in the 2010s during the era of lower interest rates, with just 23% in bonds and a 22.8% position in alternatives.

Alternatives rose to prominence during the post-financial crisis era as interest rates were on the floor and investors in search of reliable income turned to other assets such as property, infrastructure and private credit to achieve meaningful returns.

In recent years, with developed market base rates around the world climbing to 5% or higher, bonds (and particularly government bonds) have become far more appealing.

FE fundinfo Alpha Manager Rupert Silver noted that his Credo Dynamic fund had as much as 45% in fixed income at its peak, which coincided with the Liz Truss mini-Budget, but said he is “not particularly impressed with corporate bonds or gilts” right now.

“Things change quickly”, he added.

These changes have contributed meaningfully to returns, with the £114m fund a top-quartile performer in the IA Mixed Investment 40-85% Shares sector over the past three and five years, while also beating its average peer over 12 months.

The fund has sat in the top 25% of its peer group in each of the past three calendar years, with recent Trustnet research showing it has ticked (just about) all the boxes for investors in recent years.

Performance of fund vs sector over 3yrs

Source: FE Analytics

Within bonds, his typical preference is investment-grade credit, where investors can get “significantly higher returns” for taking “a fraction more risk”.

However, today spreads are “the tightest they’ve ever been”, meaning there is very little compensation for credit risk. As a result, co-manager Ben Newton noted the fund is largely weighted to short-dated government bonds, with maturities of less than three years.

“In corporate bonds, we don’t see the value because of the spreads and with gilts, we want to go quite short, which makes it more cash‑plus. As a result, we want to achieve an attractive return somewhere else,” he said.

But the return to alternatives is not just due to a dearth of options in the fixed-income space, they said, noting that there are some “super exciting” opportunities among alternative assets.

Silver noted: “We think we can get much higher returns over the long term in alternatives and hold assets in the portfolio that have near‑zero correlation to equities.”

The fund is allocated to commodities, which surged in 2025. The bucket was led higher by gold and other precious metals, which boomed as investors turned to safe havens amid geopolitical concerns.

More recently, oil has spiked following the start of military action in Iran by the US and Israel last week, which has given the broad commodity sector another leg higher.

Another sleeve that has performed well for the trust is real estate investment trusts (REITS), where there was a “big wave of takeovers”. Newton said: “Last year was an outstanding year for the alternatives section, particularly within commodities and REITs.”

The managers also venture into investment trusts for more traditional equity portfolios – not just for real estate and other alternative assets. For example, the Merchants Trust is a 1.6% position in the Credo Dynamic fund.

Here, they argued that the rationale is centred on valuation. Although the discount “wasn’t super exciting”, they bought the trust on a 6-7% discount to net asset value (NAV), which is “boring in a sense when compared to some of the quirky 20% ones”.

However, the long-term track record of the trust (it has beaten the FTSE All Share over the past decade) and the discount on offer made it a “lovely way” to access UK equities at a time when the managers were “running away from US large-cap equities” on valuation grounds.

They argued that, should UK equities continue to outperform the US (as they did in 2025) and the trust continue to beat the FTSE All Share benchmark, this discount could close.

For much of the three years prior to 2024, the trust traded on a premium, with Silver suggesting the discount could come in by between 2% and 4%, bringing it closer to par, or “maybe more” if it were to return to its pre-2024 levels.

2025 was a year of two halves for the biotech sector. The first half was dominated by uncertainty, with markets becoming increasingly unsettled following the late-2024 US presidential election and coming to a head with president Trump’s ‘Liberation Day’ tariff announcements.

Those wider concerns were compounded by sector-specific issues, including debate around drug pricing resurfacing and questions facing leadership and resourcing at the US Food and Drug Administration (FDA). Together, these developments created a challenging backdrop for the sector, with the lack of visibility weighing heavily on investor confidence.

The second half of the year saw conditions become more clement. Business continued as usual at the FDA despite leadership changes, restoring confidence in the regulatory process, while merger and acquisition (M&A) activity also picked up as large pharmaceutical companies began to re-engage strategically after a period of relative caution. Financing markets also improved with higher-quality companies continuing to successfully raise capital, although the initial public offering (IPO) window remained largely shut.

Promising pipeline

This improvement in conditions was evident in the atmosphere at this year’s J.P. Morgan Healthcare Conference, an event which has long been a focal point for the industry.

In previous years, discussion at the conference has often centred on clinical milestones and M&A. This year, however, many biotech companies used the platform to provide updates on commercial execution and revenue guidance. That shift reflects a broader change across the sector. An increasing number of biotech companies are choosing to take assets fully through development and into commercialisation themselves, rather than partnering early or seeking acquisition by larger pharma groups. This is an important development which bodes well for future value creation.

Sentiment around capital availability also felt more constructive. IPO activity looks to be picking up with 20-30 in the pipeline for 2026 and equity issuance has already been strong this year, with more than $3bn raised in the first couple of weeks of January, extending the momentum seen in the second half of 2025. Balance sheets are generally strong, leaving ample financial flexibility, and valuations remain in attractive territory with EV/cash multiples below historical averages.

From the perspective of M&A, although no major deals were announced at the conference, there was credible speculation around future activity, including the potential for some very large transactions. As one senior pharmaceutical executive put it, the constraint to further M&A is not access to capital but identifying the right strategic opportunities.

Regulation was another recurring theme, with health policy featuring prominently in the programme. For biotech investors, the most relevant contribution came from Dr Marty Makary, the recently appointed commissioner of the FDA. Makary emphasised the need to shorten the journey from invention to patient, greater flexibility in trial design, increased use of historical controls and a reduced reliance on multiple Phase III trials as potential ways to accelerate development, particularly in a global context where other regulatory regimes are often seen as nimbler.

Innovation abounds

The conference also revealed continued momentum across several areas of innovation within the sector. Obesity remains a prominent theme, with particular interest in next-generation treatments. Progress in oral GLP-1 therapies featured heavily, underlining the opportunity beyond injectable drugs and the potential for future approaches that could broaden uptake and improve patient experience. Meanwhile, immunology, oncology and CNS (central nervous system) were also areas of considerable excitement, with a number of highly anticipated clinical read-outs expected this year.

Overall, we see a sector that has moved through a difficult period and is now in a more supportive environment. Sentiment has improved meaningfully, capital is available for high-quality assets, regulatory processes appear to be becoming more pragmatic and strategic interest from large pharma companies is evident.

These conditions are consistent with where we believe the sector now sits in the biotech investment cycle. Having emerged from a period of volatility, we believe the industry is now firmly in the longer, more benign ‘equilibrium’ phase, generally characterised by steady progress, healthy balance sheets, and typically, growing interest from generalist investors which can lead to valuation expansion.

While the IPO market has yet to meaningfully reopen, the order book is full, and improving sector conditions and renewed interest from more generalist investors gives us confidence as we look ahead. We believe the environment remains supportive for 2026 and beyond – and we hope to be making hay in the sunshine for a while yet.

Ailsa Craig and Marek Poszepczynski are portfolio managers at International Biotechnology Trust. The views expressed above should not be taken as investment advice.

The oil price has surpassed $100 a barrel for the first time since 2022 after conflict in the Middle East and the near-closure of the Strait of Hormuz delivered a stagflationary shock to markets and sent investors searching for safe havens.

Investment strategists broadly agree that the best course of action in sudden outbreaks of volatility is to do nothing, relying instead on exercising caution in the near term, prioritising diversification and avoiding reactive selling.

But for those looking to introduce a more cautious tilt to their portfolio, Daniel Casali, chief investment strategist at Evelyn Partners, pointed to several hedges: gold and hedge funds, inflation-linked bonds, short duration sovereign bonds and energy equities.

Each addresses a specific dimension of the current risk environment, such as the inflationary shock, the uncertain rate outlook, rising government debt and the direct benefits accruing to oil and gas producers.

Brent crude was trading near $60 a barrel in January. By Monday morning it had surged to $119.50 before settling just over $100. Brent closed the London session at just over $99 a barrel.

“The US and Israeli military strikes on Iran are now reverberating through energy prices. Iranian drone and missile strikes on regional oil and gas infrastructure, along with damage to multiple tankers, have further heightened concerns about supply disruptions,” Casali explained.

The primary cause is the near-closure of the Strait of Hormuz, the 3.2-kilometre-wide shipping channel through which roughly a fifth of global crude oil and LNG exports normally pass. Five of the world’s 10 largest oil producers border the Persian Gulf and for all of them the Strait is the only maritime exit to global markets.

Qatar has declared ‘force majeure’ on LNG exports, which means it cannot meet contractual delivery obligations due to circumstances beyond its control. Iraq has cut output by 70% at its three main oilfields.

Multiple tankers have been damaged and marine war risk insurance has been withdrawn or severely curtailed by private markets. JPMorgan estimated the cost of fully insuring tankers in the Gulf at $352bn, well above the US Development Finance Corporation’s statutory cap of $205bn through 2031.

Dan Coatsworth, head of markets at AJ Bell, said: “Tipping over the $100 a barrel level has major implications from a psychological and economic perspective. It significantly raises the chances of a sharp jump in inflation and interest rates shifting to a completely different path than the market had priced in only two weeks ago.”

Casali characterised the shock as stagflationary: higher inflation combined with lower growth, a combination that limits central banks’ room to respond. Edmond de Rothschild Asset Management estimated that a $15 rise in oil prices adds 1 percentage point to inflation in developed economies whilst removing 0.3 to 0.4 percentage points from global GDP growth.

Rate expectations have shifted sharply. Coatsworth said markets are now pointing towards UK interest rates holding flat through the rest of 2026 and potentially rising in 2027. “That is radically different from recent expectations of more cuts this year,” he said.

Casali said: “Our base case is for a ‘contained conflict’ that has a limited global growth impact but with a transitory increase in inflation. For the moment, global equities continue to be underpinned by an upward expansion in company earnings.”

However, he pointed to several portfolio diversifiers that could be useful given the “inherent uncertainty and the asymmetric nature of wars”.

Gold and diversifying hedge funds address the geopolitical tail risk directly. Their low correlation to both equities and bonds during inflationary shocks makes them useful portfolio stabilisers.

Casali argued they are particularly suited to protection against geopolitical tail events. Recent days have seen stock markets sell off indiscriminately while government bond yields have risen.

Inflation-linked bonds, or linkers and TIPS, hedge against headline inflation surprises. Casali noted they also protect against the specific risk that central banks choose to tolerate temporarily higher inflation rather than tighten aggressively and deepen the growth slowdown. In a stagflationary environment, that tolerance is a plausible policy response.

“Given the current uncertainty over the inflation outlook and rising government debts and deficits over the medium term, it makes sense to keep portfolio exposure to short duration sovereign bonds, which are less sensitive to changes in the inflation outlook,” the strategist added.

Energy equities are the most direct expression of the oil price move. Casali noted they “historically do well when the price of crude oil rises.”

Coatsworth pointed to Shell and BP in a note on Monday: “The FTSE 100 fell 1.2% to 10,160 [in early trading], with only a handful of stocks in positive territory including Shell and BP as two beneficiaries of the sharp rise in the oil price. Their earnings could soar in the near term.”

The FTSE 100 ended 0.25% down at the end of Monday's session, with around 20 stocks – including Metlen Energy & Metals, Shell and BP – in positive territory.

The duration of the conflict is a key variable for the geopolitical impact, the oil price and its effect on the economy and portfolios. John Wyn Evans, head of market analysis at Rathbones, said Iran’s response had been the critical miscalculation.

“Previous cycles of tension were characterised by heavily signposted missile launches and attacks designed to allow Tehran’s leadership to claim resolve without provoking a broader escalation. This time, the strategy looks markedly different,” he said.

“When conflicts are counted in days, equilibrium is typically restored quickly. When they stretch into weeks, and when they involve essential commodities, the odds deteriorate.”

China may hold the key to any resolution. Casali argued that Beijing has both the leverage and the incentive to press Tehran toward de-escalation.

China receives around 40% of its crude oil through the Strait of Hormuz and remains Iran’s primary economic lifeline. President Xi Jinping also has a summit with US president Donald Trump approaching, creating an opportunity to offer restraint on Iran in exchange for tariff relief and eased technology export controls.

While Evelyn Partners’ base case is a contained conflict, Casali said the direction of risks is clear. “Upside inflation pressures are building as energy costs rise, while equities face mounting downside risk and bonds are increasingly exposed to renewed inflation momentum,” he warned.

“Geopolitical events are inherently unpredictable, which is precisely why we invest in highly diversified portfolios, built to withstand such risks over the long term.”

Wyn Evans cautioned against cutting market exposure in response.

“Materially reducing market exposure risks missing any sharp relief rally that could follow progress toward a settlement,” he finished. “But with little sign that Tehran intends to step back and Washington signalling that its definition of 'victory' remains fluid, good news may not be imminent.”

Troy Trojan, Liontrust UK Growth and T. Rowe Price Global Value Equity are all worth considering for investors looking to maximise their ISA allowance before the 5 April deadline, according to Kate Marshall, lead investment analyst at Hargreaves Lansdown.

ISAs are one of the most effective tools for building wealth over time, as they shield investments from income tax and capital gains tax. Savers can deposit up to £20,000 into either a stocks and shares ISA or a cash ISA.

“A well-constructed stocks & shares ISA can combine global growth potential, resilience during more challenging markets and exposure to areas that may currently be out of favour but positioned for recovery,” said Marshall.

T. Rowe Price Global Value Equity falls into the first camp, offering investors broad market exposure by investing in out-of-favour stocks.

“Global equity funds often form the backbone of long-term portfolios. Within global equities, value investing – focusing on companies that appear undervalued relative to their long-term prospects – lagged growth investing for several years. However, investment styles tend to move in cycles,” said Marshall.

“Should markets shift towards a more fundamentals-driven environment or if higher interest rates persist and weigh on highly valued shares, value investing could see renewed interest.”

Managed by Sebastien Mallet, the fund has been a top-quartile performer in the IA Global sector over one and three years and has beaten the MSCI World during both periods.

Performance of fund vs sector and benchmark over 3yrs

Source: FE Analytics

Launched in 2012, the portfolio has also beaten the MSCI World index since inception, although it is slightly behind over the past decade.

T. Rowe Price Global Value Equity fund blends traditional ‘deep value’ opportunities with higher-quality businesses that are temporarily undervalued, said Marshall, which makes for a more balanced portfolio than some value peers.

“While a notable allocation remains in the US, reflecting the breadth of that market, the fund also invests across other developed regions such as the UK, Japan and Europe, and can allocate up to 10% to emerging markets,” she said.

“For investors whose portfolios have become heavily tilted towards US growth stocks or large technology names, a global value allocation could provide useful diversification.

Staying with equities, those looking for a more concentrated bet on undervalued companies could consider Liontrust UK Growth. While the fund is a growth portfolio, it invests in UK mid- and small-caps, which have been strongly ignored by investors in recent years.

In addition, the quality-growth style used by managers Matthew Tonge, Victoria Stevens and FE fundinfo Alpha Manager Anthony Cross has also fallen out of favour with investors.

The team implements its ‘Economic Advantage’ process, which looks for companies with durable competitive strengths that can support above-average profitability over the long term, looking for characteristics such as strong balance sheets, resilient cash flows and sustainable competitive positions.

“Although the fund has historically tended to lag in rapidly rising markets, its quality bias has meant it has tended to hold up better during downturns. If markets begin to refocus on fundamentals or if economic uncertainty persists, high-quality companies could regain favour,” said Marshall.

This will need to happen, however, as the fund’s track record in recent years has underwhelmed; it sits in the bottom quartile of the IA UK All Companies sector over one and three years.

These short-term performance figures have also weighed on its previously strong long-term figures, with the fund now in the third quartile of the peer group over the past decade.

Performance of fund vs sector and benchmark over 3yrs

Source: FE Analytics

“For patient investors willing to take a long-term view, exposure to high-quality UK businesses could offer both recovery potential and resilience,” said Marshall.

Lastly, for the more risk-averse, Troy Trojan is a strong option as its focus on capital preservation tends to serve investors well during uncertain times.

Managed by Alpha Manager Sebastian Lyon and co-manager Charlotte Yonge, the fund invests in four major categories: quality-growth, large-cap equities, government bonds, gold and cash.

Returns may look relatively uninspiring over the short, medium and long-term, as markets have generally risen over the past decade. However, in difficult years, such as 2018 and 2022, this fund has risen to the top quartile of the IA Flexible Investment peer group.

Performance of fund vs sector and benchmark over 10yrs

Source: FE Analytics

“For investors seeking moderate long-term growth with an emphasis on resilience, the fund may help cushion portfolios during more volatile periods,” said Marshall.

Japan’s latest dividend outlook makes for compelling reading.

Supported by robust corporate profits, listed companies are expected to pay more than 20 trillion yen (around $127 billion) in dividends in the fiscal year ending March.

That’s a record, and the implied payout ratio is now close to 40% – above even the S&P 500 average of roughly 34% over the same period.

But the shift is more than a headline number.

It’s clear evidence Japan’s long-running push to raise corporate governance standards is producing tangible outcomes. It also challenges the outdated view of Japan as a market defined by shareholder neglect and persistent cash hoarding.

Importantly, the reform story is far from over.

With further revisions to the Corporate Governance Code anticipated this year, we expect the pace of change to accelerate rather than fade.

One of the most significant drivers of governance reform in Japan over recent years has been its growing emphasis on capital efficiency.

In 2023, the Tokyo Stock Exchange (TSE) issued guidance requiring companies trading below a price-to-book ratio (PBR) of 1 (firms the market believes are generating returns below their cost of capital) to publish clear plans to lift valuations above that threshold.

In practice, this meant companies were pushed to show how they would improve shareholder outcomes through measures such as stronger capital returns and more productive investment.

It was a bold move, directly confronting a long-standing feature of Japanese corporate balance sheets: large cash reserves and under-utilised assets that were rarely questioned.

And crucially, the exchange did not stop there. It went further by introducing what has become a highly visible “name-and-shame” regime, publicly identifying companies that failed to produce credible improvement strategies.

The positive impact is clear.

Alongside rising dividends, the average PBR across listed Japanese companies has climbed from 1.1 in 2022 to 1.4 in 2025, while average return on equity has improved from 8.4% to 9%.

But the next phase may be even more meaningful for investors.

Japan’s Financial Services Agency, in its most recent Action Programme for Corporate Governance Reform released last June, listed “clarifying accountability on whether companies are effectively utilizing cash and deposits for investments” as one of its four core objectives. These objectives will guide the TSE’s anticipated Governance Code revisions this year.

The implication is that reform focus may broaden beyond simply addressing companies with weak balance sheets and low valuations. Instead, we may see the embedding of capital discipline, shareholder returns, and accountability across the entire market.

In other words, even companies already trading at higher valuations and delivering strong return on investment (ROE) could face increasing pressure to justify excess cash balances more explicitly.

This expansion hasn’t come out of nowhere.

Recent data shows that the ratio of cash and deposits to GDP at non-financial corporations in Japan stands at 59.2%, materially higher than Western peers. And since taking office last October, prime minister Sanae Takaichi has repeatedly challenged companies publicly for failing to put surplus cash to work.

Rationalising the market

We believe this broadening of governance expectations may have positive implications for investors in two key ways.

First, it shifts the governance conversation away from valuation metrics alone and towards capital efficiency at any level. It will frame capital discipline as a universal standard, rather than a remedy reserved only for the most obviously undervalued businesses.

Second, it is likely to reinforce a trend that is already reshaping Japan’s market structure: de-listings.

In total, 124 companies delisted from the TSE last year.

At face value, fewer listed companies could sound negative because it means a smaller opportunity set. But it’s more about the quality of the companies that are delisting.

As governance expectations rise and public scrutiny increases for firms that fail to articulate credible strategies, it becomes less attractive and less prudent for lower-quality companies to remain publicly traded. For some, de-listing is a simple way of avoiding the higher standards now demanded by shareholders and regulators.

Looking ahead, we expect this dynamic to continue.

With further revisions to Japan’s Corporate Governance Code expected to add an increasingly explicit focus on accountability, capital allocation and the use of excess cash, the bar for remaining listed is likely to rise again.

That should encourage further market rationalisation, reinforcing a shift toward quality over quantity.

The net result is a Japanese market gradually becoming more concentrated in companies willing to meet higher expectations around transparency, sustainable profitability and shareholder alignment; a structural improvement that benefits both domestic and international investors.

Japan’s record dividend outlook is not a one-off.

It reflects governance reforms that are becoming embedded in corporate behaviour, with expectations set to rise further as standards tighten again this year.

For investors, these reforms may signal a market offering stronger capital discipline, more reliable shareholder returns and improving long-term credibility.

Megumi Takayama is a portfolio manager and analyst on the Chikara Japan Income and Growth fund and the CC Japan Income & Growth trust. The views expressed above should not be taken as investment advice.

Oil crossing $100 per barrel for the first time in four years has pushed stagflation to the top of the agenda for investors, with markets falling overnight as the Iran war shows no sign of abating. 

Brent crude surged as high as $119.50 a barrel when Asian markets opened on Monday, before settling around $107 to $108. West Texas Intermediate followed a similar trajectory. Both benchmarks were trading near $60 a barrel in January, meaning oil has roughly doubled in price in 10 weeks.

“Today’s shock thus looks like a negative supply shock, combining inflationary pressure with an economic slowdown,” Edmond de Rothschild Asset Management said in a note published Monday.

“For investors, this is a worst-case scenario as it rekindles stagflation fears. Rising prices are coupled with slowing growth so monetary authorities and governments have less leeway.”

The primary driver is the effective closure of the Strait of Hormuz, through which approximately a fifth of global oil and liquefied natural gas supplies normally pass. The strait has been largely impassable for more than a week following Iranian threats on tankers.

Iraq has cut production by 70% at its three main oilfields. Kuwait, the UAE and Qatar have all curtailed output as Gulf storage reaches capacity. Saudi Arabia has been intercepting drone strikes targeting its Shaybah oilfield and rerouting crude through its Red Sea terminal at Yanbu.

Iran’s appointment of Mojtaba Khamenei as supreme leader over the weekend shifted market expectations toward a longer conflict. The Iranian politician and Shia cleric is the son of previous supreme leader Ali Khamenei, who was assassinated at the start of the ongoing 2026 Iran war.

US president Donald Trump has said the appointment is “unacceptable” and suggest he should be involved in the choosing of Iran’s new leader.

Neil Wilson, UK investor strategist at Saxo, said the move was the key development.

“It’s a sign of continuation of Iran’s hardline approach and indicates that the war will be more prolonged than financial markets had assumed last week,” he said.

“Complacency has been replaced by a degree of panic because the market is now pricing in a more sustained hit to energy and trade flows.”

Iran produces approximately 10,000 drones per month, Wilson noted, giving it the capacity to sustain pressure on shipping lanes for an extended period.

Equity markets fell sharply on Monday. Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Save for the VIX, investors in global stock markets are staring at red screens this morning.”

Overnight, Japan’s Nikkei dropped 5% and South Korea’s Kospi fell 6%; trading on the latter was briefly halted by a circuit breaker. In Europe, the FTSE 100 opened down 1.75%, with the DAX and CAC 40 each falling 2.5%. US futures pointed to losses of around 1.5%.

The VIX – a measure of implied US volatility, known as Wall Street’s fear index – jumped to 34.7, its highest level since the Liberation Day volatility spike in April 2025.

The concern among analysts is not the oil price in isolation but the combination of effects it triggers. Edmond de Rothschild estimates that a $15 rise in oil prices adds 1 percentage point to inflation in developed economies while removing 0.3 to 0.4 percentage points from global GDP growth.

Royal Bank of Canada has estimated US inflation could reach 3.7% if oil holds at $100 per barrel. RSM calculates that oil at $125 a barrel could cut US GDP by 0.8% even as inflation exceeds 4%.

Susannah Streeter, chief investment strategist at Wealth Club, said: “The worsening situation in the Middle East has the potential to bring a toxic combination of shocks to economies.

“The concern is that governments lack the financial firepower, given high debt levels, to deliver meaningful support to companies and consumers.”

Despite that, markets are pricing in rate hikes. Swaps markets now assign approximately a 70% probability to a Bank of England rate increase this year, with the ECB similarly expected to tighten. Before the conflict, both the Fed and the Bank of England had been expected to cut rates twice in 2026.

The two-year gilt yield rose 27 basis points on Monday, its largest single-day move since the Liz Truss crisis.

The Fed is now not expected to move until September at the earliest. Friday's US non-farm payrolls figure added to the pressure, coming in 92,000 below expectations, a signal of labour market softening at a time when inflation fears are rising.

Some analysts have drawn comparisons with the 1970s oil shocks. Wilson acknowledged the parallel but noted its limits.

“The global economy is a lot less dependent on the price of a barrel than it was then – oil intensity has declined steadily since the 70s. But clearly there are fears of a global economic slowdown and inflation crisis which is roiling global markets after a weekend of further escalation in the Middle East war,” he said.

“The 1970s crisis led to the 80s bull market – will it also create the roaring 20s bull market? For the moment, financial markets are concerned about a 1970s-style stagflation situation first. But these geopolitical events have a tendency to create opportunities, if your time horizon is long enough.”

Edmond de Rothschild puts a 50% probability on a prolonged war of attrition, 30% on rapid regime change, which it considers positive for risk assets, and 20% on a risk-of-chaos scenario involving lasting disruption.

Goldman Sachs has warned that crude and refined products could reach all-time highs if Hormuz flows remain depressed through March. Westpac projects oil at $185 per barrel if disruption continues for three months.

On portfolio positioning, analysts are broadly aligned: exercise caution in the near term, prioritise diversification and avoid reactive selling.

Adrian Murphy, chief executive of Murphy Wealth, said: “In times like these, there are some evergreen principles that apply. Whether it has been double-digit inflation, financial crises or a global pandemic, markets have proven resilient. Dealing with uncertainty is one of the reasons investors earn a return over time – and, as the old adage goes, it is about time in, rather than timing, the market. 

“Many investors consider selling their investments during periods of uncertainty and holding cash until there is more stability. But that is just another form of market timing and has proven to be self-defeating – downturns are often followed by periods of strong growth, for example after the tariffs uncertainty last year.”

Edmond de Rothschild said it is taking profits on its government bond overweight and plans to increase its allocation to risk assets once conditions become clearer.

On gold, Hargreaves Lansdown’s Nathan noted that the yellow metal’s safe-haven role is being complicated by broad deleveraging and the repricing of rate expectations.

Meanwhile, Saxo’s Wilson noted that the sell-off has triggered a rotation out of positions that had led markets earlier this year, including overweight Europe, Asia and emerging markets, and that these may not reassert themselves quickly even if the conflict ends.

Wealth Club’s Streeter offered the longer perspective: “History has shown that after previous conflicts around the world, markets have recovered but it can take considerable time and patience.”

With more young people pursuing higher education while the price of a degree continues to climb, increasing numbers are graduating with sizeable debts.

The Department of Education estimates that full-time undergraduates starting in 2024/25 will borrow an average of £44,690 during their studies, with just over half expected to repay the full amount.

Under Plan 5 – which applies to students starting from 2023 – repayments begin once earnings exceed £25,000, with a 9% charge on anything above that.

Interest accrues from the first payment made to the individual or university and continues to build until the loan is repaid or the full term of the loan agreement elapses and the remainder is written off – for borrowers under Plan 5, this is 40 years. Last year, the rate of interest for Plan 5 loans was 4.3% – the year before, it was 8%. 

This means the average student’s debt balance can rise quickly. Dan Coatsworth, head of markets at AJ Bell, noted that 2024/25 undergraduates will likely amass £53,000 in debt at the end of their period of study which, when applying a conservative estimate of 5% annual interest, means the amount owed will grow to over £86,000 in 10 years.

Given how quickly this debt can accumulate and how long it lingers, a Junior ISA (JISA) is one way in which families can build a pot to offset future university costs.

Up to £9,000 can be paid by parents into a JISA tax-free each tax year.

According to AJ Bell data, if parents paid £750 per month into a cash JISA from their child’s 11th birthday, they would have a pot worth £67,675 at the end of the seven-year period, assuming 2% interest paid monthly. Had that money been invested in the market, such as in the Vanguard FTSE All World ETF, the Junior ISA would be worth £100,143.

But what other funds would fund selectors consider in a JISA with this specific goal?

Rob Morgan, chief analyst at Charles Stanley, suggested M&G Global Dividend as “a great longer-term holding to help drive more consistent performance across market cycles”, adding that yielding stocks tend to be less volatile, while the flow of dividends can bolster returns during leaner periods.

When the child turns 18 and the JISA becomes a standard ISA, Morgan said the units could be switched from accumulation to income – “effectively turning the tap on an income stream that could help towards education costs”.

The fund, which is managed by Stuart Rhodes, invests in a broad range of income stocks spanning quality companies, those with asset backing and faster growing opportunities. As such, Morgan said “it is a well-balanced fund in its own right, or a good option for diversification when held with a growth fund or global tracker”.

M&G Global Dividend has beaten the IA Global Equity Income sector average return in five out of the past 10 years. Notably, it delivered a top-quartile return of 4.6% in 2022, a bad year for equities, while the sector average was a 1.2% loss and MSCI ACWI fell 8.1%.

Performance of the fund vs sector and benchmark over 5yrs

Source: FE Analytics

Meanwhile, Sheridan Admans, founder of Infundly, said a JISA needs both long-term growth and risk control, suggesting a blend of Nutshell Growth and Trojan, with the former serving as “the growth engine” of the JISA and the latter “providing balance”.

Managed by Mark Ellis since its 2020 inception, the Nutshell fund holds around 30 high-quality global stocks demonstrating strong profitability and cash generation – purchased at sensible valuations.

“This disciplined ‘quality at a reasonable price’ approach has historically delivered solid long-term growth with lower volatility than many global growth peers, making it well suited to compounding over a medium- to longer-term horizon,” said Admans.

With over half of its assets allocated to the telecom, media and technology sector, the vehicle is clearly tilted toward growth, with its top 10 holdings – which make up 57.7% of the fund – currently including Adobe and ASML.

The strategy has delivered an annualised return of 13.7% in sterling terms since inception.

Meanwhile, Admans said Troy’s £5.2bn Trojan fund will protect capital in downturns through its high exposure to gold and bonds, maintaining notably low volatility and limited sensitivity to broader equity market movements.

“This will help to ensure accumulated gains are still there when university costs arise,” Admans said.

Its current biggest position is in Invesco Gold ETC, which makes up 6% of the portfolio.

Performance of the fund vs sector and benchmark over 5yrs

Source: FE Analytics

“For parents starting saving later in their child’s life, for example at age 11, a higher allocation to Trojan may be prudent to protect accumulated gains,” he said.

“For those starting earlier, a heavier weighting to Nutshell allows time to absorb volatility while targeting stronger long-term growth.”

Simon Woodacre, fund research analyst at Quilter Cheviot, made two fund suggestions covering lower-risk and higher-risk appetites.

For those wanting a lower-risk option, he pointed to the £282.6m TM Redwheel Global Equity Income fund, which is led by Nick Clay and targets capital and income growth with a low turnover, a yield of around 3% and a long investment timeframe.

Its greater levels of downside market protection “make the fund suitable for clients with a variety of different timescales, however, it would still be best used at the earlier stages of the child’s life in order to benefit from the long-term effects of compounding and to provide more diversification to the rest of the portfolio”, Woodacre said.

A higher risk option is Scottish Mortgage Investment Trust – a £13bn vehicle that invests in a combination of global private and public companies deemed innovators among their peers.

FE fundinfo Alpha Manager Tom Slater and deputy manager Lawrence Burns typically hold investments for long periods with limited turnover, meaning the trust is suitable for long-term objectives such as university fee planning, Woodacre said.

“The trust has also invested in pioneering businesses such as Anthropic and SpaceX, which could compound returns over time and help grow the portfolio to a meaningful size by the time the child needs to pay for university fees,” he said.

It has delivered strong returns over one, three and 10-year periods to the end of February 2026, gaining 19.3%, 76.1% and 425.9% respectively – although its five-year performance is slightly weaker due to a large drawdown during the interest rate hiking cycle of 2022.

“The trust should primarily act as a source of alpha generation within the portfolio,” Woodacre said.

Performance of the fund vs sector and benchmark over 5yrs

Source: FE Analytics

In contrast, Anthony Snowden, private client investment director at Tyndall Investment Management, said he likes the concept of pairing a trend following fund alongside a thematic option.

He selected the MontLake DUNN WMA Institutional UCITS Fund – a long-running commodity trading advisor (CTA) strategy – and WisdomTree Megatrends UCITS ETF.

CTAs are regulated managers that run systematic, futures-based trading programmes using trend-following models to capture moves across global markets.

“Unlike many other CTAs, MontLake DUNN WMA Institutional UCITS Fund currently has an around 40% exposure to commodity markets,” Snowden said, noting its strong longstanding record adapting to changing trends across equities, bonds, commodities and currencies.

In contrast, the WisdomTree exchange-traded fund (ETF) systematically allocates capital to a curated selection of themes, including quantum computing, Chinese technology, AI and blockchain.

“Spreading across multiple themes avoids the risks of being incorrect or swept up in fads, yet remaining exposed to growth sectors that will shape our world and investment markets over the coming decade,” Snowden said.