Blue Whale Capital’s Stephen Yiu, Comgest’s Franz Weis and Richard Hodges from Nomura have been added to the FE fundinfo Alpha Manager Hall of Fame in 2025.

Yiu has been the sole manager of the £1.3bn WS Blue Whale Growth fund since its launch in 2017, having previously worked on funds at Hargreaves Lansdown and Artemis.

Since its launch, the fund has achieved a 164.2% return, the seventh-best in the IA Global sector, as shown in the chart below. It is also a top performer over shorter timeframes, including cracking the top 10 of the peer group over three years.

Performance of fund vs sector since launch

Source: FE Analytics

He runs the portfolio with an out-and-out growth approach – with chipmakers Nvidia and Broadcom, and taxi firm Uber, among its top holdings.

Weis runs Comgest’s seven European strategies, with his longest tenure on the Comgest Growth Europe Opportunities and Comgest Growth Europe, which he has run since 2009.

Performance of fund vs sector and benchmark over 10yrs

Source: FE Analytics

The Growth Europe fund is his largest strategy by some distance, with £3.9bn in assets under management. While it has struggled over the past half a decade, its long-term returns are impressive, with the fund up 145.6% over 10 years – the ninth-best performance in the 63-strong IA Europe Including UK sector.

Industry veteran Hodges meanwhile is the only bond manager on the list. He has run the £1.6bn Nomura Global Dynamic Bond fund since its launch in 2015, having previously been at Legal & General Investment Management (LGIM).

During this time it has made 34.9%, around 5 percentage points ahead of the IA  Sterling Strategic Bond sector, as the below chart shows.

Performance of fund vs sector since launch

Source: FE Analytics

Analysts at FE Investments rate the fund. They said: “We consider Hodges to be one of the most successful and proven fund managers for managing flexible global bond strategies such as this.

“His departure from LGIM took us by surprise as we previously recommended the LGIM Dynamic Bond fund. His move to Nomura was considered a gamble as the firm does not have a strong reputation for bond investing, but he has successfully built a diverse and experienced team around him to support in building a portfolio that accurately reflects their views.”

The Hall of Fame is made up of managers who have held the coveted Alpha Manager rating for seven years or more.

Alpha Manager ratings are awarded to the top 10% UK retail-facing managers based on their entire career performance. It centres around three main factors: risk-adjusted alpha; consistency of outperformance versus the benchmark; and performance in both rising and falling markets.

Managers with longer track records of delivering strong performance receive additional weighting to reflect the value of their experience and resilience through market cycles.

Charles Younes, deputy chief investment officer at FE fundinfo, said: “The Alpha Manager Hall of Fame recognises those whose performance is not only impressive, but enduring.

“These managers have weathered multiple market regimes, from the global financial crisis to Covid-19 and more recent geopolitical upheavals, while delivering consistent, risk-adjusted returns. Their ability to outperform in both calm and volatile conditions makes them exceptional.”

The list has shrunk this year, down to 41 from 46 in 2024. Liontrust’s Julian Fosh, Fidelity’s Leigh Himsworth and Jeremy Podger and Jupiter’s Daniel Nickols all retired last year.

Meanwhile Luke Kerr, who had been an Alpha Manager, left Jupiter after the firm restructured its small- and mid-cap equities team. All have been excluded from the Hall of Fame as they are no longer eligible for the Alpha Manager title.

Bond manager Ariel Bezalel, UK small-cap specialist Chris Hutchinson and global quality investor William Lock – from Jupiter, Unicorn and Morgan Stanley respectively – all lost the Alpha Manager title in the latest rebalance earlier in 2025, bringing an end to their time in the Hall of Fame.

Square Mile Investment Consulting & Research has added three funds to its Academy, suspended three after key manager exits, and stripped one of its ‘Positive Prospect’ rating due to a change in ownership.

TwentyFour’s Income and Asset Backed Opportunities funds were awarded ‘AA’ and ‘A’ ratings respectively. The £884.7m closed-ended Income trust earned its ‘AA’ rating for its high-yield exposure to European asset-backed securities (ABS), including illiquid and unrated private assets.

It has made 73.9% over 10 years, although this ranks as lowest in the AIC IT Debt – Structured Finance sector.

Meanwhile, the open-ended Asset Backed Opportunities fund received its single ‘A’ rating for offering higher-yielding bonds while avoiding non-rated and private assets.

It fell short of an ‘AA’ rating due to its smaller asset base and shorter track record, although notably topped the rankings of the IA Specialist Bond sector over both three and five years, generating 34.6% and 49.5% respectively.  

Square Mile also awarded the Premier Miton Tellworth UK Select fund an ‘A’ rating, noting that it “exhibits all the main characteristics” that are “desirable” in an absolute return fund.

Analysts pointed to the strategy’s “impressive” track record, with the fund delivering 28.5% over 10 years.

At the other end of the spectrum, Square Mile removed its ‘Positive Prospect’ rating from the Downing European Unconstrained Income fund, following news that the strategy is being transferred over to Tyndall Investment Management.

Although the portfolio managers – Mike Clements and Pras Jeyanandhan – and investment approach are unchanged, analysts flagged their concerns around the new corporate environment and operational support as reasons to withdraw the rating.

The fund is set to be rebranded as the VT Tyndall European Unconstrained Fund.

The research firm also suspended ratings on four strategies offered by Baillie Gifford and BNY Mellon due to key manager departures.

Baillie Gifford’s Shin Nippon and Japanese Smaller Companies had their ‘A’ ratings suspended following the exit of lead manager Praveen Kumar, while BNY Mellon’s Real Return fund was suspended after co-lead Andy Warwick and strategist Brendan Mulhern announced their departures.

In all cases, the Square Mile analysts said they will need to assess the impact of these leadership changes before reinstating ratings.

The Goldman Sachs Emerging Markets Equity Portfolio fund held on to its ‘A’ rating, despite the departure of co-manager Hiren Dasani, with analysts citing the strategy’s stable and team-based approach.

There have been more compelling UK opportunities in recent months than he has over the past half a decade, according to Clive Beagles, manager of the JOHCM UK Equity Income fund, who has taken the recent volatility to add new positions to his portfolio.

The market is experiencing a "natural evolution" this year, with a range of new opportunities entering the value manager's radar, after years of stocks being “stuck” at quite high valuations.

Stocks that used to be considered too expensive have re-rated downwards, while previously underperforming businesses have begun to stage a comeback.

Beagles said: “We’ve probably had more ideas in the past three or four months than we have had in the past four or five years. That is a healthy dynamic.”

One of the stocks to recently enter the portfolio is supermarket giant Sainsburys. The business has experienced wobbles in recent days with investors getting concerned over a potential price war with Asda.

However, Beagles explained that even before this the stock was being underestimated by investors and trading significantly below its actual value. With a price-to-earnings (P/E) ratio of around 15x, the stock is on a 64% discount, according to recent data from IG.

This is “well below the value of its real estate”, meaning that by purchasing Sainsbury’s shares investors can gain access to the whole supermarket franchise at a fraction of it’s actual cost.

“It feels like you are not paying very much for a strong business,” Beagles said. “We think it has had a great few years and is still priced very modestly."

Shares are up 89.2% over the past five years, beating the FTSE All Share by 25 percentage points, as demonstrated by the chart below.

Performance of stock vs market over the past 5yrs

Source: FE Analytics

Chris Beauchamp, chief market analyst at IG, said: “This is a classic case of strong performance being ignored by the wider market. Sainsbury’s is not cheap because it has struggled – it is cheap despite delivering.”

Chemicals company Johnson Matthey is another recent addition to the JOHCM UK Equity Income fund, although Beagles has been considering buying it throughout 2025 so far.

Its decision to recently sell its catalyst business for £1.8bn has caused shares to surge 30.6% year to date, outperforming the UK market by more than 20 percentage points.

Performance of stock vs market over YTD

Source: FE Analytics

While Beagles conceded it is disappointing that the fund did not own the stock during its surge, “it is important to look forwards, not backwards”.

The FTSE 250 chemicals company has plenty of room left to run, especially if it achieves its 2027 targets of a cashflow yield of 18%, as well as a return of 13% to shareholders through dividends and buybacks.

Additionally, it is set to return £1.4bn of the recent sale to shareholders through a one-off special dividend, which should cause the market to view it much more favourably, according to Beagles.

“For its market-leading positions and embedded growth optionality, [its price-to-earnings ratio of 8x] is materially too cheap.”

Whitbread, the hotel and restaurant company that owns Premier Inn, is another brand new holding in the fund.

Hotels have been out of favour in the UK in recent months, contributing to “sluggish revenue trends” at home for the hospitality giant. With the business also attempting to kickstart a German branch earlier this year, there has been significant internal investment.

This has weighed heavily on the stock, with the share price dropping from £35 to close to £25 in recent months as investors have “got bored of waiting for Premier Inn to recover, and bored waiting for the German business to become profitable”.

However, the business has performed solidly over the long term and remains a compelling opportunity that is valued “far below its actual offering”, according to Beagles.

Performance of stock vs market over the past 3yrs

Source: FE Analytics

Over the past three years, the hospitality company climbed 29.7%, almost double the performance of the UK market and it still has room to run, he explained. If the UK economy recovers and the German business further matures, the stock will gain "further momentum" and remain an “attractive opportunity".

“There is a lot of self-help going on at Whitbread, which means earnings could as much as double in the next four to five years, all at a very modest (13x) multiple,” said Beagles.

If the management successfully delivers its plans to return £2bn to shareholders by 2030, it should continue to grow even further, he added.

Finally, earlier this year, asset manager Schroders was added to the portfolio for the first time, with the manager citing the low valuation and the new management team, which he is confident will mark a turnaround.

The 30s are a turning point as people’s relationship with money matures, ‘reality hits’, and big life changes such as mortgages, family and children start to compete for income. It’s easy for long-term planning to fall by the wayside, but this is exactly when pensions need to move up the priority list.

As EQ Investors financial planner Zoe Brett put it: “Your 30s is definitely the time to start getting serious about pension planning. Time is still on your side – but by your 40s, it’s already an emergency.”

At this stage, Brett said, people should start looking at all the pension pots they’ve accumulated and sense-checking the basics: Should they be consolidated? Are they performing well? What are the charges?

That sense of urgency often starts when people run the numbers for the first time. According to the latest data by the Pensions and Lifetime Savings Association (PLSA), a single person will need £31,300 a year for a moderate retirement lifestyle – and that rises to £43,100 for a comfortable one. For many, those figures can come as a shock.

Below, we look at the most crucial questions everyone in their 30s should ask themselves to make sure they can maintain their expected lifestyle well beyond their working life.

How much am I contributing?

Brett pointed to the “really good rule of thumb” of contributing half one’s age to their pension – 10% in your 20s, 15% in your 30s and so on.

However, contributing that much can make a massive dent in your income.

“I know I would definitely feel it if somebody took away 15% of my income, so yes, there's that aspect to take into account,” she admitted.

“However, this is a time in your life when you are starting to earn more money, perhaps have some extra resources that you can throw at it. As an incentive, remember that in your 30s, you still have the opportunity to have a relatively leisurely journey into retirement.”

Should I be consolidating?

It’s likely that 30-year olds will have more than one pension pot to their name, one for each of the employers they have had since they started working.

Different pensions will have different benefits, rules and structures, so there is no one-size-fits-all argument. But for 80% of people, consolidating will be the way to go, said Brett.

“Having one pot is more straightforward both for the investor and the adviser – it is much better from an administrative point of view and you can have one, cohesive investment strategy behind it. It also brings charges down,” she said.

Beyond individual preferences, there are broader reasons why someone might want to keep their pensions split. For instance, they may wish to keep one sustainable pension and one conventional one.

Another argument is to reduce risk by spreading money across providers in case one goes under – though Brett was sceptical of this, noting that the risk of default is low and funds are protected by the Financial Services Compensation Scheme (FSCS).

Are my charges fair?

Charges play “a huge role”, said Brett. Workplace pensions usually have low charges because either the employer picks up some of the cost or, alternatively, providers give them discounts for the business they bring in.

Typically with workplace pensions, charges are around 0.5%.

However, there are a lot of products out there with very high charges that are no better or worse than other, perfectly reasonably charged, products. Ultimately, charges eat into profits and growth, so that’s “something to keep an eye on for certain”.

“If your costs are getting over 2.5%, factoring in your product, your investments and your advice, you really need to start looking at the value that that is adding,” she said.

“For a workplace pension, 0.75% would be the upper end.”

Am I taking enough risk?

In your 20s, 30s and even 40s, you can afford to take “a lot more risk”, according to the planner.

“Just take the risk. Don't worry about it. Don't look at it. Don't tear yourself up with the volatility. It's all going to be all right,” she concluded.

Am I on track with my goals?

If behind on their goals, the key thing for people is to not bury their head in the sand, according to Brett.

“When you realise you are behind, you've actually done the hardest part of it –acknowledging and accepting that there is a problem. It's a big mental breakthrough to think: I could go from my working life into absolute poverty,” she said.

“Even if you can only do a small amount, then that's absolutely fine. Just start. You just need to start with something and get some momentum going.”

One thing that might make up for lost time is to start saving more each year with salary increases as one financial planner recently recommended doing on Trustnet.

“These tiny wins and re-budgeting, committing even just £50 or £100 a month, over time, it will add up,” Brett concluded.

For a pension roadmap for people in the 20s, click here.

Boutique fund managers often struggle to get their funds to scale early on in their careers. Without a big brand name behind them, it can be tough to make the industry pay attention.

A good track record helps, but not always. A common rule of thumb for investors is to wait until a fund has a three-year track record. This can give them the conviction that the manager has a repeatable and proven process.

But this has not been enough for the VT Holland Advisors Equity fund. Although it boasts impressive performance, it remains small, with just £36.9m in assets under management.

Over the past three years it has made 58.6%, the 10th best return in the IA Global sector. It is also in the top quartile of its peer group over one year and since its launch in 2021, as the below chart shows.

Performance of fund vs sector since launch

Source: FE Analytics

Manager Andrew Hollingworth explained that, while good performance helps, he is left with a ‘chicken and egg’ situation when it comes to growing his fund.

“I think the problem if you run a small amount of money these days is that the wealth management industry has tens of billions of pounds that it needs to allocate. So by definition it is often looking for managers that run hundreds of millions of pounds that it can give £50m to.”

However, a fund will struggle to grow to this size without serious investment from said wealth management industry, creating a vicious cycle.

“The industry structure is not very good at giving up-and-coming managers money. I can’t do much about that. All I can do is turn up every day, enjoy the job and try to produce the best returns I can,” he noted.

“If people think it is best to invest with us, that is what they will do. Worrying about the industry structure and how it should or shouldn’t be different isn’t my job and isn’t going to make it any easier. If we are destined to succeed then we will.”

He is (perhaps unsurprisingly) a long way from his maximum threshold for assets under management, with the portfolio likely able to still function with between £1bn and £2bn in assets.

However, this would be a fairly hard cap for Hollingworth. He said: “Above that we end up with multiple managers and strategies and committees with all sorts of people… I abhor all of that.

“I want to run one fund really well. We will add a little bit more resource if it is appropriate if we have a lot more size. But I still want to be free to invest in Jet2 or Wetherspoons or whatever else. Probably £1bn-£2bn is the size we will need to stop taking money.”

The VT Holland Advisors Equity manager said he will not “bend and twist and jump through hoops” to get more money, as he wants the portfolio to remain invested in the same way that it has been in its first four years.

This is part of the trials and tribulations of a young, small fund at a boutique management house. Others include a long list of regulation and red tape, which Hollingworth described as “exhausting”.

However, the “freedom” it provides in “an industry that generally has constraints” is worth it, he noted. The fund manager set up Holland Advisors in 2008 initially to provide research for other fund groups, including the likes of Fidelity and Artemis.

This was preceded by 15 years as an analyst for investment banks advising institutional investors on stock ideas. Initially he was focused on the transport sector, something that he admits was the cornerstone of his career path to becoming a fund manager, as it forced him to study different business models.

“The business models of National Express and British Airways and Avis are all completely different,” he noted.

But it was his pitching ideas to other fund managers where he really learned how to run money, describing some of his former clients as “tough to impress”.

“You have to give them an investment idea and you have to know the answers. I went away from those meetings over many decades not knowing the answers and trying to work it out,” said Hollingworth.

“I have been helped by all my clients because they have pushed me to get a bit better and come back with the answers next time. It was a fantastic learning experience.”

Today, he runs a fund looking good businesses that can generate returns on capital and allocate any extra cash well. It is his performance and his process that he ultimately hopes will attract more money but, if not, he is unconcerned.

“If people like the way we do things then great and if they don’t, there are lots of other funds they can go and buy,” he concluded.

If there has been one key lesson about ‘the environment’ over the past few years, it is that measures to support it will not be implemented through inspirational messaging alone.

The war in Ukraine, soaring inflation, and a cost-of-living crisis, have all served to refocus attention on economic growth. This has taken place across governments, businesses and consumers alike.

However, the mistake in popular debate has been allowing these goals to be positioned as natural opposites. As if measures to improve energy efficiency or optimise resource consumption are not themselves inherently accretive to the bottom line.

This is the premise Impax Environmental Markets (IEM) was established on more than 20 years ago. IEM gives investors access to the superior earnings growth potential of companies operating across environmental markets.

By this we mean businesses whose products and services either i) enable the more efficient, and therefore cleaner, delivery of basic needs such as power, water and food; or ii) address environmental risk such as climate change or pollution. These areas are enjoying structural growth, regardless of political sentiment.

The rationale which underpins environmental markets is fundamentally economic. Whether it’s food, energy, water or commodities, resource efficiency boils down to ‘doing more with less’.

Companies like PTC, which specialises in computer-assisted design (CAD) and product lifecycle management software, help customers spend less money on prototypes, improve manufacturing, and repair products before they fail.

For PTC’s customers, energy and CO2 savings are largely a by-product of measures designed to boost the bottom line.

Similarly, the proper management of environmental risk is ultimately an exercise in minimising long-term costs. Hotter temperatures, rising sea levels, and more powerful storms all make for challenging conditions, both as a business and consumer. Yet demand for ever higher living standards is insatiable.

Ensuring environmental pressures do not constrain the global economy is one of the surest ways to ensure that living standards continue to rise affordably.

Environmental risks can be managed in two ways: mitigation or adaptation. Mitigation methods aim to tackle risk at the source and have historically had the highest profile.

Think reducing CO2 emissions, eliminating plastic waste or regenerating agricultural land. Companies that provide solutions to these challenges are respectively seeking to tackle climate change, pollution and biodiversity loss, on the assumption that not doing so will be more costly down the line.

In recent years, macroeconomic conditions have made investors, governments and consumers alike less patient. Soaring inflation, a sharp rise in interest rates and open geopolitical conflict has eroded appetites for expenditure which does not visibly address the cost of living.

This is a stark change to just a few years ago, when president Joe Biden’s Inflation Reduction Act, alongside the Infrastructure Investment and Jobs Act, ushered in over $2trn of spending.

Nowhere is this change in sentiment more clearly visible than in renewables. In IEM’s portfolio, this sector now accounts for less than 8% of the portfolio and a stock like Boralex – a Canadian specialist in wind, hydroelectric and solar electricity – now trades at 11.5x enterprise value to earnings before interest, tax, depreciation and amortisation (EBITDA) down from a peak of 16.2x in 2021.

While the levelized cost of electricity generation from offshore wind is now globally lower than that of gas, the upfront cost has become less politically palatable. To that end, a sustainability premium for these assets may only return when negative externalities like CO2 emissions become globally regulated and priced.

Yet adaptation to environmental risk has risen rapidly up the agenda. The World Meteorological Office recently published a study predicting average global temperatures will reach and stay at record levels for the next five years.

This has a very real and visible impact – 2024 was the ninth consecutive year in which damages from natural disasters cost the US more than $300bn. As a result, spending on the products and solutions for populations to survive and thrive in a more hostile environment is far more protected.

Adaptation to environmental risks therefore is an investment theme that continues to have high growth visibility, resilient drivers and a broad opportunity set. Significant areas of exposure for IEM include HVAC companies such as Aaon, water infrastructure and utilities such as Brazil’s Sabesp, and US-based Advanced Drainage, through to purveyors of electrical infrastructure such as Italy’s Prysmian.

Financial stocks also have a growing role to play, with reinsurance companies such as RenaissanceRe increasingly leading on both quantifying environmental risk and providing the funding to tackle it.

World Environment Day last week served to remind us of both the environmental challenges and solutions that surround us. Since its founding, technological advances have made the latter more affordable, and increasingly superior to their more resource intense predecessors.

At the same time, greater economic uncertainty is pushing some to favour the potential cost of environmental risk over upfront investment, even as those costs become a part of daily life for others.

Tom Morris Brown is a portfolio specialist for Impax Environmental Markets. The views expressed above should not be taken as investment advice.

Traditional government bonds will not provide the ballast to a portfolio they have historically, according to Peter Kent, co-head of fixed income at Ninety One, who warned investors that “asset allocation approaches need a reboot”.

The main difference this time around is the rationale behind market volatility. In past crises, such as in 2008, the issue was demand-driven.

This made predicting the future much easier, he said, as analysing demand shocks, and policy responses to them, is “relatively less complex than analysing supply shocks”.

Typically, when growth fell, lower inflation would follow, meaning fixed income behaved well as a defensive asset.

However, in recent years the nature of shocks hitting the global economy has changed. Brexit, Covid, Russia’s invasion of Ukraine and trade tariffs are all supply-sided, which makes forecasting much more difficult.

“These are exceptionally hard to quantify and have resulted in growth and inflation moving in opposite directions – i.e. lower growth and sticky inflation. That has led to higher correlations between defensive and cyclical assets; in this context, developed market bonds have been less able to shield investors from equity market losses,” said Kent.

“Put another way, the shift from demand to supply shocks has changed the nature of interest rate risk and its relationship with risk assets, meaning it’s not as helpful for managing a balanced portfolio as it used to be.”

More volatility in the developed market bond space means investors will need to get more return for the additional risk they are taking.

His solution is for investors to turn to an oft-overlooked part of the bond market – the emerging markets (EMs). Here he said perceptions were “outdated” as much has changed from the days of the ‘Brady bonds’ in the 1980s.

Back then, these bonds (issued mainly by Latin American countries) had sky-high yields, liquidity was scarce and most debt was denominated in dollars.

Today, however, Kent said “credible monetary policy” in emerging market economies has underpinned the significant growth of the local currency debt market.

“The volatility of the benchmark has fallen with the inclusion of more Asian markets, with somewhat lower yields today reflecting the higher quality of the asset class,” he noted.

The addition of China and India and the removal of Russia from the index has bolstered this, although investors should keep in mind there are three main cohorts within the market: high-quality Asia; central and eastern Europe; and more cyclical markets

Looking at the Sharpe ratio, Kent said developed market bonds will need to make significantly more in capital gains to match the yields available on their emerging market cousins, as starting yields are higher for EM bonds.

This makes it unlikely that developed market bonds will replicate the historical returns and portfolio diversification that they have in the past.

The next decade “is likely to be more favourable for emerging markets” as the rally in the US dollar “begins to weaken” and structural themes such as deglobalisation, the energy transition and demographics impact investor behaviour.

“Shifts in asset-class behaviour, coupled with the changing nature of economic shocks outlined above, mean the case for portfolio diversification has never been stronger,” he said.

“Crucially, a ‘far and wide’ approach may be needed when diversifying. And this is not just about picking winners; it’s about avoiding losers, especially in today’s geopolitical reality.”

This points to a more diversified global fixed income approach, which includes emerging market debt, something he described as a useful diversifier. This is shown in the chart below, which highlights the correlation of the asset class with other bond markets.

But there is also a benefit from the market’s breadth, with “significant diversifying forces” in the asset class as a whole.

Alongside different countries, Kent pointed out that it spans oil exporters and importers, regional manufacturing hubs and services-driven economies across the globe.

“A key benefit to investing across all EM debt asset classes is that the performance of each sub-asset class is differentiated through the broader economic and monetary policy cycle,” Kent said.

“Supported by an enduring, positive shift in fundamentals, emerging market debt deserves a place at the global investor table.”

Fidelity China Special Situations is increasing its dividends by 25% and offering a one-off special payout, according to the investment trust’s end-of-year results.

The company will up its ordinary dividends from 6.4p to 8p per share, with the additional special dividend of 1p per share coming from its position in online finance marketplace Lufax Holding.

It has also added £7.7m to its revenue reserve, which now stands at 5.6p per share, or 70% of the total dividends paid this year.

Performance-wise, the company reported a net asset value (NAV) total return of 31.5% in the 12 months to 31 March and a share price total return of 35.8%, as the discount narrowed from 10.2% to 7.3%.

However, it failed to beat its benchmark, with the MSCI China Index up 37.5% over the same timeframe.

James Carthew, head of investment company research at QuotedData, said: “It has been great to see Fidelity China’s NAV pick up a bit but we are still a long way off the trust’s high in 2021 and the NAV was this level during 2018.”

Although markets have been “rocked” by renewed US-China trade tensions since the financial year end, manager Dale Nicholls said he remains confident in the longer-term opportunities in Chinese equities.

“Performance during the year was driven largely by domestically focused small and mid-cap stocks, financials, and several of the most innovative companies held, particularly those linked to artificial intelligence (AI) and the electric vehicle (EV) supply chain,” he said.

FinTech lender LexinFintech Holdings and AI-enabled short-term consumer credit platform Qifu Technology were identified as standout performers last year, while investors’ continued enthusiasm for AI and digital transformation supported strong returns from the likes of Alibaba Group Holding.

However, the decision not to hold automakers BYD and Xiaomi – both of which are focused on growing their EV potential – detracted from the company’s performance compared to the MSCI China benchmark index, Nicholls admitted.

“However, I remain cautious given the competitive intensity in the auto sector along with relatively high valuations,” he said.

As geopolitical tensions escalate, European defence stocks have surged into the spotlight. The STOXX Europe Total Market Aerospace & Defence index is up 45% over the year to date (shown in the chart below), fuelled by renewed military budgets and investor momentum.

Governments across the old continent are pledging higher defence expenditure, with major firms such as Rheinmetall, BAE Systems and Thales seeing order books swell and valuations rerate significantly.

Investor appetite has been just as rapacious. The WisdomTree Europe Defence UCITS ETF, launched at the beginning of March, has already gathered €2.5bn in assets in just over three months.

But the sector isn’t tempting for Will James, co-manager of the Guinness European Equity Income fund.

“We missed it, but we are very relaxed about,” he said. “We missed it because defence companies don’t meet our quality criteria, as they are pretty cyclical and don’t cover their cost of capital.”

Performance of index over the year to date

Source: STOXX

A key part of his hesitation lies in the patchy fiscal commitment of European governments to military spending, particularly the further west you go from Russia.

“Poland is going to spend 5% of GDP on defence – I’m not surprised, they don’t want Russia coming at their border,” James said. “But Spain, France and Italy have all said they’re happy below 2%, because they’re so far away from Russia they don’t really care.”

The manager also pointed to the stop-start nature of defence industry returns, shaped by government procurement cycles and shifting priorities.

“These companies have moments in the sun – three, four, five years of high returns when defence spending goes up – and then they fall out again,” he said. “Because what are they dependent on? Governments, convoluted procurement processes and fiscal constraints.”

Even where defence budgets are growing, delivery remains slow and politically constrained. “The roadmap for growth is well underpinned but returns aren’t going to happen overnight.”

The off-and-on-again nature of the space has been reflected in fundamentals. Over the long term most defence companies have struggled to deliver consistent cashflow or cover their cost of capital – and Guinness’s process screens them out on that basis.

“We’re not index investors. Owning Thales or Rheinmetall would have been fantastic. But has it completely impacted our performance over the past 10 years? No, it has not.”

For James, recent investor enthusiasm has pushed expectations ahead of fundamentals. “You look at the valuations of these companies and think: hold on a second – they are now discounting cashflow returns they’ve never, ever delivered, even in the good old days.”

The rally they have enjoyed recently has been driven more by flows than any structural change. “There’s a momentum argument but we aren’t weight-of-money or momentum guys,” he said.

The fund’s process instead emphasises consistency. Guinness applies a strict quality filter that focuses on companies with high, sustained returns on invested capital. Defence names, historically, have not made the cut.

“If a company is in and then it’s out, and then it’s in, and then it’s out – that tells you something. For example, the last time utilities appeared in our universe was in 2009 – the next year, they fell out.”

James pointed to internal research showing how companies with sustained returns tend to remain in the universe. “If you do a back test on companies that delivered 8% over the past eight years, the probability of that company staying in our universe the next year is 93%. Over three years, it’s over 80%.”

That consistency matters more to Guinness than catching short-term themes. “You’ve got to be very, very careful with businesses that promise but are ultimately dependent on fiscally constrained governments,” he said.

“Would we prefer to allocate capital to a business that will grow just as well, but do it sustainably and generate productive cash flow? Absolutely.”

The door isn’t closed entirely – if a defence stock met the process requirements, it would be considered. In fact, historically, Thales was a part of the Guinness European Equity Income portfolio – initially bought in 2020, the position was then sold out of in 2022.

But James said the team’s track record shows that sticking to a quality discipline has been the right call.

“Our general concern about European defence is: yes, that’s great, but there are only so many companies you could buy. And our quality threshold tells us not to. Over time this has actually been the right thing to do.”

Performance of fund against index and sector over 1yr

Source: FE Analytics

Savers need to get started early if they have any hope of achieving a comfortable retirement, says Ian Cook, financial advisor at Quilter Cheviot.

With recent “wake-up call” figures from the Pensions and Lifetime Savings Association (PLSA) revealing a single person could need up to £800,000 for a comfortable retirement, a number that will swell with inflation, it is more important than ever for savers to understand how to take advantage of their pensions.

However, pension planning can be challenging, particularly for those who have not previously considered their savings. In the first part of a new series, Trustnet looks at the steps savers across different age brackets need to take to achieve a comfortable retirement, starting with 20-year-olds.

Cook explained pension planning is usually the last concern of the average 20-year-old who, despite having a lot to save for, is enjoying their “first brush with financial freedom and independence” and so has more immediate priorities such as nights out or holidays.

While this is understandable, Cook said it is a crucial mistake. “Your 20s are really when you need to do the most work on your savings,” he said.

Young savers’ “number one priority” should be to build themselves a cash ballast to draw on if an emergency, such as job loss, happens. This is a common recommendation among financial advisers. Last year Brown Shipley recommended investors should keep at least six months of their salaries in cash.

Once savers have this store of cash, the most important thing to do is to start saving often and early for retirement. “You need to think about automating an amount of money for your future self.”

One way young savers can do this is by taking full advantage of their workplace pension. “Very simply, if an employer pays a maximum match contribution of 8% in your portfolio, you should match it.”

While opting out may seem initially tempting, as it gives more money in a person’s pocket each month, Cook argued it was the wrong move. Although the PLSA report found the state pension was enough for a couple to have a minimal retirement on its own, he said it was unreliable and offers no protection to savers who may need to consider early retirement because of health reasons, for example.

An investor who contributed as little as £100 a month into a workplace pension at a 7% growth rate could end up with a pot of close to £380,000 over 45 years, close to half of the PLSA’s prediction of the pot needed for a single person to comfortably retire.

This is money that is taken directly from a paycheck and so is cash most savers “would not have noticed they had to begin with”, making it a relatively easy and stress-free way to prepare for retirement. 

Savers who start thinking about their pensions for the first time at age 40, for example, “are already a bit too late”, he argued. The problem with not investing early is that as people get older, they need to save more money to make up for the years of contributions not made and supplement the growth they missed out on.

In a worst-case scenario, a 40-year-old may have to contribute at least four or five times as much as someone who started saving early. “For many people, I just do not think that kind of comfortable retirement is achievable if you start late.”

Additionally, while rising inflation means retirement will become more difficult, by starting early, young savers can approach their later years more flexibly.

“From a psychological standpoint, your future is uncertain at age 20”, he explained. A job you start your career in could become something you hate in later life but, if it pays well, people may have to keep working at it to achieve a comfortable retirement.

However, those who have started contributing early and have done most of the heavy lifting in their 20s could have the freedom to do something different later in life. This could cover anything from a career change to raising a family to travel or engaging in something vocational, a benefit later savers will not enjoy.

“It is easy for young people to think of pensions as something that’s for when you are old, but they aren't. A pension is just a name for a pot of money you will use later.”

Finally, once savers have started automating a regular contribution that they will not need for a long time, they can then start thinking about their medium-term goals, through individual savings accounts (ISAs).

For investors' three-to-five-year needs, Cook recommends some combination of stock and shares ISA and lifetime ISA, the former of which could significantly contribute to buying a house, a car or starting a family, which may not be as immediately important for younger savers.

A drop in markets during the first year of retirement can cut the long-term value of a pension pot by tens of thousands of pounds, according to new modelling from RBC Brewin Dolphin.

Retirement marks the point when people shift from saving money to drawing an income from their savings. This phase – known as decumulation – makes the timing of investment returns especially important. If markets fall early on, ongoing withdrawals can make losses worse and shrink the pot faster than expected.

This type of risk is different from the ups and downs investors may see while building their savings. Even when long-term returns look healthy, early losses can have a lasting impact on how long retirement savings will last.

To explore this, RBC Brewin Dolphin looked at a scenario where markets rise by 10% one year and fall by 5% the next, repeating that cycle over 25 years. They assumed a steady annual withdrawal of 5% from the starting pot and an average annual return of 5.23% after fees.

In one version of the model, a retiree with a £250,000 pension pot who withdraws £12,500 a year would still have £39,238 left after 25 years – but only if the first year saw a 10% market rise. If the first year brought a 5% decline instead, the pot would shrink to just £4,637. That £34,600 difference is equal to more than two years’ worth of withdrawals.

What’s left after 25 years of 5% withdrawals from retirement pots

Source: RBC Brewin Dolphin

This is what RBC Brewin Dolphin refers to as “pound-cost ravaging”, or the damage caused by pulling money from investments during a market downturn.

Rob Burgeman, a wealth manager at RBC Brewin Dolphin, said: “Most people will have heard about the benefits of pound-cost averaging – investing over time to take the edge off market volatility and gradually build wealth.

“What they may be less familiar with is pound-cost ‘ravaging’, which demonstrates how taking money out at the wrong times can have a big impact on your retirement pot in the long term.”

This pattern holds across different pot sizes. Someone with £100,000 would be left with £15,695 if markets rose in year one, or just £1,855 if they fell. For a £500,000 pot, the difference is even starker: £78,476 compared to £9,275, a gap of £69,200.

Withdrawing £12,500 from a £250,000 retirement pot over 25 years 

Source: RBC Brewin Dolphin

Burgeman said that even when long-term average returns stay the same, early market losses can leave people short. “If markets fall in the first year, it can create a hole in your retirement plan that only grows over time,” he said.

“But that example is merely illustrative of a much wider point – if the value of your investments declines over an extended period, the effects will be amplified because you have to sell more of your assets to maintain your withdrawal amount. And that runs the risk of leaving you short towards the end of retirement.”

The model uses simple assumptions, but the underlying risk (which is known as ‘sequence of returns risk’) is well known. It describes how the order in which investment gains and losses occur can affect the outcome when withdrawals are being made regularly.

“Markets do not move in straight lines. A bad first couple of years can make all the difference, which people retiring in 2007 or 2019 may have been unfortunate enough to find out,” said Burgeman.

“And if you had retired in 1999, the three-year bear market that followed may have scuppered your plans altogether. Once retired, market conditions become really important to you and the adage about time in the market is still important, but has a different relevance.”

To manage these risks, Burgeman said retirees should build flexibility into their financial plans. “Scenarios like this are why having a financial plan, and taking professional advice, can make a significant difference to your retirement,” he finished.

“This will allow you to take steps, such as keeping a year or two of cash aside, to build in flexibility and avoid making withdrawals when markets are down, ensuring your savings last as long as they possibly can.”

In their 25th year in Europe, exchange-traded funds (ETFs) are more dynamic than ever. More and more investors are using ETFs for their core allocation, tactical and active asset allocation or portfolio construction.

They are leveraging the advantages of liquidity and price efficiency across all asset classes to maximise their returns. Especially in these volatile times, the liquidity and risk management advantages of ETFs can make all the difference.

We are convinced that this will benefit not only passive or alternative index strategies, but also active management.

The European ETF market recorded a record volume of $2.3trn at the end of 2024, with ambitious forecasts of $4.5trn by 2030. Current trends show that 2025 will be dominated by active ETFs, environmental, social and governance (ESG) solutions with low tracking errors and further rising demand from digital platforms and private investors.

Trend 1: The rise of active ETFs

Active ETFs recorded their highest inflows ever in 2025. In the first quarter, active strategies accounted for around 8% of all net inflows, even though they represent only 2.5% of the total market.

Fully active equity ETFs with a high degree of conviction (‘high conviction’) were particularly successful, accounting for 63% of year-to-date inflows.

Source: Franklin Templeton

Trend 2: ESG remains in demand – but in a more differentiated form

ESG ETFs continue to gain in importance, but investors are increasingly differentiating between them: strategies with low tracking error, such as CTB and climate ETFs, recorded significantly higher inflows than SRI or ESG leader products with higher tracking error.

Overall, ESG ETFs attracted around $9bn in inflows in the first quarter of 2025, representing around 10% of the total.

Source: Franklin Templeton

Trend 3: Focus on factor strategies and model portfolios

Factor ETFs are making a comeback: with inflows of $8bn in 2024, mainly in dividend and equal-weighted strategies, interest in targeted market segments is growing.

At the same time, ETF model portfolios are establishing themselves as an efficient management tool for investment decisions, particularly in digital advisory solutions.

Trend 4: Digitalisation, new players and model portfolios

The number of ETF providers is growing, as is their use via digital platforms. Private investors are increasingly turning to portfolio models – a trend that is further accelerating growth.

ETFs are thus finally evolving from passive ‘index trackers’ to tailor-made portfolio components with strategic added value.

Conclusion

The year 2025 marks a significant step forward in the evolution of ETFs. Investors are increasingly turning to active and ESG-oriented strategies with a clear data basis, while digitalisation and model solutions are facilitating access.

Once purely passive products, ETFs are thus becoming high-precision tools for portfolio management – and shaping a new era of investing.

Lotfi Ladjemi is vice president of ETF distribution at Franklin Templeton. The views expressed above should not be taken as investment advice.

Equity investors should expect to make half the returns they have become accustomed to over the past decade and a half, as markets will be challenged on several different fronts in the years to come, according to Pictet Asset Management senior multi-asset strategist Arun Sai.

“Both on earnings and on multiples, the primary drivers of growth tell us that returns are going to be much weaker for equities. It's going to be as much as half of the past five to 10 years,” he said.

“Returns over the next five years for global equities will be around 5% rather than the 10% we have got used to.”

This all comes down to Sai’s view that the key driver of equity returns over the past 20 years has been a “bizarre” structural uptrend in profit margins – a consequence of globalisation.

Although globalisation is “not going to reverse”, it will be “more nuanced”, he said, continuing for services, plateauing on goods and reversing on capital – all of which will lead to lower margins.

His way to tackle that is to “allocate deliberately to non-US champions, mid-cap stocks and European assets”.

Challenged US leaders

The US will be particularly affected. US tariffs, tax increases and weaker consumer demand will push global equities into a profit downturn, just as investors will grow more wary of inflation volatility and less inclined to pay a premium for stocks from a country that is losing momentum and soft power amid divisive policies.

There will be no US exceptionalism to come to the rescue, said Sai, not even its superiority in tech.

“There is no question that the US is the leader in tech across several dimensions, but are the moats around tech companies as deep as we thought they were a year ago? Perhaps not,” he said.

Sai used the example of Chinese artificial intelligence (AI) firm DeepSeek, which challenged Open AI’s ChatGPT at the start of the year. But this isn’t the only champion whose leadership is “not quite eroding, but at least being challenged”.

The US does not have a monopoly on innovation, Sai stressed.

“There are champions everywhere that benefit from the same kind of winner-takes-all trend, but trade on much lower multiples,” he said. “While retaining your investments in the winners, some amount of exposure to these other companies makes sense and diversifies you away from very crowded positions.”

Below is a chart of such companies, showing the price-versus-growth expectations of US champions (in brown) and non-US champions (in blue).

US versus non-US leader by 12 months forward P/E ratio

Source: Refinitiv, Pictet Asset Management. As of 30 May 2025.

“The blue dots are either as critical to some of these secular growth stories, or as good as some of the US winners,” Sai said. For example, he argued that the growth potential of Brazilian e-commerce company MercadoLibre is comparable to that of Amazon.

“There are a number of these players that have been left behind in the whole US exceptionalism narrative.”

To illustrate the transformation driving this winner-takes-all dynamic, Sai pointed to John Deere – a 200-year-old US tractor manufacturer that has reinvented itself as a high-tech solutions provider.

“We’re not abandoning that dynamic,” he said, “but on the margin we’re shifting toward non-US champions that are tapping into similar forces but trade at more reasonable valuations.”

Mid-caps on the rise

Not only did Sai suggest moving away from US leaders, he also argued that the large-cap space overall is getting overcrowded.

“If you had the luxury of taking a 30-year investment horizon, then all you would do is bet on the median stock, not on the winners,” he said. “That is because, over time, the median stock catches up to the winners. You always sell the winners and buy the median stock.”

Unfortunately, no investors can think that far ahead, so Sai suggested to hedge your bets: staying with the winners and allocating deliberately to what he called the “feed” stock.

“We think of this as mid-cap stocks. Investors should take an equal-weighted exposure to markets, rather than just focus on the mega-caps,” he said. “This gives them exposure to some of the next generation of winners, which will begin to play out in the next five years or so.”

The European advantage

Pictet chief strategist Luca Paolini mentioned another trend: there will be a “very minimal difference” between US and European GDP growth in a scenario where growth will normalise across developed countries.

“The US will always be a much more dynamic place to do business than in Europe. We are not saying sell everything in the US and come to the European heaven,” he said.

“Europe is not going to move significantly, but it is going to improve from a period of stagnation that has lasted for the past decade.”

Investors, especially if they are based in Europe, should also “think twice” about having a permanent, structural overweight to the US and would be better off putting their money to work at home.

“What we tend to forget is that, for Britons and Europeans investing abroad in equities, roughly 30% or 40% of total returns come from currency movements,” he said.

“The currency risk is not that relevant normally, but if you have low returns and low dispersion, like we will, one of the critical factors in achieving your expected returns is to get the currency right.”

Mergers and acquisitions (M&A) could be exactly what UK businesses need to become more popular among UK investors, according to Clive Beagles, co-manager of the JOHCM UK Equity Income fund.

Despite managers typically insisting that the UK has been full of great value opportunities, “the market has been stuck for quite a while” with businesses struggling to convince investors they are worth the investment.

As a result, the UK market has suffered “terrible outflows”, with UK investors withdrawing another £449m from domestic funds in May, continuing a trend of outflows from the market,  e.

Source: FE Analytics

With UK stocks heavily undervalued, the market has been catching the eye of private investors and international firms, with businesses such as Hargreaves Lansdown exiting the stock market earlier this year after a bid from CVC Capital Partners.

For some managers this increased takeover activity could lead to a much smaller public market and a shrinking opportunity set. However, Beagles argued investors have developed the wrong idea about M&A activity because they “do not consider the impact it is having on companies.”

If UK businesses want to become more appealing, they need to become more proactive. Because undervalued businesses are now more likely to get purchased by international firms, companies “can’t just sit on their hands and hope the market eventually looks at them differently”.

“I think there is a fear among boards and corporate structures that they will get a takeover bid from international investors at a 40-50% premium and investors will just take it because there’s plenty of other opportunities on the market”.

To avoid this, UK companies are increasing doing “almost internal M&A” on themselves to identify inefficiencies and sell off parts of their businesses that improve their valuations and catch investors’ attention.

“This subtle internal M&A activity can be just as powerful, if not more, than someone telling you to buy the UK because it is one of the most undervalued markets in the world”.

There are companies “all over the market” that could benefit from this and, in the process, draw investors back to the UK. One example is Curry’s.

Early in 2024, the company was bid for by US private equity firm Elliott, as well as JD.com in China. A potential takeover encouraged Curry's to sell its underperforming Greek business, “which most people did not even know it owned”.

As a result, the company’s stock price surged in March 2024 when the sale was confirmed. Beagles explained that it deleveraged the company, allowing investors to become more optimistic and appreciate the business's strong fundamentals. As demonstrated by the chart below, the share price has climbed 134% over the past two years as a result.

Share price performance over the past 2yrs

Source: FE Analytics

He added that it is still underappreciated and has several subsidiaries under the surface that it could be encouraged to sell if international investors came knocking.

“I think we are beginning to see more activism from boards themselves. No one likes selling a big part of what they see as their best business, but if it is mispriced and there is a lack of domestic interest, there is room to make changes.”

For a more recent example, he identified FTSE 250 chemicals company Johnson Matthey, which invests in speciality chemicals and sustainable technologies. Shares are down 26.3% over the past five years.

Recognising the issue, the business sold the catalyst component of its business for £1.8bn last month, which has caused the share price to surge 28%. As a result, it is now slightly up over the past year and could continue to rally, he said.

Share price performance over the past month

Source: FE Analytics

One company that could benefit from becoming more proactive and conducting this internal M&A is FTSE 250 iron and ceramics company Vesuvius, he said.

Year to date its share price has slid by roughly 12% following poor results but the business is full of inefficiencies that it could be encouraged to address if it receives M&A interest, said Beagles.

For example, it has two listed subsidiaries in India, representing roughly 80% of the company's total market capitalisation, but contributing less than 10% of its profitability.

Share price performance YTD

Source: FE Analytics

“Obviously, India is a higher-growth market, but if the whole market capitalisation is run by something worth a fraction of the profitability, I would be asking if there is an opportunity there”.

Pharon Independent Financial Advisors has boosted its allocation to cash this year up to between 11% and 12% of its model portfolio service (MPS) – a record for the firm.

Andrew O’Shea, investment director and head of fund solutions, explained this is much higher than the usual average of 2% in cash, which is sufficient to pay fees and give investors a safety net.

He explained that the cash allocation had been ramped up dramatically this year as a “defensive manoeuvre” because “we just got a bit nervous really at the end of 2024”. In the gap between Donald Trump’s election and his inauguration markets became too optimistic, “even euphoric”, under the assumption that Trump would bring a pro-business agenda that would help push stock markets even higher.

“It just all felt like it was too good to be true and when it feels like that, 99.9% of the time, I’d say it is.” Expecting a downturn, he argued that cash has become a much more attractive asset.

The biggest risk facing investors in periods of uncertainty is that their capital gets wiped out – not whether they have made high enough returns, he said.

“If there’s one eye-opening lesson I’ve learnt, it is that you should not get greedy. Be more concerned about the downside risks than the upside potential, because if you leave things long enough, they’ll grow, but it’s when you try and make a quick buck that you tend to lose the most.”

To this end, a higher-than-normal allocation towards cash makes sense. This increased allocation was achieved by adding the Fidelity Cash fund, managed by Tim Foster and Ravin Seeneevassen to the MPS range.

The fund aims to “favours capital security over the chase for capital, just what you want from a defensive position”, and is up 1.9% so far this year, just above the average return for the IA Short term Money Market sector, as demonstrated by the chart below.

Performance of the fund vs the sector and benchmark YTD

Source: FE Analytics

To make room for this heightened cash weighting, Pharon opted to trim part of their equity allocation selling two global market trackers and bringing the total number of funds in the portfolio to just 13. “We just thought they had a good run, and they were the easiest to sell”.

Additionally, he noted that if they were correct in the assumption that a downturn is incoming, then all the passive trackers would do was track the decline, limiting the rest of the portfolio’s returns.

However, O’Shea still likes several active managers, who he feels have the potential to outperform the market during recent uncertainty through careful stock selection and an emphasis on income.

One area he is particularly interested in is the UK, where the MPS range has been “ramping up exposure” significantly over the past six to nine months. While O’Shea explained that he has “always been a fan of the UK”, the current allocation is now 25-32% depending on the model portfolio, compared to a minimum of roughly 15%.  

This increased allocation is because of the UK’s markets status as a high-dividend, low-valuation market. Dividends, he argued, are one of the best indications that you are in investing in a quality company because a business can “always fudge accounts” to make themselves seem more profitable or stable. However, if a business must pay out a dividend and can’t, they have no way of hiding this.

Additionally, in times of uncertainty investors often underestimate the benefits of an income strategy. “If you do not need the income, you can reinvest it, but it just gives you a safety net if you know you’re investing in conservatively managed companies. Then all you really have to do is pick a decent manager who will not fall for a value trap.”

To this end, he pointed to Artemis Income, managed by FE fundinfo Alpha manager Adrian Frost, Andy Marsh and Nick Shenton, as a favourite that he’s been adding to recently.

Year to date, the strategy is up 11.2%, a top-quartile result compared to its peers in the IA UK Equity Income sector and beating the FTSE All Share.

Performance of the fund vs the sector and benchmark YTD

Source: FE Analytics

Last week the fund went through its 25-year anniversary. Initially managed by Derek Stuart, one of Artemis’ founding partners, it was passed to Frost in 2002.

Frost said: “Much has changed over the past quarter century, with one of the biggest transformations being how much more short-term the market has become. Most market participants are only interested in the past 12 months and the year ahead, whereas we want to talk to company management teams about their vision three to five years from now. We are finding a lot of opportunities by putting the short-term noise into perspective and looking for long-term value.”

It has been hard for active global funds to excel in recent years. Even harder still when avoiding some of the ‘Magnificent Seven’ US tech stocks that have dominated in the artificial intelligence (AI) boom.

Yet the little-known VT Holland Advisors Equity fund has achieved just this. The fund was launched in 2011 but was converted to a UCITs fund in 2021 – when Trustnet first started collating data on the portfolio.

Since this time, it has been a top-quartile performer in the IA Global sector over one, three and six months, as well as over one and three years. It also is among the 25% best funds in the peer group since 2021, as the chart below shows.

Although it has failed to beat the MSCI World over this period, it has proven to be one of the top portfolios in the sector. And it has achieved all of this with a US weighting of 39% - around a third less than the MSCI World index, and a whopping 42% in Europe including the UK.

Performance of fund vs sector and MSCI World since 2021

Source: FE Analytics

Yet with assets under management of just £36.2m, it could  be falling through the net for many investors.

Below, manager Andrew Hollingworth explains how we draws inspiration from Charlie Munger and Warren Buffett, why he made a mistake selling Apple for portfolio construction reasons and why he has a UK bias.  

What is your investment process?

I’m very focused on a small set of global businesses that aren’t in a specific sector or country but have certain special traits. Those are generally disruptor businesses that have very low unit costs, are trying to upset an industry and are run by passionate and aligned owner-managers.

Today 95% of my portfolio falls into that categorisation. I am not interested in country allocations, sector allocations, or growth and value labelling.

Why do you have so little (comparatively) in the US and so much in the UK?

I try to be intellectually honest about how I allocate my capital. Do I find amazing businesses in America? Yes, because the US is a fantastic, deep capital market. But the other reality is I am English and was brought up in the UK and live near London.

So if I am not going to have more conviction in businesses that are close to home I’m probably deluding myself.

It might look a bit odd against a global index that has ‘X%’ in the US and ‘Y%’ in Europe. But this is an honest outcome of the way I do the job and the conviction I get from having done the work on a company.

Do you look at the portfolio based on weightings and allocations?

If anyone ever asks me about currency exposure or top-down exposure I use the example of Apple. I purchased Apple shares at a similar time to Warren Buffett and they are up six or seven times since then.

But I am a fool because I sold them around a year later because I was worried about my dollar and US exposure at the time.

That shows you that overlays sometimes have terrible consequences because, in my case, they led me to be foolish enough to sell a great company at what was a great price.

I want my portfolio to be free to not do things like that and if that means I have to accept a bit of currency volatility now and again, then that is a price worth paying.

Where do you find new ideas?

They can come from anywhere. Charlie Munger once said there are three ways to find an investment idea. One is to look at big companies spinning out smaller ones. I don’t tend do that. I have done in the past but it is a bit of a specialist area.

The other two are to look at the cannibals, and by that he meant people who are buying their own shares, such as Next. And lastly look at what the good investors are doing.

The last two aren’t bad places to be.

Occasionally, I will look at what other managers have bought – although not that often in the UK – and wonder why they’ve bought that.

But for me it is mainly about pattern recognition. For example, seeing a business model I know repeat in a different country or sector.

Why don’t you have a strict process or big research team?

The industry likes to have a process that it can demonstrate is diligent and detailed and resource-heavy. At the margin, those things do help.

If you want to research a stock in Hong Kong and you are Fidelity, the fact that you have an analyst on the ground is going to help a bit.

But I am inspired by some of the great investors of the past and quite a few of them were much freer with their time and weren’t constrained by sector or country biases. They could use the skills they had learned in US retailing, let’s say, in Chinese e-commerce.

You have to be nimble and bring the skills from one part of the investment world to another. And that is hard to do if you have a lot of resource and that resource is very silo focused.

All I’m trying to do is move between the silos and get excited when something is significantly mispriced for the growth it offers.

What have been the best and worst performers in recent years?

My worst-performing stock was Ryman Healthcare. It was about a 6% holding a year ago. It is a wonderful company in New Zealand that looks after really good elderly care facilities.

But the business was not run with the financial discipline that it needed to be and I made some mistakes. I gave it a bit of a pass on the owner-manager who left the business five years before. I thought the culture was still intact but I was probably wrong.

It fell 20% in the year. I sold it just before year end and it’s down another 50% since.

The best was Netflix. It made 86% in 2024 and is up another 38% in 2025. Then there is Carvana, up 350% in 2024 and a further 54% in 2025. Finally Jet2 was up 30% in 2024 and 18% in 2025.

Jet2 is interesting. I think it is a compounder dressed as a cyclical. It is a business that is consistently growing over time around 15-20% per annum.

It is doing this without any leverage, in a sector where there is really poor quality competitors, but the stock market has been slow to recognise that.

The stock has gone from a P/E [price-to-earnings ratio] of 6x to a P/E of 10x in the past six months or so as people have finally started to pay a bit more attention to it.

What do you do outside of fund management?

My wife and I are big gardeners. I also play a bit of golf. We have a golf course about five miles away so I leave work at 6pm and take the dog with me for a few holes to keep sane.

Seemingly almost overnight, a rift of intergalactic proportions has emerged and no, it was not emperor Palpatine disbanding the galactic senate.

Far closer to home, Donald Trump and Elon Musk got into a social media back-and-forth last night, with Tesla and SpaceX chief Musk taking aim at the US president’s ‘Big Beautiful Bill’.

He took to his social media platform X, calling it a “big ugly spending bill” and retweeted videos that were negative about the proposed legislation.

The disconnect is clear. Musk was brought into the newly created department of government expenditure (DOGE) at the start of the year to make savings in an effort to bring down the country’s budget deficit – something the outspoken tech billionaire has been vocal about in the past.

He left the DOGE office recently, with Trump explaining that Musk was “asked to leave” from his position as he was “wearing thin”, a claim he made via his preferred social media site: Truth Social.

The president also said Musk “went crazy” after Trump removed the electric vehicle mandate that “forced everyone to buy electric cars that no one else wanted” and suggested removing the tech CEO’s government subsidies.

Among other posts on X, Musk hit back with a poll suggesting a new political party was needed, claimed Trump would not have won without his support and said Trump was named in the Jeffrey Epstein files, suggesting this is the reason these documents have yet to be released. There is no evidence provided, however, to back this up.

He also suggested he would begin decommissioning SpaceX’s Dragon spacecraft, which have been used to bring astronauts back from space, a claim he seemingly walked back later in the night.

This was enough, however, to prompt Steve Bannon, the former White House chief strategist, to suggest Trump should seize control of SpaceX through nationalisation. He also said the president should look into Musk’s immigration status.

It is an ugly end to what had been a ‘bromance’ between the pair and brings into question what happens when the sitting US president and world’s richest man get into a war of words.

Whether it will turn into action remains to be seen, but it is clear that both are volatile characters. Although both will believe they have much to gain, in reality, I suspect there is far more to lose.

Markets overall have been muted so far, but shareholders in Tesla are already feeling the repercussions of the spat. Shares in the electric vehicle maker dropped 14.3% yesterday, although they are up 5% in pre-market trading this morning.

But it highlights the growing concerns that investors should (in my view) rightly feel about the state of the US government – and in particular its president.

Many have been vocal about moving away from US assets as the risk associated with the White House make investing in the country much more difficult and volatile.

At the very least, diversifying some of your portfolio away from the US might be a smart move. Although many of the tech giants remain on good terms with the Trump administration (or are, at the very least, not in the crosshairs in the same way Musk is), this latest chapter shows that relationships can sour this quickly.

How long might it be before the US government takes aim at others, particularly if other chief executives say anything perceived as remotely negative about the president?

FE fundinfo has named 60 nominees across 12 categories for its 2025 Alpha Manager Awards, with the winners set to be announced on 17 June.

The awards highlight long-term outperformance by active fund managers based on FE fundinfo’s Alpha Manager rating, which recognises the top 10% of managers running funds for UK-based retail investors. The shortlist reflects performance across a manager’s entire career and all funds managed.

Nominees for Alpha Manager of the Year include John Warren (Premier Miton), David J. Eiswert (T. Rowe Price), Jeroen Brand (Neuberger Berman), Jonathan Golan (Man Group) and last year's winner of the award Robin Parbrook (Schroders)

The Best New Alpha Manager category, which recognises upcoming talent by only including first-time rated managers, includes James Macdonald and Sid Chhabra (BlueBay), John H. Fogarty and Vinay Thapar (AllianceBernstein), Sashi Reddy (Stewart Investors), and Patrick Kelly (Alger).

The full list of nominees in all categories of the 2025 Alpha Manager Awards can be found below.

Charles Younes, deputy chief investment officer at FE fundinfo, said: “This year’s Alpha Manager Awards reflect a remarkable consistency in manager performance. This was despite 2024 being an extremely challenging year for active management, especially within fixed income, where no bond strategies achieved standout returns and little dispersion in equity markets.

“Even in this tough environment, our Alpha Manager nominees were consistent in delivering returns throughout the period, with many returning nominees maintaining strong risk-adjusted returns across their portfolios.

“Being shortlisted for the Alpha Manager Awards is a major achievement, which reflects a fund manager’s long-term success and outperformance of market benchmarks. We congratulate all nominees and wish them luck ahead of the award announcement later this month.”

Source: FE fundinfo

Getting a pay increase every year is nice. Getting a promotion with a significant pay bump is even better. Whether you have moved job or been rewarded with a bonus for your hard work, having more in your account each month is a great feeling

But before popping bottles of bubbly, it might be worth considering if any of this new money can be put towards future financial goals.

If not, it could just get swallowed up into household bills and the odd extra takeaway each month.

Below, Trustnet collected tips and tricks from experts in behavioural finance and financial advisers to give you the ultimate roadmap of how to make the most of a salary increase.

Premise: Avoid temptation

With extra income comes the temptation to upgrade your lifestyle. You could get a new car or finally afford that fancy health club membership.

This is called lifestyle inflation and according to Paulo Costa, senior behavioural economist at Vanguard, it is absolutely “normal and to be expected”. However, you shouldn’t give up on the opportunity to speed up your financial goals.

“If you are able to contribute a little bit more towards your savings and investments [you should]. Save as much as you reasonably can. Do your best,” he said.

By giving in to lifestyle inflation, you are only keeping yourself in a cycle of ‘pay check to pay check’ living, noted Zoe Brett, financial planner at EQ Investors.

“Instead, opt to save this extra income before you become accustomed to it. Automating savings and investments is a great way to do this,” she said.

“Think about your needs versus your wants and what sacrifices are worthwhile for a financially secure future. Do you really need to upgrade your wardrobe or would you value being able to retire to a lovely beach 10 years early whilst your still young enough to enjoy yourself?”

The real upgrade to be excited about isn’t a more luxurious lifestyle, but financial freedom, which offers no immediate gratification, so is often discounted, she noted.

“Not putting the extra cash to work for your future self if a big missed opportunity in creating financial freedom. So, ignore that celebrity spin class and opt for repaying debt or increasing wealth instead.”

Step one: Review your budget

First and foremost, update your budget. “You need to know what you are working with to ensure you put this new money to the best use,” Brett said.

There is no hard-and-fast rule that applies to everyone, but if you have specific financial goals, then all your excess cash should be working towards these.

“If you really must give yourself some shorter-term joy, then at least commit 50% of your raise to your goals.”

Step two: Allocate the money

Once you have figured out your budget, you are in a position to work out how best to allocate additional funds. This is where personal circumstances play the largest role, so below are a few options to consider.

Pay off your debt

This may be a good opportunity for you to pay off any high-interest debt, according to Ian Futcher, financial adviser at Quilter, as credit-card and short-term loans “often have high interest rates attached” to them.

If paying off your debts in full isn’t possible, making extra payments above the monthly minimum “can still make a meaningful difference, as it reduces the capital owed, shortens the repayment term and lowers the total interest paid over time”.

Consider building or increasing your emergency fund

Futcher suggested using your increased income to bolster your emergency savings, aiming to cover at least three to six months’ worth of living expenses.

“If you are already at six months’ worth of living expenses, you can look to increase this.”

Here, he diverged from Brett, for whom the decision on whether to top up an emergency fund really comes down to two things: is there a large one-off expenditure on the horizon, or have your expenses increased?

“There is no need to increase an emergency fund simply because you have more budget to do so. Any cash above short-term cash needs and three to six months' expenditure is typically put to better use for your financial future by investing the money or repaying debt,” she said.

Costa believes that $2,000 in the bank is worth more than $1m in assets, which he shared with Trustnet earlier this week.

Take out an insurance policy

Having insurance policies in place that protect your lifestyle or mortgage in case of sickness or death are “crucial”, according to Futcher.

“Perhaps before you couldn’t afford to take out this policy or could only have a policy that insured half of what you needed. This is a good opportunity to review and improve this, as this could be more valuable than your six-month emergency fund.”

Step three: Turbocharge your savings

Next would be to review your medium- and long-term savings. Once again, there is no best option, just different outcomes, which may or may not suit depending on your goals.

Save up for the short term

Maybe you want to have an accessible pot for a rainy day or are saving for a significant purchase such as your first property.

“Making sure your money keeps up with inflation is important, otherwise its spending power will be reduced, essentially keeping you in the same position as you were,” Futcher noted.

There are lots of tax-efficient ways to achieve this, such as ISAs with a £20,000 allowance or, if you qualify, a Lifetime ISA with a £4,000 allowance and 25% bonus from the government.

These can be in fixed-rate cash or in stocks and shares ISAs so offer a good variety of options.

“Be wary of putting anything into stocks and shares that you may need easy access to, as, if markets fall, you may not have the original amount you invested.”

Think longer-term by increasing your pension contributions

If after all that you still have money left over, are you and your employer making maximum contributions to your pension?

All employers must offer a workplace pension scheme. To take advantage of it, employees must contribute a minimum of 5%, with employers matching at least 3%, making a combined minimum contribution of 8%. However, in some schemes, your employer has the option to pay in more than the legal minimum, so it’s worth checking with them, Futcher explained.

“Company contributions are money you wouldn’t have got otherwise, and will be there to help provide a comfortable retirement”.

Recent PLSA data has shown that a comfortable retirement is increasingly difficult to achieve, especially for single people.

Depending on your salary, you may also want to put some into a private pension, he continued. “You can make contributions into a pension of up to £60,000 a year and receive tax relief, but you won’t be able to touch that money until you are 55 or even 57”.

Bonus tips

Keeping your expenditure the same as your income increases is a sure-fire way to increase long-term wealth, according to Brett.

“Directing extra regular income will soon build up into a financial future to be proud of,” she said. “If you put the money to use before you become accustomed to it, you’ll build wealth without ever feeling the pain of paying for it.”

Costa also talked about ‘compounding interest’ or increasing the amount you put away every year.

“If that is possible, it is a way to make your savings even more powerful and go a very long way,” he concluded.

Despite emerging markets having a reputation as an attractive market for stockpickers, active funds have not been the best way to invest since 2020. In fact, most active funds would have underperformed a tracker and not a single active fund would have outperformed the small-cap part of the market, according to Trustnet research.

Emerging markets can be a challenging place to make money. Despite being referred to under the same umbrella, the trends that drive a market such as China can be significantly different to those in Latin America or India. This has made investing in the region complicated.

Add in the fact that investors have managed to make strong returns in the US and global markets, many investors have not needed to look toward the region.

However, interest seems to be rising, with asset managers such as St James’s Place stating that investors should consider rotating into the region. For those struggling to decide where to start, knowing what has performed well in the past could be helpful.

This is part of an ongoing series where Trustnet examines different markets based on market capitalisation and investment style, as well as looking at the difference between active and passive funds, to determine what has been the best way to invest since 2020.

To begin with, we consider market capitalisation. Since 2020, the MSCI Emerging Markets Small Cap index trounced the MSCI Emerging Markets Mid and Large Cap indices, delivering almost double the returns, as demonstrated by the chart below.

Performance of indices since 2020

Source: FE Analytics

This trend continues when we examine investment styles. The MSCI Emerging Market small-cap value and growth indices have surged by 56% and 52.3% over this period, beating the next closest index by more than 25 percentage points.

While value outperformed growth across the market cap spectrum, the dominance of the small-cap indices suggests that market capitalisation mattered more than investment style on performance during this period.

Performance of indices since 2020

Source: FE Analytics

Turning to the age-old active versus passive debate, with small-caps performing best some might suggest active managers should win in this arena, as smaller stocks tend to be less well researched and therefore a happier hunting ground for those doing their own research.

Yet most active funds failed to beat the most common benchmark in the sector – the MSCI Emerging Markets.

When compared to the small-cap index, the results are even worse, with the average fund underperforming by almost 42 percentage points. In the 139-strong sector, not a single active fund delivered a better result than the small-cap index, with the top fund in the peer group up 53.1%, lagging by just over a percentage point.

Performance of sector vs index since 2020

Source: FE Analytics

Indeed, two of the best performing emerging market funds during this period tracked the small-cap index. The SSGA SPDR MSCI Emerging Markets Small Cap UCITS ETF is up 51.3% over this period, making it the fourth best-performing strategy in the sector overall. It is followed by the iShares Emerging Market Small Cap UCITS ETF, which trails just behind with a performance of 48.9%.

However, while an active fund could not outperform the small-cap index, 63 funds in the peer group had a better return than the all-cap index. The chart below shows the 10 best-performing emerging funds in this period, which included eight active strategies.

Source: FE Analytics

Top of the chart is the Aberdeen SICAV Emerging Markets Smaller Companies fund, which aims to outperform the MSCI Emerging Markets Small Cap Index using an environmental, social and governance (ESG) approach. While it has not achieved this over the period, it has climbed by 53.1%, the best return in the sector.

Following just 20 basis points behind is the Invesco Global Emerging Markets fund managed by FE fundinfo Alpha Manager William Lam, who works alongside co-managers Ian Hargreaves, Charles Bond and Matthew Pigott. Its top 10 includes some of the biggest names in the emerging market index, such as TSMC, Alibaba and Tencent, which have all performed well.

Indeed, analysts at FE Investments said recent outperformance was due to “favourable stock selection” and a bottom-up focus since 2020, with very few underperforming holdings.

The Templeton Emerging Markets Smaller Companies fund also qualified, surging 47% since 2020, the sixth-best result in the sector. Managed by Alpha Manager Vika Chiranewal and Chetan Sehgal, it aims to invest primarily in companies with a market capitalisation of less than $2bn.

The other funds in the top 10 include: Pacific North of South EM All Cap Equity, Artemis SmartGARP Global Emerging Markets Equity, Carmignac Portfolio Emergents, PGIM Quant Solutions Emerging Markets and GAM Sustainable Emerging Markets.

Previously in this series, we have looked at the UK, European, global and US markets.

With its origins dating back to the protests over the Vietnam War, the slogan ‘America, love it or leave it’ encouraged people to accept and support the country’s values and policies or, quite frankly, get out quickly.

Investors are having to grapple with the same decision when it comes to the world’s largest economy in 2025. Donald Trump has created fear over the long-term damage his trade policy could inflict on the economy, with growing concerns on areas such as rising inflation and falling growth figures.

By contrast, the proposed $1.2trn European fiscal bazooka, plus China’s economic recovery and its rise as a tech leader, are giving investors valid alternatives. Recent research from Morningstar shows Asian and European investors put $2.5bn into world ex-US mutual funds and ETFs between the start of December 2024 and the end of April 2025.

Meanwhile, April figures for the Bank of America Global Fund Manager Survey show the allocation to US equities fell to a net 36% underweight – the biggest underweight since May 2023 – and a 53 percentage-point fall in the US equity weighting since February 2025, the biggest two-month decline on record.

This is the market investors have relied upon for the past 15 years – with returns from the S&P 500 in excess of 600%, dwarfing anything produced by any other major economy. But the question now is whether investors can rely on it from here onwards or should look to diversify amid rising volatility.

We know these returns have been driven in large part by tech companies in recent years. The Magnificent Seven represent over 20% of the MSCI All Countries World Index and over 27% of the S&P 500.

Only 26% and 27% of the S&P 500 constituents outperformed the index in 2023 and 2024, respectively – a smaller figure than seen during the dot.com bubble.

Lofty price regardless of rising volatility

Research from Orbis showed that nearly half of the S&P’s annualised return of 13.8% in the past 15 years came from rising margins (2.5%) and valuations (3.6%). To achieve the same returns in the next 15 years net margins would need to reach 18% and valuations would need to reach 40x earnings.

Having previously produced strong returns in a goldilocks scenario of low rates and continued innovation (specifically from those tech giants), it would be a brave person who would back the S&P 500 to repeat the trick. The reality is very different as Lazard Global Equity Franchise co-manager Bertrand Cliquet points out.

Bertrand says his fund has held an average of around 60% in the US over the long term but the near-‘safe-haven’ status it has enjoyed in recent years - courtesy of a strong currency and lower interest rates - has been replaced by one of uncertainty, with erratic changes in policy and a lack of visibility. As a result, the allocation is now closer to 40%.

“We are all about good franchises but being picky on valuation. The opportunity set in the US is drying up and increasing elsewhere. There is also rising uncertainty (the likes of tariffs) and it would be foolish of us to predict the outcome,” he says.

Global funds are often seen as the best one-stop-shop for an investor who wants a broad exposure to equities but, as I am sure many of you will know, the MSCI World now has around 71% in the US alone and even active funds will often have a significant bias towards the US economy and those aforementioned tech giants.

But with 550 funds to choose from, there are a number of alternative ways to gain exposure to the global economy, without having a huge skew towards the US.

With this in mind, here are four you may want to consider:

JOHCM Global Opportunities – 42.6% in US equities

Manager Ben Leyland has a strong bias towards larger and medium-sized multi-national businesses in his portfolio, which typically holds 30-40 stocks.

The philosophy of this fund is 'heads we win, tails we don't lose too much', and if markets do struggle, the fund’s strict valuation process will help in this regard. The JOHCM Global Opportunities fund also can, and will, hold large cash positions if valuations are unattractive.

It has returned 52.7% to investors in the past five years and currently holds reasonable exposure to the likes of German and French (both 12%) and Japanese (9%) equities.

IFSL Evenlode Global Equity – 50.7% in North American equities

IFSL Evenlode Global Equity focuses exclusively on 'quality' companies, which are characterised by their ability to achieve sustainable growth over time while minimising the need for additional capital reinvestment.

The final portfolio consists of 30-50 stocks with a further five or so on a watchlist that are modelled, researched and considered for inclusion in the short to medium term.

Launched in July 2020, the fund has returned 34.6% in the past three years and currently has 26% and 21% in European and UK equities respectively. Top holdings currently include names like L’Oreal, Diageo and London Stock Exchange Group.

WS Montanaro Global Select – 47% in US equities

WS Montanaro Global Select is an unconstrained quality growth strategy that scours the globe in search of the best small and mid-cap companies. The outcome of this process is a high-conviction portfolio of between 25-40 best ideas.

The fund has returned 42.4% in the past five years and currently has the likes of German aerospace company MTU Aero Engines (6%), Games Workshop (5.9%) and French biotech business Sartorious Stedim (5.4%) among its largest holdings.

Artemis Leading Consumer Brands – 27% in US equities

Launched in December 2023, Artemis Leading Consumer Brands is a flexible global thematic fund that seeks to capture the emerging middle class’s consumption of luxury brands.

It is a benchmark-agnostic, unconstrained portfolio targeting companies with robust brand strength, which helps create barriers to entry and gives them pricing power and greater profit margins, increasing the compounding growth opportunity.

Top holdings include the likes of Hermes, Franco-Italian eyewear specialist EssilorLuxottica and Ferrari.

Darius McDermott is managing director of FundCalibre and Chelsea Financial Services. The views expressed above should not be taken as investment advice.