Since 2023, investors have had plenty to navigate – a shifting rate environment, rising geopolitical tension and an equity market increasingly dominated by a handful of AI-driven mega-cap names.

In this first instalment of a new Trustnet series, we have identified funds that delivered first-quartile returns consecutively from 2023 to 2025 and have done so again in the first half of 2026 – a test of consistency rather than a single strong year propelling performance.

We are starting with the multi-asset sectors, where managers arguably have the greatest flexibility, as they can shift allocations across equities, bonds, property, cash and alternatives as conditions shift.

Only 14 funds across IA Flexible Investment, IA Mixed Investment 20-60% Shares and IA Mixed Investment 40-85% Shares met these criteria. Notably, no funds from the most cautious multi-asset sector – IA Mixed Investment 0-35% Shares – are included in the final table below.

Source: FE Analytics

The standout performer in the first half of 2026 is AB Emerging Markets Multi Asset Portfolio, which gained 21% to the end of June – enough to rank it third across its whole sector over the six-month period.

The $1.1bn strategy, managed by FE fundinfo Alpha Manager Sammy Sazuki alongside Eric Liu, Richard Cao and Christian DiClementi, has leaned into the global AI roll-out, with TSMC holding a significant position in the portfolio at 10.1%, followed by Samsung at 6.8% and SK Hynix at 4.9%.

These growth stocks are, however, counterbalanced with more defensive holdings in the top end of the portfolio, such as ICICI Bank and Petrobas.  

The recent run of performance by AB Emerging Markets Multi Asset Portfolio is all the more striking given its struggles just a few years earlier, when it eked out just 0.6% in 2020 before losing 12.7% in 2021.

Moving from emerging markets to a more globally diversified approach, the Orbis Global Balanced fund has also managed three consecutive years in the first quartile for returns in the IA Mixed Investment 40-85% Shares sector and a strong first half of 2026.

Co-managed by Alpha Manager Alec Cutler and Mark Dunley-Owen, the £2.4bn strategy is built around a simple but disciplined idea: find high-conviction investments trading below what the management team believes they are actually worth and hold them until the market catches up.

RSMR analysts said: “The fund’s active hedging and flexible asset allocation make it a compelling option for investors seeking active management beyond a traditional 60/40 portfolio with a three-to-five-year investment horizon.”

The analysts suggested that the fund can be blended with passive and/or growth funds to dampen drawdowns and can be seen as capital protection and a diversifier within portfolios.

Similarly to AB Emerging Markets Multi Asset Portfolio, the Orbis strategy also includes TSMC and Samsung among its top holdings.

Meanwhile, the bond sleeve has an average duration of 4.8 years and a yield maturity of 5.6%.

As well as logging a strong short-term performance, the fund was also recently identified for having held a maximum FE fundinfo Crown Rating for the greater part of the past decade.

At the other end of the active management spectrum, the £18.2bn Vanguard LifeStrategy 80% Equity strategy features in many UK investors’ portfolios as a core holding. It was the most bought multi-asset fund in 2025, attracting £1bn in net new money, while performance added £1.9bn.

True to the suite’s design, the fund keeps things straightforward with roughly 80% of assets housed in equities and 20% in bonds – no bold country or sector calls, although like the rest of the LifeStrategy range it carries a structural tilt toward the UK.

Beyond the past three years, Vanguard LifeStrategy 80% Equity’s longer-term track record has also been consistent: it has been in the first or second quartile every year from 2016 to 2025 in the sector.

Fund selectors have previously suggested holding funds such as JOHCM Global Opportunities, Thornburg Equity Income Builder and Schroder Global Equity Income alongside it.

Several other Vanguard funds from the firm’s Target Retirement range also appear in the table. These use a life-styling approach that automatically adjusts equity and bond exposures depending on proximity to the ‘retirement’ year set.

Meanwhile, one of three funds from the IA Mixed Investment 20-60% Shares sector to post first-quartile returns in 2023 to 2025 and for the first half of the year is the £872.7m Aegon Diversified Monthly Income fund.

It aims to deliver a target yield of around 5% per year, with the potential for capital growth over any five-year period.

The fund, launched in 2014 and managed by Vincent McEntegart and Debbie King, currently invests 41% of its assets in equities and 34.6% in bonds, with the remainder split between specialist income, listed property and cash. Geographically, the fund has a big weighting to the UK at 40.8%.

RSMR analysts said: “The Aegon Diversified Monthly Income fund offers investors access to a cost effective, unconstrained, global, multi asset approach to income generation.”

Scottish Widows Managed Growth 4 and PIMCO GIS Balanced Income and Growth are the other two from the sector. The latter is the best performer of the three so far this year, up 10.5%.

The returns made from investing in emerging markets have largely been a byproduct of whether the US dollar is strengthening or weakening, according to James Syme, manager of the JOHCM Global Emerging Markets Opportunities fund, who said this one factor dictates investors’ experience of the asset class more than anything else.

“If you look at the longer term, you make almost all your money in emerging markets during weak-dollar periods,” he said.

In fact, in strong-dollar environments, historically, investors have actually lost a little money in emerging markets. So the whole asset class is extremely sensitive to the direction of the dollar.

The chart below highlights this. The horizontal axis is the volatility of returns and the vertical axis is average returns going back to 1989.

Source: JO Hambro Capital Management

During times of dollar weakness, “you take on a bit more risk but you get a return premium,” Syme said.

This is pertinent right now because the dollar has weakened significantly over the past 18 months. Indeed, the chart below shows currencies versus the dollar over three years.

US dollar vs other currencies over 3yrs

Source: JO Hambro Capital Management

“The dollar seemed to reach a temporary peak in December 2024 and has broadly been depreciating since. Since then, US growth stocks have clearly been extremely strong, yet EM equities have still outperformed,” he said.

Some investors may query if the data in the first chart is correct, Syme noted, with clients asking him if it is really possible for emerging market equities to annualise at 30% per year during weak-dollar environments.

He pointed to the most recent 18 months, within which emerging market equities have made an annualised return of 39.3% per year as the dollar has fallen.

This stark contrast may be useful for investors looking to expand their horizons beyond the US. The chart below looks back at the past 30 years. The dotted line is the direction of the US dollar, inverted, so when the line is going down it represents a stronger dollar; the solid line is the relative performance of emerging-market equities against US growth stocks.

Source: JO Hambro Capital Management

“When the dollar turns down US growth tends to underperform and historically the best hedge [to poor US equity returns] has been emerging-market equity,” Syme said.

This is particularly prevalent right now. After decades of dominance, the US market has struggled to keep pace with the rest of the world as investors have moved their allocations away from American companies on valuation grounds.

“Most of the clients we talk to are trying to work out how much US growth exposure they have, how to manage that risk and what opportunities there are elsewhere,” said Syme.

Those looking at Japan are “extremely concerned about fiscal and monetary policy” as well as the weak yen. Although Europe is an option, he said emerging markets are a “strong fit” for hedging US markets. “It's rare in finance that you get a fit that strong,” he said.

This does not mean the opportunities are across the board. Syme note that the countries that benefit from this phenomenon tend to be more toward the “emerging” part of the asset class, such as Latin America, South Africa, India and Turkey.

Latin America is extremely dependent on commodities, both economically and in market terms. However, since Covid there has been a “huge repricing” in commodities that has not been reflected in Latin American companies.

“That reflects the undervaluation of both the companies and the currencies. Since December 2024 we've seen some strength in Latin American equities and we've been overweight Brazil and Mexico and benefited from that,” said Syme.

“But commodities have moved higher too, so we're still not where we should be. If you take the 10 commodities that matter most for Latin America – iron ore, copper, lithium, silver, gold, wood pulp, sugar, wheat, soy, crude oil – the scale of undervaluation gets enormous.”

The recent repricing is therefore not enough and means Latin American companies are a “great opportunity right now”.

He also likes South Africa, where the economy has struggled for a long time but the new government has implemented positive changes that have led to a sovereign credit-rating upgrade.

“The South African economy is genuinely strong, and again, that hasn't yet been reflected in South African equities,” he said.

Investors should not mistake these as the only places the JOHCM Global Emerging Markets Opportunities fund is interested in at present, however, with China, Korea and Taiwan – all enjoying strong runs from the AI trade – also a key theme.

Co-manager Roshni Bolton noted they own the three biggest emerging-market beneficiaries of the Western AI boom: TSMC, Samsung Electronics and SK Hynix.

“These companies operate at such high capital intensity and technical complexity – thanks to processing excellence and a culture of quality refined over decades – that they hold an almost insurmountable competitive advantage,” she said.

“That allows for margin expansion through the cycle, with better shareholder returns at the peaks and higher margins at the troughs compared with previous cycles.”

However, valuation still matters, she said. The fund continues to own these stocks as the managers believe their share prices are “still reasonable”, but noted that this is something “we would reassess if the valuation becomes untethered from the fundamentals”.

Syme pointed to selling out of commodities in early 2008 (too early) as an example of this. “We were early, and we were wrong, and then we were very right,” he said.

The fund made similar changes with consumer and domestic demand in 2011 and 2012 in the lead up to the taper tantrum, and again with Chinese internet names in 2021.

“For now, we still find value in these three [AI] names, but when the time comes, we will move against them. It's not just about riding the trend all the way to the end; there has to be a point at which you can no longer find upside in these names compared with others, and as that happens, we have to look for other opportunities,” said Syme.

As the United States celebrates 250 years of independence, it's a reminder that America’s economic success has never been driven by just a handful of companies.

Today's market tells a different story. The rise of the Magnificent Seven has led many investors to equate the US with a small group of global technology giants. While their importance is undeniable, they represent only one part of a much broader economy.

Beneath the headlines, thousands of smaller, domestically focused businesses are building factories, modernising infrastructure, supporting AI, strengthening supply chains and solving increasingly specialist challenges.

They may not attract the same attention as Silicon Valley's biggest names, but collectively, they represent what we think of as the heart of America: the businesses quietly underpinning the country's long-term economic strength.

As managers of JPMorgan US Smaller Companies investment trust, this is where we spend our time looking for opportunities. Investing predominantly in domestically focused businesses gives us a different perspective on the US economy. This ecosystem extends well beyond the largest technology stocks and focuses instead on companies enabling America's next phase of growth.

But rather than trying to predict tomorrow's household names, we're interested in identifying high-quality businesses with durable competitive advantages that benefit from long-term structural trends. Three themes stand out today.

Building the infrastructure behind AI

Artificial intelligence has understandably captured investors' attention but much of the conversation remains focused on hyperscale technology companies and semiconductor designers and manufacturers.

In reality, every dollar invested in AI requires an enormous amount of physical infrastructure. Data centres require cooling systems, electrical equipment, engineering expertise and ongoing maintenance before a single AI model can be trained.

One company benefiting from this trend is Modine Manufacturing. Founded in 1916, Modine specialises in highly engineered thermal management solutions. As computing power becomes more concentrated and energy-intensive efficient cooling has become essential infrastructure rather than an operational afterthought.

What makes Modine particularly interesting is that it doesn’t compete in the crowded areas of AI that dominate headlines. Instead, it occupies a critical position further down the value chain.

Its products are embedded within facilities, difficult to replace and central to maintaining continuous operations. This allows the company to participate in AI-driven growth while retaining the characteristics we value most: profitability, durability and competitive differentiation.

Engineering America's next industrial chapter

Another defining feature of America's next chapter is the resurgence of domestic investment. Whether driven by reshoring, manufacturing expansion or rising electricity demand, businesses across the US are investing heavily in new facilities and modern infrastructure.

But behind every new factory, distribution centre or data centre is a network of specialist engineering businesses responsible for designing, installing and maintaining the infrastructure supporting that growth.

One example is Legence, which provides engineering, consulting, installation and maintenance services across commercial building and critical infrastructure. While rarely making headlines, businesses like Legence are helping turn long-term investment themes into reality.

They illustrate an important characteristic of the US smaller company universe: many of the country's most important businesses operate quietly behind the scenes, providing specialised expertise that becomes increasingly valuable as investment accelerates.

Specialist expertise remains a competitive advantage

Innovation doesn't always mean inventing new technologies. Sometimes it means solving increasingly complex problems more effectively than competitors.

Ryan Specialty operated in the excess and surplus insurance market, helping businesses insure risks that standard insurance products cannot easily cover. As industries become more specialised and risks more complex, demand for expert underwriting and distribution continues to grow.

Although investor sentiment has been affected by concerns around pricing cycles and the potential impact of AI on insurance distribution, we continue to see a high-quality business whose competitive advantage rests on specialist expertise, strong relationships and deep market knowledge.

Businesses like Ryan Specialty demonstrate another important feature of the US economy: businesses don't need to be household names to build enduring competitive positions. Often, solving niche problems exceptionally well creates stronger competitive moats than operating in crowded mainstream markets.

Keep looking beyond the big names

America's next phase of economic success is unlikely to be driven by a single industry or a handful of tech giants. Instead, we believe it will be built by thousands of businesses investing in critical infrastructure, supporting industry and providing specialist expertise across the domestic economy.

These are companies that rarely dominate the headlines but collectively form much of the backbone of the American economy.

For long-term investors, looking beyond the obvious can uncover opportunities that are easy to overlook when attention is concentrated on the market's largest companies. As the US enters its next chapter, we believe many of the country's most compelling investment opportunities remain at the heart of its economy -not necessarily at the top of its stock market.

Jon Brachle is portfolio manager of JPMorgan US Smaller Companies investment trust. The views expressed above should not be taken as investment advice.

Investors should not be focusing on which AI lab can develop the best large-language model but on which companies are supplying the underlying infrastructure for the whole AI revolution, according to Grégoire Kounowski, head of advisory at wealth management platform Norman K.

For nearly two years, markets have linked AI almost exclusively to semiconductors, cloud computing and the platforms built on top of them, but Kounowski reckons that association is now breaking down.

"The central question is no longer simply which companies will develop the best AI models, but which companies will have the necessary infrastructure to run them at scale," he said.

"As AI becomes more widespread, the demand for computing power continues to rise at a spectacular rate. Data centres are now one of the main drivers of growth in global electricity consumption."

He cited International Energy Agency projections that electricity demand from AI data centres could more than double by 2030 as evidence that investment opportunities are being created outside of the tech names at the heart of AI development.

A recent paper from Edmond de Rothschild's global investment research team also forecast that global data centre electricity consumption will double by 2030 to roughly 945 terawatt-hours, with AI-specific demand tripling over the same period. Some projections put total consumption above 1,200 terawatt-hours by 2035.

Kounowski said: "Whilst investors have so far focused on chip manufacturers and software companies, their attention is now turning to physical infrastructure: electricity generation and distribution, transport networks, industrial equipment, cooling systems, the acquisition of strategic land and the construction of the data centres themselves.

"Major technology groups are fully aware of this. Having previously devoted the bulk of their investment to computing capacity, they are now seeking to secure their energy supply for decades to come."

That shift can be seen in several sectors outside of tech, such as power generation and distribution. Data centre operators are signing long-term renewable supply contracts, with technology companies accounting for roughly 40% of all renewable electricity purchase agreements signed in 2025, according to Edmond de Rothschild.

They are also reviving nuclear capacity, shown through agreements between Constellation Energy and Vistra and hyperscale cloud providers, and backing small modular reactors (SMR): the pipeline of conditional agreements between data centre operators and SMR projects grew from around 25 gigawatts to 45 gigawatts in a single year. Where grid connections are too slow, some operators are turning to on-site gas generation, with GE Vernova adapting turbines to power sites directly.

Industrial and electrical equipment are also attractive, according to Edmond de Rothschild. An executive at Eaton said the industrial company's order backlog was equivalent to 11 years' worth of what it built in 2025, with data centre-related orders up roughly 200% in the fourth quarter of that year alone. Caterpillar expects to quadruple sales of generators used to supply data centre power by 2030.

Edmond de Rothschild estimates the investment required to electrify AI data centres could reach approximately $1,400bn by 2030, with Schneider Electric, ABB, Siemens, Legrand and Hitachi Energy named among the suppliers of switching equipment, inverters and transformers benefiting from extended delivery times and resulting pricing power.

A third opportunity is cooling. Server densification and the shift to liquid cooling have made thermal management critical, an area where Vertiv holds a leading position alongside Johnson Controls, Carrier, Trane and Modine, according to the bank's research.

"In construction and installation, players such as Quanta Services – whose order backlog reached a record high by the end of 2025 – and connectivity providers such as Corning in fibre optics round out the ecosystem," Edmond de Rothschild added.

"A notable strength of this sector lies in its relative resilience: the same equipment manufacturers benefit from the broader modernisation of electrical grids, which provides them with a certain degree of visibility even if specific demand from data centres were to moderate."

Norman K's Kounowski said this should feed into portfolio construction. He argued that the resulting equity market implications could be significant, given how concentrated stock market performance has been.

"Since 2024, stock market performance has been largely concentrated amongst a small number of technology companies," he said.

"However, the next phase of the cycle could extend to much more traditional sectors. Certain manufacturers, electrical equipment suppliers, engineering firms, energy producers and infrastructure operators could benefit indirectly from the massive spending on AI. This development is all the more interesting given that these companies often have more reasonable valuations than those seen in certain technology segments."

He drew a comparison with previous infrastructure build-outs, pointing out that the beneficiaries of past phases of electrification or the rollout of the internet were ultimately companies much wider than those developing the technology itself.

On positioning, Kounowski favours balance rather than rotation out of technology altogether. Exposure to technology leaders is justified thanks to their dominant position and their capacity for investment and innovation.

However, diversifying some exposure into infrastructure, energy, certain industrial sectors and strategic commodities gives investors the chance to capitalise on a long-term structural trend while reducing their reliance on the increasingly expensive technology sector.

"The market is gradually shifting from speculation on the promises of AI to an analysis of the concrete needs it generates," he said. "In this new phase, the question may no longer be simply who will develop the best AI, but who will provide the electricity, networks and infrastructure enabling the entire ecosystem to function."

Vanguard has launched four new US exchange-traded funds (ETF) to give investors more choice when buying into the world’s largest market.

The Vanguard Russell 2000 U.S. Small-Cap UCITS ETF and Vanguard Russell U.S. Mid-Cap UCITS ETF will both cost investors 0.2% per year and offer access to companies further down the market capitalisation spectrum.

Meanwhile, Vanguard Russell 1000 U.S. Value UCITS ETF and Vanguard Russell 1000 U.S. Growth UCITS ETF will have an ongoing charges figure (OCF) of 0.16% and will invest using screens to allocate within specific investment styles.

Claire Aley, head of product for Europe at Vanguard, said: “The US equity market offers investors a wide range of opportunities. With these new ETFs, we are expanding our range of low-cost building blocks to help investors tailor their US equity exposure more precisely.”

The growth fund will be more applicable for those who want to “lean into areas of the market with greater exposure to technology and AI-related businesses”.

Conversely, the value fund “can help investors diversify away from the parts of the market that have dominated recent performance”, she noted, which may prove appealing in the current climate as some fear the valuations of the largest tech stocks have become stretched.

“The addition of mid- and small-cap exposures also gives investors further tools to diversify,” she concluded.

Private markets are shifting into a more selective phase, with returns increasingly set to hinge on asset quality, income resilience and operational performance rather than a broad recovery, according to Aberdeen Investments.

Aberdeen's latest Private Markets House View argued that rising performance dispersion is increasing the importance of manager selection, sector positioning and diversification. The report comes from Aberdeen's private markets solutions team, which also runs Aberdeen's Global Private Markets fund alongside discretionary multi-strategy, evergreen private market mandates.

Nalaka de Silva, head of private markets solutions at Aberdeen Investments, said: "Private markets are entering a more selective phase.

"In this environment, fundamentals matter more than ever, from the quality of the underlying assets and the strength of income generation to disciplined capital deployment. As a result, manager selection and strategy are becoming increasingly important drivers of outcomes."

Aberdeen described global growth as resilient overall but unevenly spread. It said the US economy continues to outperform, while the UK and Europe contend with softer consumer spending, tighter financial conditions and inflation sticky enough to keep interest rates elevated.

Against this backdrop, Aberdeen put the five-year internal rate of return (IRR) for infrastructure at around 9-11% for core strategies and 12-15% for core-plus strategies. It defines core assets as lower-risk holdings offering reliable, long-running cashflows, while core-plus strategies carry added complexity, higher growth potential or greater exposure to transition-related themes.

Global infrastructure deal value totalled around $327bn in the first quarter, up 10% year-on-year, though on fewer transactions, suggesting a shift towards larger, higher-quality deals. European deal value fell 27% year-on-year to $71.7bn.

Aberdeen said infrastructure returns are leaning more on cash income than rising valuations, a change it tied to higher interest rates. North America has been the most active region, led by power generation and data centre deals.

The asset manager expects capital to keep flowing into digital infrastructure and energy transition assets, with a widening gap between stronger and weaker-performing segments.

For real estate, Aberdeen foresees a five-year IRR of around 6-8% for core strategies and 10-15% for value-add strategies. It said future performance will hinge less on a broad cyclical upswing and more on income resilience, asset quality and sector selection.

Global direct investment in real estate came to around $216bn in the first quarter, up 18% year-on-year. European all-property yield spreads stood at around 150 basis points over bonds in early 2026, which Aberdeen described as less attractive than during the peak of the repricing cycle.

Regional trends diverged, according to Aberdeen. Europe's recovery is holding but fragile, aided by steady leasing demand and limited new supply, while APAC has gained momentum with a pickup in transactions and the UK market looks steadier, helped by settling values and dependable income.

Aberdeen expects that divide to sharpen at the sector level too, with industrial and retail assets benefiting from more predictable cashflow while residential and office properties face greater exposure to financing costs and market-specific pressures.

The firm drew a distinction within private credit: some areas, direct lending among them, warrant closer examination, while other segments benefit from real-asset backing or stronger credit quality. It said the sector overall remains structurally supported by a persistent gap between capital demand and supply, especially as banks are stepping back from lending.

Aberdeen described its stance on private credit as "selectively positive", forecasting five-year returns of around 8-12% for direct lending and around 6-8% for investment grade private credit.

In the US, direct lenders completed 199 deals worth a combined $71bn in the first quarter of 2026. Leveraged buyout activity slipped to its lowest level in several years, though cumulative volumes for the year remained slightly ahead of the same point in 2025, reflecting fewer but larger deals.

European direct lending volumes fell to around €8.3bn across 35 deals, a year-on-year decline of 33% by value and 24% by number of deals.

Aberdeen said pricing gaps between lenders are widening and defaults are starting to climb from historically low levels, underscoring the case for careful underwriting. It sees the strongest opportunities in mid-market lending and more specialised areas such as special situations and opportunistic lending.

Private equity carried leftover momentum from late 2025 into the new year, Aberdeen said, before activity slowed as geopolitical risks unsettled investors. It expects a five-year IRR of around 10-12% for buyout strategies and around 12-15% for venture capital.

US private equity deal value dropped 18.3% to $260.2bn in the first quarter, while the European market saw a 22.5% quarterly decline. Aberdeen said it was "selectively positive" and "cautiously positive" on the asset class.

Add-on acquisitions made up 71.4% of European buyouts, the highest share in a decade. Investors are increasingly turning to secondary sales for liquidity, a shift Aberdeen linked to growing demand to recycle capital, while secondaries reached a record 19% share of fundraising in the same quarter.

Buyout pricing has settled at elevated levels, with multiples running at 12.6x globally and 11.9x in the US. The group said this reflects fewer, better-quality deals being completed rather than any broad improvement in market conditions.

It expects future gains to rely less on rising valuation multiples and more on operational improvements, with investors continuing to favour technology-driven and AI-related businesses.

De Silva added: "We continue to see opportunities in structurally supported sectors such as digital infrastructure, the energy transition and technology-enabled businesses. However, dispersion across sectors and assets is rising, reinforcing the need for a highly selective approach to capital allocation."

This year has been a rollercoaster, with UK funds struggling in the first quarter before recovering from their nadir at the end of March to make high single-digit returns.

Within this tumultuous time, it has allowed some formerly struggling funds to bounce back. In this series, Trustnet looks at the funds that have had a miserable decade, landing in the bottom quartile of their respective Investment Association sector, but where there are signs of rebound in 2026.

In particular, funds with a value style have performed well so far this year. The MSCI United Kingdom Value index was up 11% in the first half, more than double the momentum style (4.4%), which was second. Quality has been the worst place for investors, with the style broadly flat in 2026 so far.

Value investing dominance has particularly benefited income funds in IA UK All Companies sector. These funds can be found in the broader UK peer group for a multitude of reasons, although typically it is because there is no income requirement, unlike the IA UK Equity Income sector.

Here funds must have three-year rolling yield above the FTSE All Share’s yield at their year-end, and must achieve at least 90% of the FTSE All Share’s yield on an annual basis.

Montanaro UK Income was removed from the income sector in 2016 for failing to adhere to its rules and was recategorised to the IA UK All Companies peer group.

Since then it has been tough sledding. The fund has made 72.7% over the past decade, a bottom-quartile effort in the sector. Its 1.3% loss over five years is also in the bottom 25% of its peers, with the fund sitting in the bottom quartile of sector in 2022, 2024 and 2025.

Performance of fund vs sector over 10yrs

Source: FE Analytics

As well as being an income play, the fund is also heavily invested in mid- and small-caps, which have had a torrid past decade relative to their large-cap cousins. However, so far in 2026 things have turned around, with the fund up 9.9% in the past six months.

Recommended by analysts at RSMR, they said the asset management firm has a strong long-term track record investing in smaller companies and has a “substantial team of analysts to carry out proprietary research into stocks which receive less coverage than their larger peers”.

“The fund is well diversified from a sector level and in terms of the underlying stream of dividends and is not overly reliant on conventional income sectors such as resources or banks. We believe that this is an extremely attractive offering for investors seeking a healthy and sustainable level of equity income and/or exposure to smaller companies.”

It was one of four funds in the IA UK All Companies sector to make the list, alongside IFSL Church House UK Equity Growth, M&G UK Sustain Paris Aligned and Premier Miton UK Focus.

Source: FE Analytics

In the IA UK Equity Income sphere, Fidelity Enhanced Income made the list. Its 8.7% return in the first half of 2026 was good enough for the top quartile of the peer group, although over the long term it has struggled.

The fund aims to provide an enhanced income. Rupert Gifford is in charge of the underlying equity positioning, looking for solid, blue-chip companies that have historically coped well with testing market conditions.

Given an ‘A’ rating by analysts at Titan Square Mile, they noted that the portfolio is managed using a “cautious, long-term approach”.

“It is possible therefore, that the fund is likely to underperform the broader market in strongly rising markets, such as we saw in 2025. However, the fund's track record has proven to be highly resistant during more challenging periods, as evidenced by its return profile in 2022,” they noted.

The second part of the fund is run by Vincent Li and uses the derivatives market (in particular a covered call options overlay strategy), to boost income.

“Whilst it is complex, it has proven successful at delivering additional income to help the fund meet its yield target over time,” the Titan Square Mile analysts notedsaid.

“We think the combination of these two elements results in an appealing proposition for investors who have a requirement for income.”

Lastly, the sole entrant from the IA UK Smaller Companies sector is IFSL Church House UK Smaller Companies. It has made a total return of 9.9% so far this year, the third-best in the peer group. It has had the worst decade however, up just 39.4% over 10 years.

Debt issuance is accelerating as the AI build-out accelerates and expands – and for Andreas Michalitsianos, manager of JPM Global Corporate Bond, that creates more opportunity for bond investors than most realise.

In 2025, the largest hyperscalers – including Amazon, Alphabet, Meta and Oracle – issued around $120bn in US corporate bonds versus an average of $28bn per year between 2020 and 2024, with Morgan Stanley forecasting that total AI-related global debt issuance will reach $570bn in 2026.

Recent debt issuance from the hyperscalers includes $14bn of Canadian dollar-denominated high-grade bonds, €14.5bn in euro-denominated bonds by Amazon and a 100-year bond in sterling markets by Alphabet.

Last month, PGIM’s co-chief investment officer of fixed income Greg Peters argued that bond investors in the unsecured space are “knowingly financing a bunch of losers”, given that the winner-takes-all nature of AI means the losers will overwhelm the one or two winners and, unlike equity investors, while bondholders may get their money back, they will never get the upside.

Michalitsianos also acknowledged the risk that underpins the AI bubble versus boom debate: What if the promises surrounding the AI build-out fall through?

“The obvious parallel is the dot-com bubble, when there were only a couple of winners and many more losers,” he said.

He emphasised the importance of being self-reflective but countered that the risk to bond markets is ultimately far less than in equity markets.

“If I use Meta and its Metaverse as an example, the company admitted this was not the right call and pulled back its capital expenditure (capex) on the project – I think this is what would happen with the hyperscalers, too,” he said.

“If a company decided that owning, building and maintaining a frontier model was not feasible after all, it would likely licence it from someone else and simply pull back on capex.”

While the consequences of this would likely send ripples across equity markets, Michalitsianos pointed out that this does not mean the company will be unable to pay back its debt.

“That decision actually makes it more creditworthy because it would be spending much less,” he said.

Given the growing pace of demand for AI and AI-powered products, it is also likely another hyperscaler would step in and commandeer the space should another pull back its financing plans, Michalitsianos added.

“In that scenario, where demand for AI is not on the trajectory people expected – and that is why the investee company is pulling back financing – from a bondholder’s perspective, we are still comfortable with the balance sheet, whereas an equity holder would be experiencing a lot of volatility.”

The four stripes of AI debt

Michalitsianos has been exploring the ways in which JPM Global Corporate Bond may invest in AI, noting there are “four main stripes” to AI-related financing.

The first is the debt of the hyperscalers themselves. “At times, they do provide opportunities because, as supply comes, they may present a new issue concession and they can be interesting tactically,” Michalitsianos said.

However, he was cautious about being too overweight at this time “because they are going to issue a lot of debt over the next several years but they remain interesting”.

The second way in which Michalitsianos expects to see AI debt manifest more is through investment grade construction bonds.

“The hyperscalers are funding a lot of chips and servers but they don’t necessarily want to pay for all the shells housing the data centres – so they are happy to let others do the heavy lifting there,” he said.

He explained that these bonds are typically issued from joint ventures – “typically non-recourse to a corporate parent and then secured by a data centre”.

“This would normally sit on a bank balance sheet, as it is construction lending, but because of the size, and because some issuers wish to secure funding in bond markets, we are seeing this become a new segment of our market,” he said, noting that he likes these bonds “when they tick all the boxes”.

A smaller sliver of the growing AI-related debt issuance comes from the utilities required to power all this new AI infrastructure.

“Of everything it takes to build a gigawatt of data centre capacity, only about 5% is the power build-out – yet this still needs to be funded,” Michalitsianos said.

In this area, he said he especially likes issuances from utilities with projects in southeastern states in the US, due to less political pushback to AI-related construction work.

The final area concerns bank lending.

“Bank lending in the US is up by around 11% year-over-year and a good portion of that is commercial real estate, which is now starting to inflect higher because of these data centres,” Michalitsianos said.

“So lending to banks – which primarily use deposits for funding but also borrow from bond markets – can present opportunities as well.”

However, AI is not the only secular theme prompting opportunities across debt markets, with Michalitsianos highlighting the “capex wave” surrounding the pharmaceutical revolution with GLP-1s, the global renewed desire for energy security, reshoring and nearshoring, and aerospace and defence spending.

“It points to a period where spending on capital equipment and factories will be very high, which is growth-supportive, and it will all require diverse funding,” he said.

“The AI story is like a cloud in the sense that you cannot see past it but there is an enormous amount happening behind it too.”

The most useful company meetings are those that show you what the narrative is missing. I was reminded of this on a recent trip to the US, split between a conference in Florida and time on the road in Arizona visiting companies at their headquarters. Across the week, I met around 50 US companies.

It showed me that there is no neat one-liner to sum up the environment in the US. The picture is highly idiosyncratic and therefore, for active smaller company investors such as ourselves, more interesting. That said, a few themes did come through loud and clear.

The diverging consumer

Given that it is the largest driver of most developed economies, we must start with the consumer. There has been much talk of the ‘K-shaped’ recovery. My interactions suggest that this is not levelling out. If anything, the jaws of the ‘K’ appear to be widening.

Companies exposed to higher-income consumers, such as luxury retail, high-end hotels, travel and golf, continue to report resilient demand. But at the other end of the spectrum, businesses are seeing weaker volumes and pricing pressure in areas such as personal care, packaged food and alcohol.

This matters because the market often talks about the ‘consumer’ as though it is one homogenous group, but it is not.

A very different defence spending cycle

Defence companies have been performing well recently and the outlook seems favourable, but this cycle appears very different to previous ones.

The obvious assumption is that the largest prime contractors will be the biggest winners but my meetings suggested a more nuanced picture, with demand shifting towards smaller- and medium-sized defence companies that can design effective, scalable and more affordable solutions quickly.

Areas such as defence electronics, sensors, radars, space and hypersonics are seeing strong interest. Holdings such as Curtiss-Wright, CACI International and Furuno Electric are in the portfolio.

AI's expanding footprint: From silicon to the physical economy

AI was mentioned in virtually every meeting, and it remains central to the mood of the stock market. However, the opportunity set has broadened well beyond semiconductors.

The data centre and infrastructure boom is feeding demand in testing equipment, construction materials, cooling, water management, real estate services and natural gas and power infrastructure. In other words, AI is becoming much more embedded into the physical economy.

Last year, at the same conference, many companies were still talking about AI use cases. This year, management teams were more willing to talk about productivity benefits and potential labour reductions. That is a material change.

At the same time, AI disintermediation is a real risk. For the software and IT services sector, businesses with regulatory barriers, compliance requirements, embedded workflows, network effects, proprietary data or deep customer trust appear better placed to defend themselves.

Despite this, even the survivors look likely to have less pricing power in the future and must therefore carry lower valuations than before.

Opportunities in the industrial economy

Tariffs and industrial policy provided another example of why selectivity matters. Some companies are clear winners: steel and aluminium businesses are seeing stronger orders and longer lead times. Additionally, industrials with pricing power, flexible supply chains and the ability to move production closer to the US have generally managed tariff disruption well.

But others have not – companies selling into large customers on long-term contracts, including parts of healthcare equipment and consumables, have struggled to pass through higher costs and are absorbing margin pressure.

There were clear pockets of cyclical recovery. Trucking and freight stood out. After a three-and-a-half-year trucking recession following the pandemic, there are signs of stabilisation.

I spent time at a truck depot in Arizona, where the management team of one of America’s largest fleets sounded more constructive. Some of the excess capacity that entered the market in 2021 and 2022 is now leaving, helped by tighter regulations and industry consolidation.

Demand is not booming, but it is stable, retail inventories are lean and rates have improved recently. A little more demand could tighten the market quickly.

Aerospace was another highlight. One company I met services aircraft engines through a large global workshop network and a skilled technical workforce. It is benefiting as OEMs and airlines outsource more servicing work, while long-term contracts with inflation protection provide a degree of predictability. This is the kind of business we like to study: specialist, hard to replicate and exposed to longer-term demand.

My conclusion from the trip was not that the US economy is uniformly strong or weak, but that the opportunity set is more fragmented, diverse and ultimately more interesting than in recent years.

For investors, the temptation is to focus on the handful of large companies dominating index returns. Yet many of the most revealing signals are coming from smaller businesses closer to the real economy: the truck depot, the aircraft engine workshop, the defence electronics supplier, the cooling specialist, the industrial company that is reshaping its supply chain.

These companies rarely attract headline attention, yet they frequently signal where the most compelling opportunities lie. The trip served as a further illustration of just how expansive the global smaller companies universe is.

Our trust has access to a rich and diverse pool of candidates, affording us the luxury of being highly selective – concentrating our focus on quality businesses that appear undervalued today and that we believe are well-positioned to generate attractive, sustainable returns for our shareholders.

Nish Patel is manager of the Global Smaller Companies Trust. The views expressed above should not be taken as investment advice.

European mid-caps have been the strongest part of the region’s equity market over the past decade, recent Trustnet research found, and market experts believe the segment is well-placed to continue outperforming.

As such, Trustnet asked fund selectors to identify funds and investment trusts they believe offer meaningful exposure to Europe’s blossoming mid-sized businesses.

First up, Billy Ewins, fund research analyst at Quilter Cheviot, suggested the £585m JPMorgan European Discovery Trust, noting that it provides differentiated access to Europe’s small- and mid-cap universe through a disciplined and high-conviction investment process.

As of 31 May 2026, over 80% of JPMorgan European Discovery Trust was invested in European mid-caps, with 13.3% in small-caps and just 3.6% in large-caps.

“The trust stands out for the experience of its team, long-term performance track record and its proven ability to identify underappreciated businesses with strong fundamentals,” Ewins said.

The managers – Jack Featherby, Jonathan Ingram and Jules Bloch – are bottom-up stock pickers, combining quantitative screening with fundamental research to identify companies with attractive valuations, improving business quality and positive earnings momentum.

The trust has posted a first-quartile one, three and five-year return against the IT European Smaller ex UK sector, gaining 16.6%, 75.3% and 46.9% respectively.

Rob Morgan, chief analyst at Charles Stanley, also picked JPMorgan European Discovery Trust, noting that its structure and ability to gear should offer an advantage over open-ended competition.

“It is an interesting higher risk proposition for investors seeking capital growth from an often-overlooked asset class – [although] given the risk profile of both the asset class and the greater volatility involved in a trust that can employ some gearing, this is best held in a smaller portfolio position size, perhaps complementing a more mainstream European equities fund devoted to larger stocks,” Morgan said.

The trust is currently trading at a 6.5% discount to net asset value (NAV).

Performance of the trust vs sector and benchmark over 5yrs

Source: FE Analytics

Meanwhile, Kate Marshall, head of fund research at Hargreaves Lansdown, pointed to Barings Europe Select, which is on the investment platform’s Wealth Shortlist.

While the fund predominantly invests in smaller businesses, it invests in companies with a market capitalisation ranging from $456m up to $19.4bn in size, with a meaningful weighting to mid-sized businesses.

Marshall highlighted the experience and longevity of the fund’s lead manager, Nick Williams, who took over the fund in 2005 and has amassed over three decades of experience investing in Europe.

Under Williams’ management, the fund has gained 772.8% to the end of May 2026, according to Marshall.

Williams utilises the growth at a reasonable price (GARP) philosophy, identifying companies in good financial shape, with low levels of debt and a quality management team, only investing in stocks he believes can increase the existing stock price by 40%.

If the share price of a portfolio holding instead falls by 20%, the stock is sold.

“There aren’t many fund managers with such a long and successful track record of investing in this area,” she said.

The fund has nonetheless underperformed the MSCI Europe ex UK Mid Cap index over the past decade, as its focus on quality has been a headwind.

Indeed, looking at discrete annual returns, the fund has lagged in the third quartile in 2023, 2024 and 2025. Although in the second quartile for returns in the sector in 2022, it made a loss of 18.6%.

Despite the near-term performance challenges, Morgan also highlighted the fund, noting that “the experience of the team and consistent application of a repeatable investment process makes it a worthy consideration in the European small- and mid-cap space”.

Both Morgan and Marshall said the fund is likely to take more of a satellite position in an investor’s portfolio, due to the increased level of risk attached to investing in smaller companies.

Performance of the trust vs sector and benchmark over 5yrs

Source: FE Analytics

Darius McDermott, managing director at FundCalibre, highlighted both IFSL Marlborough European Special Situations and Montanaro European Income.

The former is a £167m strategy managed by FE fundinfo Alpha Manager David Walton – supported by Tom Livesey and Steve Robertson – that targets outperformance of the benchmark over a minimum of five years.

McDermott said: “It is a true stock picker’s fund focused on under-the-radar European businesses that larger peers tend to overlook, with a bias towards small- and mid-cap stocks.”

However, unlike the earlier funds, it has a much higher weighting to small- and micro-caps at 37.2% and 26.2% respectively, while 9.8% of the fund is invested in mid-caps.

Although the fund has vacillated between the third and second quartile for returns against its peers over one, three and five years, it has ultimately posted a first-quartile return of 211.7% over the decade.

Then McDermott said that the smaller €77m Montanaro European Income fund “provides a stable and growing income stream with a focus on the continent’s under-researched small- and medium-sized companies”.

The strategy is managed by Alex Magni, supported by George Cooke, and targets capital growth alongside income. It typically holds 50 stocks, with around one-third in mid-caps and two-thirds in small-caps.

As of 29 May 2026, the majority (31%) of the portfolio was invested in companies with a market capitalisation between £1bn to £2.5bn, 17% in companies in the £2.5bn to £5bn range and 16% between £5bn to £10bn.

The Montanaro strategy also has a bias towards quality-growth businesses, a style that has lagged in recent years.

In contrast to the other fund selectors, Dzmitry Lipski, head of funds research at interactive investor, suggested a less obvious fund for European mid-cap exposure: the £2bn Artemis SmartGARP European Equity fund.

“Unlike many European equity funds that are more growth or large-cap oriented, this strategy is different: value-oriented with mid-cap bias,” he said.

As an example, in May Alpha Manager Philip Wolstencroft said he had reduced positions in large-caps such as insurance firm Mapfre and recycled the proceeds into mid-cap stocks such as Nordex, a European company that designs, sells and manufactures wind turbines, citing the need “to ensure the fund owns attractively valued stocks with earnings upgrades”.

This also speaks to Artemis’ proprietary SmartGARP process, designed by Wolstencroft, which is a quantitative analysis tool that screens the financial characteristics of companies, identifying those that are valued materially lower than their growth prospects merit.

“Artemis SmartGARP European Equity is a viable core holding in a global well-diversified portfolio, with a competitive ongoing charge of 0.82%,” Lipski added.

The fund has also consistently outperformed, logging first quartile returns in the IA Europe Excluding UK sector over one, three, five and 10 years – gaining 272.3% over the decade.

Performance of the trust vs sector and benchmark over 5yrs

Source: FE Analytics

High-net-worth clients are more willing to play the long game and invest in higher-risk assets such as private markets, according to Eleanor Ingilby, head of high net worth at atomos.

Families with millions of pounds in the bank enjoy more tax breaks as they find it easier to use up their full ISA and pension allowances. While this can be done by the non-ultra-rich as well, the super-rich can also set up family investment companies or trusts to lower their taxable income.

But gaining or maintaining wealth is not all about tax relief and there is an important mindset shift that separates the extremely wealthy from the rest of us: patience.

Right now, that is manifesting in an appetite for private markets, which is attractive to high-net-worth clients due to its diversification benefits. They are hearing about it from the “teams around them, whether that be through the family accountant or the solicitor who's worked with them for a long time”, said Ingilby.

Yet it comes at a time when private markets are seemingly out of fashion. The average trust in the IT Private Equity sector, for example, is on a 17.5% discount to its net asset value.

Ingilby noted there are concerns, such as the liquidity issue. Private equity can be difficult to sell and can, in some cases, lead to some investors being unable to get their money out while redemptions are made.

“Private markets obviously have a liquidity challenge around them. I got an email from a client this morning around some investments they had in one, which has stopped allowing drawdowns from the fund," she said, although she noted they do “offer a diversification benefit” to public markets.

This is not the case with investment trusts, although the large discounts and potential lack of a buyer can be prohibitive to selling.

But this liquidity challenge can be overcome by taking a long-term mindset and having certainty in whether the money is going to be needed or not in the near term.

“They can afford to invest in investments that are not as liquid as, say, your client who has got £500,000 to £1m investable assets,” she said.

While this is still a large amount of money, people with this level of wealth (which she described as anything that is not needed for day-to-day life such as pensions, ISAs and long-term savings) tend to look for consistent liquidity just in case they may need to draw upon it.

“They want a portfolio that could be fully liquid within, say, 10 working days, whilst your higher-net-worth clients are a lot more comfortable having a mandate run alongside it that isn't as liquid, but is a smaller part of the overall portfolio. So that's the biggest difference we see,” she said.

Ingilby said higher-net-worth clients are “very informed” and have “sophisticated discussions” around market dips and the opportunities within them, such as the one going on in private markets.

“So often what we'll see is: if there's a dip in the market, [the client] will call to add more capital in at that stage. They're not asking for my opinion on it, they're saying, ‘look, the markets are down 10%, I've had this in the pocket, I'm going to add this into the markets’,” she noted.

Not everyone has access to additional cash. The same goes for the super-rich. But for those without additional capital to deploy, she said they will ask her to lift the risk level of their current investments.

“That's something I don't often see from clients who have, say, £1m or £1.5m – that's not often their behaviour,” she said.

She does not condone trying to time the market, noting that it is “time in the markets” that makes the best returns. However, richer people tend to be more adept at staying the course during dips and able to up their risk or buy more when dislocations occur.

“They're not looking for an absolute return, they're not saying to me, ‘if this doesn't go well, we're in trouble’. They're saying, ‘why not try this, and we'll look at it in five years and see what happened’. It's not a case of ‘I want a good return in six months’,” she concluded.

Terry Smith lifted portfolio turnover of Fundsmith Equity to more than 50% in the first half of 2026, a high for the fund, as he adapted his investment approach to a market driven by passive flows rather than company fundamentals.

Fundsmith Equity lost 2.9% between January and June 2026, against a gain of 11.2% for the MSCI World index in sterling terms. Smith linked this backdrop to a market in which momentum, rather than profitability or returns on capital, increasingly sets share prices.

He cited figures from Cboe Global Markets showing active fund managers now account for roughly 10% of trading volume, down from 80% in the 1990s.

“The trading activity which drives prices is now driven not by active fund management decisions but by the momentum feedback loop of funds moving from active to passive and reweighting within passive funds,” he said.

Against this backdrop, Smith said the first two parts of Fundsmith's investment mantra, buying good companies and not overpaying, remain unchanged. The third element – ‘do nothing’ – is the one under revision.

Fundsmith Equity's turnover reached 51.8% in the period, although Smith said investors should not expect this level to persist. Voluntary dealing, meaning trades not caused by subscriptions or redemptions, cost the fund £11,404,962 during the half year, equivalent to 0.084% of assets.

Explaining the shift, Smith wrote: "In a market in which share price moves of 33% per day for even large stocks are not uncommon a buy and hold strategy can only work if you are not subject to flows, and we are.

“Sticking to our current approach may well fall foul of the adage that the market can remain illogical longer than we can remain in business. You should therefore expect that we will be more active in future. I still expect our turnover and its cost to be significantly below that of most active funds, but it may well be higher than our historic average.”

Performance of Fundsmith Equity vs sector and index in H1 2026

Source: FE Analytics. Total return in sterling between 1 Jan and 30 Jun 2026

The manager said the fund will take more account of momentum — both fundamental and share price — when making investment decisions. Smith will also place less weight on a technique he has used before: buying shares in quality companies after they suffer a setback. He compared this to catching "the proverbial falling knife" in the current market.

He added: "All we are getting is cut fingers as their downward share price spiral is exacerbated by the index momentum enhancement effect."

Smith was clear that the fund's changes do not amount to tracking the market. "We have no desire to hug the index," he wrote. "You can buy index funds that are much cheaper than us or any other active manager, so what would be the point?"

Fundsmith Equity opened new positions across six sectors during the period. In industrials, it initiated stakes in GE Vernova, Legrand, Nextpower and Uber.

GE Vernova builds and services gas turbines and grid equipment. Smith highlighted an order backlog of $163bn, equivalent to four times 2025 revenues, and noted the company's small modular nuclear reactor project under construction in Canada, due for completion by 2030.

Legrand, a French manufacturer of electrical and digital building infrastructure, holds close to 20% global market share in wiring devices. Smith said growth would come from rising demand for energy-efficient buildings and power systems for data centres.

Nextpower makes systems that let solar panels track the sun, which Smith said increases energy yield by 20% to 30% compared with fixed installations. The company acquired battery maker Prevalon Energy for $365m in May 2026 to expand into data centre applications.

Uber was added on the view that network effects between drivers and riders have strengthened as rival ride-hailing platforms have exited the market. The company's operating cashflow rose from a loss of $4.3bn in 2019 to more than $10bn in 2025.

In financials, Fundsmith Equity bought Mastercard, which it now holds alongside Visa. Smith said the two companies are "equally good businesses" and that owning both gives the fund over 6% exposure to payments without excessive stock-specific risk.

The fund's healthcare purchase was Veeva Systems, whose cloud software manages clinical trials and manufacturing compliance for drugmakers. Smith said the company holds roughly 80% market share in pharmaceutical customer relationship software, supported by high switching costs.

In information technology, the fund bought AppLovin, Sage and TSMC. AppLovin's platform serves more than 1bn daily active users and, Smith said, generates more advertising revenue than Snap, Pinterest, Reddit and X combined, driven by its AXON ad-matching engine.

Sage replaced Intuit in the portfolio. Smith said the accounting software company carries less reliance on share-based compensation and lacks Intuit's record of "injurious acquisitions".

TSMC, the world's largest contract chipmaker, manufactures roughly 90% of the world's most advanced semiconductors, a position Smith said is protected by the estimated $20bn cost of building a single advanced factory.

In consumer discretionary, the fund bought The TJX Companies, parent of TK Maxx and Marshalls, citing its network of more than 1,400 buyers sourcing from 21,000 vendors.

It also bought Yum! Brands, owner of KFC and Taco Bell, noting the pending sale of Pizza Hut, which Smith described as "a significant drag on overall results".

The sole communication services purchase was Netflix. It now accounts for nearly 8% of all television screen time in the United States, pointing to growth in its advertising tier and a crackdown on password sharing that added 41m subscribers after being introduced in 2024.

On the sell side, Unilever prompted the longest explanation in the letter. Smith said Fundsmith had supported former chief executive Hein Schumacher's stated plan to avoid acquisitions or divestments until existing businesses were performing to standard, a commitment abandoned after Schumacher's departure.

Following the ice cream business's separation as Magnum Ice Cream Company, Unilever announced plans to transfer its food business to McCormick, a move Smith linked to activist investor Nelson Peltz.

Smith explained: "We are not fans of the idea that corporate activity solves fundamental problems. Nor are we fans of boards who listen to activists who are not long-term investors."

He also noted that "the structure of the deal means we don't get to vote on it".

Novo Nordisk was sold after the company, according to Smith, "parlayed a market-leading position in the biggest drug discovery in decades into an investment disaster".

Nike was sold on the view that a turnaround under new chief executive Elliott Hill would take longer than expected, given ongoing problems in China and at Converse. Zoetis was sold over what Smith described as management's inability to respond to new generic competition or communicate clearly.

Other disposals, including Atlas Copco, Coloplast, EssilorLuxottica, Intuit, LVMH, Magnum Ice Cream Co., Mettler-Toledo, Otis and Wolters Kluwer, were driven by a range of company-specific factors: slowing growth, valuations Smith judged too high, acquisition missteps and, in Magnum's case, a position too small and illiquid for the fund to build meaningfully.

The resulting portfolio carries a return on capital employed of 31%, a gross margin of 62% and a free cashflow yield of 4.3%, against an estimated free cashflow yield below 2% for the S&P 500. Smith expects these companies to grow cashflow by about 14% a year over the next three to five years, adding that they would either become more lowly valued or see share prices rise to reflect that growth.

Smith gave no timeline for when current market conditions might change, saying: “I profess no insight into how or when this passive-led momentum market will end, other than to say badly.”

“More likely it is something which we cannot foresee. After all a crisis would not be a crisis if we could foresee it. But we do know that trees do not grow to the sky,” he added.

Two actively managed funds in the IA Global Emerging Markets sector have combined low costs with high returns over the past decade, Trustnet research has found.

As part of an ongoing series, we screened Investment Association (IA) sectors for funds that sit in the cheapest decile of actively managed strategies while also ranking in the top decile of their sector for 10-year returns to the end of May 2026.

The idea is that, for investors, cheaper active funds can offer a middle ground between low-cost passive exposure and the potential for excess returns from skilled managers.

In the IA Global Emerging Markets sector, it paid to hunt for deals: over the past decade, the least expensive active funds delivered an average return of 253.9%, compared with 158.5% from the most expensive.

However, only two of these funds met the specific criteria for being in the cheapest decile and the best-performing decile: Nomura Emerging Markets and Invesco Global Emerging Markets (UK). 

Source: FE Analytics

Invesco Global Emerging Markets (UK) has proven to be an affordable long-time outperformer in the IA Global Emerging Markets sector. The £1.4bn strategy, launched in 2012, has an OCF of 0.75% and a 10-year total return of 261.8%.

It holds a five-star FE fundinfo Crown Rating and is managed by Alpha Managers Charles Bond and William Lam, alongside Ian Hargreaves and Matthew Piggott, who apply a value-oriented philosophy centred on identifying undervalued companies in areas of the market that have fallen out of favour. Their preference for cash-generative businesses with robust balance sheets has resulted in a 61-stock portfolio with a weighted average market capitalisation of £2.4bn.

As well as logging a first-decile 10-year return, the fund has a strong shorter-term track record, as it was in the first decile for returns in the sector in 2025, gaining 31.8%.

Analysts at Titan Square Mile noted that significant inflows in 2025 prompted the management team to raise both its market cap threshold and minimum daily liquidity requirements, pushing the Invesco strategy toward large, more liquid names and reducing its ability to take meaningful positions in smaller, higher-conviction ideas. As such, the portfolio’s current larger positions include TSMC, Samsung and MediaTek.

Invesco Global Emerging Markets (UK) has also attracted the attention of fund selectors and investment platforms. In May 2026, Hargreaves Lansdown analyst Tom James suggested pairing the strategy with JPM Emerging Markets to balance its valuation discipline with a quality-growth approach.

Meanwhile, Darius McDermott, managing director at Chelsea Financial Services, highlighted the fund as the one he would buy if emerging markets sold off, citing its blend of strong valuation discipline and fundamentally sound companies that have been mispriced by the market.

Performance of the fund vs sector over 10yrs

Source: FE Analytics

However, the strongest performer, and the cheapest of the two funds, is Nomura Emerging Markets, which combines a low ongoing charge of 0.55% with the highest 10-year return in the IA Global Emerging Markets sector at 438%.

The $1.5bn strategy is managed by Liu-Er Chen and aims to ensure long-term capital appreciation through a broad portfolio of emerging market equities.

Nomura Emerging Markets’ portfolio currently consists of 66 stocks and has its largest allocation to the information technology sector, although it is technically underweight relative to the benchmark at 39.1% versus 43.2%, while industrials (15.6%) and financials (14%) form the next largest sector exposures.

Geographically, the strategy is heavily overweight South Korea (36.3% versus 23.1% for the benchmark) and underweight China (11.5% versus 20.4%). Its top holdings highlight this geographic focus, with SK Hynix and Samsung taking up 9.9% and 9.4% of the portfolio respectively.

Although the fund launched in its current form on 31 January 2020, this was the result of a merger with the Delaware Investments Emerging Markets fund, an Irish UCITS. The merger transferred the predecessor fund’s track record, giving the strategy a longer history than the launch date suggests.

It should also be noted that the Delaware Investments Emerging Markets fund was more expensive – Class F shares had a 1.70% OCF and Class I shares had an 0.95% OCF.

However, Nomura Emerging Markets’ short-term track record is equally strong, gaining 68.3% so far in 2026 – placing it in the first decile of the sector – while it is also in the first decile over one, three and five years.

The fund was also identified as one of six in the sector that has beaten the MSCI Emerging Markets index in at least 10 of the past calendar years to the end of 2025.

Performance of the fund vs sector over 10yrs

Source: FE Analytics

The cheapest actively-managed emerging markets funds

While Invesco Global Emerging Markets (UK) and Nomura Emerging Markets are the only funds that combine the lowest fees with top-decile 10-year returns, there are other strategies in the sector that stand out purely on cost.

Source: FE Analytics

The cheapest is Abrdn Emerging Markets Equity Enhanced Index, with an OCF of 0.30% and a 10-year return of 203.8% – placing it in the fourth decile of the sector.

The £174.5m strategy aims to generate long-term growth in excess of the MSCI Emerging Markets 10/40 index over rolling five-year periods. While it incorporates this active overlay, the fund’s long-term risk profile remains close to the benchmark, with a targeted tracking error of less than 1.25% over reasonable timeframes. This places it in the grey area between active and passive – but because of its explicit active objective, it qualifies for inclusion in this screen.

RSMR analysts said: “The abrdn enhanced index funds bring together the benefits of both active and passive management in a low-cost proposition.”

Other cheaper active funds also included in the table are Dimensional Emerging Markets Core Equity and M&G Global Emerging Markets.

The actively managed emerging market funds with the strongest returns

Of course, cost is only one side of the equation. When looking purely at performance, the IA Global Emerging Markets sector has a different set of leaders – although Nomura Emerging Markets still tops the list.

Source: FE Analytics

With the Nomura strategy already covered, the next best-returning fund in the sector over the assessed timeframe is the £2.8bn Artemis SmartGARP Global Emerging Markets Equity fund, with a 10-year return of 335.5% in exchange for a 0.84% OCF.

The strategy has been managed by Alpha Manager Raheel Altaf since 2015 and is built around Artemis’ proprietary SmartGARP process, which aims to strip out behavioural biases when assessing investment opportunities. It invests across emerging markets in themes such as technological innovation, infrastructure development and the rise of domestic consumer brands.

The fund has recently attracted strong investor interest. It was added to the FundCalibre Elite Ratings list in April 2026 and was the most bought fund in the IA Global Emerging Markets sector in 2025, drawing $586.4m in net new money while performance added $457.4m.

Other funds included in the table are Baillie Gifford Emerging Markets Growth and GAM Sustainable Emerging Equity.

The first phase of the AI boom has funnelled an extraordinary amount of capital into a handful of US mega-caps. The early spoils have gone to a familiar trio, with NVIDIA, Microsoft and Alphabet dominating buy‑lists and performance tables alike, while the high‑profile IPOs of Anthropic and OpenAI look set to draw more money into an already crowded trade.

The concentration risk, however, is becoming harder to ignore. UBS estimates that hyperscalers will spend the equivalent of 100% of operating cashflow in 2026, up from a 10-year average of 40%. And that means those supposedly asset-light, cash-generative machines are starting to look distinctly more capital-intensive. With valuations leaving little margin for disappointment, betting solely on the US mega-caps is overlooking a much broader field of AI beneficiaries.

One alternative is to follow the money into the physical infrastructure required to train and run large language models, rather than betting on the winners of software arms race. Data centres have become the engine rooms of the AI economy, with McKinsey estimating that data centre capex could reach almost $7trn by 2030 (including enough fibre-optic cable alone to circle the Earth 120 times).

Energy supply is another potential constraint: data centres consume vast amounts of energy, with the cooling needed to manage heat-intensive AI chips often rivalling the power needed for the computing itself. The International Energy Agency forecasts that data centre electricity demand will more than double by 2030, which, for context, exceeds Japan's current consumption.

In short, the second wave of AI investment is taking place well beyond the mega‑cap software names dominating the headlines.

The commodities supercycle

One of the clearest beneficiaries is the commodities sector, with the AI build-out adding to soaring demand for copper, aluminium, silver, silicon and other industrial metals. Copper has emerged as the critical resource for electricity transmission, data centres and network infrastructure, not to mention electrification, renewable energy and defence spending.

This creates a bottleneck as physical supply can’t be quickly scaled like software, with new mines often taking more than 15 years from discovery to production. Added to this, companies have focused on paying down debt over investing in exploration and production in recent years, meaning that supply constraints are likely to persist in the near term.

While the long-term structural demand and supply dynamics may be attractive, it’s rather more challenging to capture it in a portfolio: single-commodity strategies come with high volatility, while individual miners carry operational and geopolitical risk.

One way to spread these risks is through a diversified portfolio of mining companies, which offers exposure to underlying commodity prices alongside operational leverage. BlackRock World Mining Trust (BRWM) operates as a quasi-virtual mining company, holding public and private mining assets across industrial and precious metals. The trust looks to capture the potential upside from higher-returning commodities with strong structural growth drivers, while managing the downside risk of cyclical and non-cyclical volatility. 

The trust’s largest weighting is gold, which offers a potential hedge during periods of market volatility, and has benefitted from central bank demand, as well as a significant weighting to copper to capture the AI tailwinds. BRWM has achieved an 80%-plus return in the last year and currently offers a 3% dividend yield.

Feeding the beast

The race is on to build the data centres, fibre networks and power grids required to meet growing AI demand from both businesses and consumers, and the closed-ended structure of investment trusts lends itself well to holding less liquid infrastructure assets.

On the equity side, Cordiant Digital Infrastructure (CORD) owns a diversified portfolio of data centres, fibre networks and towers across the US, Ireland and Central Europe, including a flagship site in Prague with the potential to become the largest data centre in the Czech Republic. Its ‘buy, build and grow’ strategy combines in‑house operational and private‑equity expertise to drive earnings growth, with a five-year return of over 45%.

Another angle is infrastructure debt, which offers attractive yields in the aftermath of traditional banks pulling back from long‑term project lending post the global financial crisis. Sequoia Economic Infrastructure Income (SEQI) invests across more than 50 assets spanning hyperscale data centres, renewable energy and transport. It currently yields just under 9%, offering a healthy premium to high-yield bonds to compensate investors for taking credit risk.

Both trusts are currently trading at discounts to NAV of more than 10%, which may offer an attractive entry point if the downstream beneficiaries of the AI boom begin to re-rate.

Away from the crowd

The temptation is to focus on the headline‑grabbing winners of AI, but this comes at the expense of single-stock risk and the challenge of picking the eventual champions of the AI race. With concerns that the AI frenzy has stretched mega-cap valuations, the second-order beneficiaries doing the heavy lifting may prove a rich source of returns.

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

Not taking enough risk early on, failing to get proper financial advice and living within their means are common issues for clients, according to Eleanor Ingilby, head of high net worth at atomos.

People can make a financial mistake at any time in their lives, whether it be in their teen years or as they come into retirement.

For the younger generation, it is often the case that they do not take enough risks. Atomos asks clients to complete questionnaires to assess individuals' risk tolerance. For those in their teens, 20s and early 30s, people often misunderstand their ability to stomach volatility.

“They're telling me they're not going to touch the portfolio in the long term, they're not going to use it for, say, 10 to 15 years, yet when they do the risk profiling, they'll come out as very low risk,” she said.

“I think that's due to a lack of awareness around the markets and this desire to protect the assets they've been given actually overriding the risk they can naturally take.”

Typically, people in this situation have either never invested before, meaning they are fearful of losing money, or they have had their fingers burned before by investing in individual stocks that did not go so well.

As such, the firm has to not only look at a person’s willingness to take on risk but also their capacity for loss. Put another way, it is the need to take risks, rather than whether or not they want to.

This is because, for younger people inflation represents the biggest risk of loss to their money, particularly if savings are going to be held for a long time. These scenarios both lead to younger generations applying too much risk to equities compared with the actual level of volatility.

“So probably my biggest challenge for younger clients is actually pushing them to take an appropriate amount of risk, rather than what they think is an appropriate amount of risk,” said Ingilby.

This is becoming a more prevalent issue right now, Ingilby noted, as she has seen a significant increase in “intergenerational wealth transfer” – older generations passing down their wealth to avoid inheritance tax or increased taxation through gifting.

“I would say in the past couple of years it's really sped up. There have been a lot of clients trying to take advantage of that seven-year rule and gifting quite a large amount of assets to their children,” she said.

As people age, their priorities change. Often, those in their 30s and 40s have several areas that require their finances. Whether it be getting married, buying a house for the first time, starting a family or spending on more exotic items like new cars and big holidays, this age is one in which it can be difficult to keep on top of finances.

“There's a lot of drawdown on your assets,” said Ingilby, who said there are a plethora of options for any spare cash, from overpaying mortgages to “playing the long game” by investing.

“I think the biggest challenge is persuading them not to draw upon [savings] for additional things and to actually live within their means and leave portfolios to grow and do the job they should be doing,” she noted.

“So that's probably the biggest challenge I have for clients of that age: persuading them to almost completely ignore their portfolios and leave them alone for a bit.”

Finally, approaching retirement, the biggest issue is that people are too lax about seeking financial advice, often only choosing to do so when they have their pension – and therefore a large amount of money to invest.

"I'm a portfolio manager; I can do so much. But it becomes incredibly important as to which pots you're building and what you are then drawing down upon, because that matters hugely,” said Ingilby.

Tax regulations have changed dramatically in recent years, with the UK going through successive governments and changes in prime minister that have made cuts or freezes to various different taxes. This has meant people have had to be “incredibly adept” at making sure they are using their cash in the most tax-efficient manner.

“It becomes about what you are taking, why you are taking it, what you are still adding to, and whether you are doing all of that in the right order. That becomes the biggest challenge at that stage,” she said.

For example, it can be tempting to pile into a pension when people get to their 50s, but they must ask themselves why they are doing so. One reason has historically been that it is inheritance tax-exempt, but this is no longer the case.

“So should you be paying into your pension, or should you be maxing out your ISAs to give you more potential flexibility potentially later? That’s a big question we're getting. I think it's incredibly important to make sure you're filling up the right pots at that stage,” she concluded.

Attempting to time the rotation between value and growth investing is close to impossible, according to Charles Stanley Direct's Rob Morgan, so portfolios need exposure to both factors to be balanced.

Markets do not favour one investing style forever and leadership between the two styles can rotate unpredictably. Since the start of 2006, the MSCI AC Growth index has made an 815.6% total return (in sterling), compared with 399.2% from the MSCI AC Value.

However, growth has not beaten value in every year. FE Analytics shows the growth index has outperformed its value counterpart in 14 full calendar years over this period, while value has won in six years and is ahead over 2026 to date.

Performance of value and growth indices by calendar year

Source: FE Analytics. Total return in sterling between 1 Jan 2006 and 3 Jul 2026.

Morgan, chief analyst at Charles Stanley Direct, said: "Sometimes growth will outperform value, sometimes it's the other way round. Often it depends on the economic situation or it is simply prevailing investor sentiment."

This creates a behavioural trap for investors if they are drawn to whatever has performed well recently. Crowding into a popular style or theme can leave them exposed when sentiment shifts and past performance fails to repeat itself.

Morgan described value investors as people who are "naturally contrarian, wish to avoid fashionable areas and instead target widely ignored parts of the market in search of unappreciated bargains".

Value investors look for a discount between a company's share price and what they judge its true worth to be. Some also seek a margin of safety, where the business's intrinsic value sits close to, or above, the value implied by its share price.

Growth investing works from a different starting point. Growth investors target companies they expect to deliver above-average earnings growth and they typically pay less attention to current valuation measures such as the price-to-earnings ratio.

This approach rests on a bet about the future. Growth investors accept paying more today because they expect a steep rise in earnings to justify that price over the long term.

Both styles carry risks that sit on opposite sides of the same coin. A value investor can fall into a 'value trap', buying a company that looks cheap but is actually declining, with no real prospect of recovery.

Because growth shares already carry high expectations, growth investors face a different danger: even a small earnings miss or short-term setback can hit their share prices hard.

Value investing has struggled in relative terms for most of the past decade, as shown above. Growth stocks, led by technology and e-commerce companies, have delivered outsized returns over that period on a global basis.

However, Morgan added: "Recent market moves perhaps suggest a broadening of market performance away from the domination of larger tech companies.

"It's a reminder to investors not to have a portfolio skewed too much in one direction and to consider rebalancing as different areas perform at different rates. Blending different approaches can lead to better balance and greater resilience to a variety of risks."

Japan offers a clearer example of value's recent strength. Improved corporate governance has lifted cheaper areas of the Japanese market, giving value-focused strategies there a tailwind that most global markets have lacked.

But the Charles Stanley Direct chief analyst warned investors against thinking they can constantly pivot portfolios between the two styles to capitalise on inflection points like this.

"To anticipate the market mood and switch back and forth between growth and value to improve performance is nigh on impossible," he said.

"Both growth and value investing strategies can perform well over the long term if the process is well implemented, so investors looking to maximise long-term returns through investing in shares should consider blending both styles."

Morgan pointed to several value funds that appear on Charles Stanley Direct's Preferred List as examples of how to add exposure to a portfolio.

Artemis Global Income, managed by Jacob De-Tusch-Lec, carries a value bias driven partly by its requirement to generate dividend income. The manager takes a disciplined, contrarian approach, often seeking turnaround situations where out-of-favour companies recover through an industry pick-up or management action.

Henry Dixon and Jack Barrat’s Man Undervalued Assets focuses on the current shape of a company's balance sheet rather than forecast earnings. The managers target UK-listed companies trading below their assessment of replacement cost, or whose profit streams they consider undervalued, while favouring businesses with little or no debt.

Fidelity American Special Situations targets US companies that have gone through a period of underperformance and are undervalued by the market. The manager assesses balance sheet strength, asset backing and business resilience and the fund trades at a sizeable discount to the index on traditional valuation metrics.

Nitin Bajaj's Fidelity Asian Values draws on a Buffett-influenced approach that targets resilient businesses run by trustworthy management teams at a good price. This tends to lead the fund toward smaller companies that are not widely followed by professional investors, across markets including China, India and south-east Asia.

Man Japan CoreAlpha runs a high-conviction value strategy that has benefited from improved corporate governance in Japan. The management team believes cyclicality strongly influences most sectors of the Japanese market and it currently holds sizeable weightings in banks, insurance and autos.

Artemis Global Income became the most-researched fund among Trustnet users in the opening half of 2026, while investors spent more time looking into emerging market strategies.

Global markets faced a volatile first half of 2026, as a result of geopolitical shocks and booming AI-related investment. The US-Iran conflict disrupted oil markets and investor risk appetite during the second quarter but corporate earnings grew strongly over the period, helped by continued capital spending on AI infrastructure.

The S&P 500 had a decent six months, with technology, semiconductor and AI infrastructure companies accounting for a disproportionate share of gains, but emerging markets surged over the period, driven by AI hardware exposure in Taiwan, South Korea and China.

An insightful view of investor sentiment can be gained by looking for funds or sectors that have seen large increases or falls in their overall research share among Trustnet users. To do this, we take the funds' share of Trustnet factsheet views in the first half of 2026 and compare it with 2025 to identify the relative winners and losers.

Change in sector research in H1 2026

Source: Trustnet, Google Analytics

One immediate finding is that investors have been spending less time researching the IA Mixed Investment 40-85% Shares, IA UK All Companies, IA North America and IA Global sectors – which are some of the biggest in the Investment Association universe – in favour of emerging markets, specialist and income strategies.

By far the biggest shift on a sector level was towards emerging markets. The IA Global Emerging Markets sector accounted for 2.31% of factsheet views in 2025 but this jumped to 3.59% in 2026's first half.

This coincides with a recent burst of outperformance for the asset class, following an extended period of lagging behind developed markets.

FE Analytics shows the MSCI Emerging Markets index made a 25.5% total return (in sterling terms) over the period, compared with 11.2% from the developed markets-focused MSCI World. Over the 10 years to the end of 2025, emerging markets' 145.9% was around 100 percentage points behind the MSCI World.

As well as attractive valuations following this underperformance, investors see emerging markets as a source of growth. Strategists at BlackRock favour a selective approach to emerging markets, pointing out that it is benefitting from structural investment themes such as artificial intelligence (helped by semiconductor exposure through Korea and Taiwan), infrastructure investment, energy security and rewiring supply chains.

"Consensus now expects headline earnings per share for the MSCI Emerging Markets index to grow by more than 50% this year versus 2025, compared with expectations for an increase of 18% at the start of the year," they added.

"Within our EM equity overweight, we see opportunities in Latin America, where AI-fuelled demand for critical minerals like copper and lithium should benefit the region's commodity and energy exporters."

IA Commodity/Natural Resources were researched more in the first half as commodity prices continued to rise amid the US/Iran conflict and constrained supply chains, while the quality and defensiveness of global equity income funds might have prompted investors to look at them during the period's more volatile times.

Source: Trustnet, Google Analytics

The most popular fund among Trustnet users over 2026's opening half was Artemis Global Income. It was responsible for 1.83% of all factsheet views in the Investment Association universe, up from 1.23% in 2025 – when it was the second most researched fund on Trustnet.

It is followed by Vanguard LifeStrategy 80% Equity (1.19% of factsheet views), Vanguard LifeStrategy 60% Equity (0.96%), Orbis Global Balanced (0.88%), Vanguard LifeStrategy 100% Equity (0.86%), Fundsmith Equity (0.77%) and Polar Capital Global Technology (0.67%).

When we look at the funds that have grown their research share the most over the past six months when compared with 2025, Artemis Global Income is again in first place. The fund, which is managed by Jacob de Tusch-Lec and James Davidson, boasts sector-topping returns in recent years: it was the second-best performer in the IA Global Equity Income in the first half of 2026 and its best fund in both 2025 and 2024.

Performance of Artemis Global Income vs sector and index in H1 2026

Source: FE Analytics. Total return in sterling between 1 Jan and 30 Jun 2026.

The fund invests across companies of all sizes, combining bottom-up stock picking with a view on global economic trends to avoid missing key opportunities or taking on unintended risks. Rather than relying mainly on high-yielding mega-cap names for income, the manager favours large and mid-cap stocks, building the portfolio around a core of reliable quality names alongside cyclical and higher-risk special situations for balance.

Analysts at Titan Square Mile, which gave Artemis Global Income an A rating, said: "We believe this fund offers a high conviction strategy which at times, may contain concentrated positions (for example in banking stocks, and more recently defence companies) and so may experience prolonged periods of underperformance if these positions are out of favour, alongside periods of stronger performance.

"As a result, investors should expect a bumpy ride. However, the fund overall will offer a good diversification benefit to more traditional income strategies."

Four funds in Artemis' SmartGARP range – Artemis SmartGARP Global Equity, Artemis SmartGARP Global Emerging Markets Equity, Artemis SmartGARP UK Equity and Artemis SmartGARP European Equity – are also being researched more on Trustnet following a period of strong returns.

The SmartGARP process, which was developed by Philip Wolstencroft in the early 1990s, scores stocks across eight different factors: growth, valuation, estimate revisions, momentum, accruals, ESG, macro and investor sentiment. Three of the four funds above were in the top quartile of their sector in the first half, while the exception (Artemis SmartGARP Global Emerging Markets Equity) made second-quartile returns.

Value is a theme in the list of funds with the biggest increases in their Trustnet research share. Artemis Global Income has a value approach, as do Orbis Global Balanced, Orbis Global Equity and Dodge & Cox Global Stock. The value style had underperformed growth investing for an extended period but has closed the gap in the recent past and was narrowly ahead in 2026's first half.

The jump in research into Barings Korea Trust (from 1,107th place last year to 188th today) tracks the strong returns of the KOSPI this year, driven by AI infrastructure demand, memory chips and governance reform.

The wider AI theme can also be seen in the list of funds catching the eyes of Trustnet users with the presence of Polar Capital Global Technology and Polar Capital Artificial Intelligence.

Flipping things on their head, Fundsmith Equity took the biggest fall in research share, going from 1.07% last year to 0.77% this year amid bottom-quartile returns. It is still the sixth most-viewed fund on Trustnet, but this is down from third in 2025 and first in many previous years.

Royal London Global Equity Select, L&G Global Technology Index Trust, Rathbone Global Opportunities and Baillie Gifford Managed are some of the other funds that have been receiving less research from Trustnet users over the past six months.

The AI semiconductor cycle has entered an intermediate expansion phase rather than a bubble or a turnaround, with its future direction resting on whether returns on invested capital by hyperscalers and AI labs keep pace with their spending, Edmond de Rothschild argues.

In a report on the semiconductor and AI investment cycle, the private bank highlighted two trends that are critical to understanding what might happen from here as hyperscalers commit massive sums of money to the ongoing AI build-out.

"The first is the unprecedented transfer of value taking place from the balance sheets of hyperscalers to computing hardware manufacturers – and foremost among them, memory manufacturers, whose market is on track to surpass the trillion mark ahead of schedule,” Edmond de Rothschild's strategists said.

"The second is the token economy: as long as tokens remain scarce and their production remains constrained, pressure on critical infrastructure links persists and pricing power remains with those who hold the capacity."

Annual semiconductor sales by underlying market, in billions of dollars since 2002

Source: Edmond de Rothschild, WSTS

Tokens, the basic units an AI large language model reads or generates, behave increasingly like a raw material. Their cost has fallen by roughly 90% since 2023, yet business usage has climbed by around 1,000% over the same period.

Edmond de Rothschild expects token demand to overtake installed processing capacity as early as the second half of 2026, which it treats as a genuine inflection point for the industry's monetisation.

The scale of token usage already looks substantial. Several hundred companies are estimated to consume more than a trillion tokens a year and the bank projects total token consumption could rise by a factor of 20 to 30 between 2026 and 2030 as agent-based applications spread.

Price pressure is now visible downstream too. Apple raised prices across its Mac and iPad ranges in late June, citing a memory shortage tied to AI demand, and Microsoft followed with a price increase on Xbox consoles. Hyperscalers and consumers cannot absorb rising memory costs indefinitely, the report noted, even if a full reversal to pre-AI pricing looks unlikely.

Multi-year supply contracts now cover an estimated 30% to 40% of industry volumes, smoothing the sharp peaks and troughs that have historically made memory unpopular with long-term investors.

"The debate is not 'bubble or no bubble' regarding memory prices, but rather the recognition of a new price regime whose floor is higher than the previous one," Edmond de Rothschild strategists said.

"We view the cycle as being in an intermediate expansion phase, nearing a certain level of maturity, rather than a turnaround,” strategists said. “However, the phase of indiscriminate expansion, during which sector exposure alone was sufficient, appears to us to be behind us."

Edmond de Rothschild has adjusted its exposure across the AI value chain, favouring selective positions in upstream segments such as memory, equipment manufacturers and foundries. It described them as facing bottlenecks and holding "defensible pricing power" but added a note of caution on valuations, saying some subsectors already reflect "highly optimistic expectations".

The bank also has selective exposure to hyperscalers, choosing those it judges best positioned on AI technology and infrastructure deployment, and whose end markets support direct AI deployment at scale.

It has turned more cautious on GPU and ASIC designers over the same horizon. Nvidia, Broadcom, AMD and Marvell are increasingly viewed as pass-throughs for memory costs rather than independent sources of margin, which the bank expects to pressure their pricing power.

Software companies remain an area of scepticism, particularly the segments most exposed to disruption from agentic AI.

Adoption of AI, however, still trails previous technology cycles by conventional measures. The private bank noted that AI investment as a share of US GDP remains below the levels reached during the rollout of railroads, electrification and 1990s telecoms infrastructure, and that more than 80% of the AI-related investment expected by 2028 has yet to occur.

Supply-side bottlenecks are expected to ease only gradually. Equipment delivery times, a persistent constraint on capacity expansion, are projected to normalise by mid-2027, while the tight cycle in DRAM memory is expected to run until the second quarter of 2028 and NAND until the end of 2027.

"The key signal to watch will emerge at the intersection of several indicators: the supply-demand balance for token capacity and the underlying electrical power, the sustainability of the absolute level of memory demand as supply increases, the normalisation of equipment lead times expected by mid-2027, the actual monetisation trajectory of hyperscalers, their ability to finance the cycle without damaging their credit profiles, and the dynamics of earnings revisions relative to the multiples paid," Edmond de Rothschild strategists said.

"It is the combination of these signals – rather than any one of them taken in isolation – that we believe will indicate whether the cycle is entering a phase of sustainable consolidation or approaching a turning point. Based on our current analysis, we remain positive on the duration of the investment cycle, while keeping in mind that its direction in the stock market will ultimately depend on the actual returns from these investments."

Beyond the current spending wave, the report points to six factors it expects to extend the cycle further: the continued rise of agent-based AI; energy and data-centre constraints; expansion into physical infrastructure such as cooling and construction; evolving financing structures; sovereignty and defence-related demand; and the fact that broader business adoption remains at an early stage.

Edmond de Rothschild also laid out three scenarios for how this could unfold. In the base case, chip demand holds steady and returns on investment gradually justify the spending, even as capital expenditure runs higher than currently expected.

In an optimistic case, demand proves broader than assumed, extending well beyond hyperscalers into enterprise, edge and sovereign computing, with the massive spending validated by monetisation. But in the pessimistic case, AI revenue growth fails to keep pace with capital spending, memory prices prove unsustainable for downstream buyers and new capacity due after 2028 tips the market into oversupply.

Every portfolio needs an element of future proofing. In a world that has become so fast-paced and where disruption is pervasive, it is essential to seek safeguards to protect against, or profit from, a constantly evolving market backdrop.

With the recent narrative so dominated by the roll out of AI, it would be understandable for investors to see this theme as having the single most significant impact on the potential for future returns. However, there are a range of structural forces in the global economy every bit as powerful as AI that may not yet be on the radar of investors.

Today’s investment landscape is increasingly governed by structural rather than cyclical forces. These forces are persistent, global and interlinked. They will include AI but are not limited to it.

Thematic investing has become a by-word for identifying these forces and unearthing companies that are set to benefit from them. While sceptics may view thematics as an attempt to tap into the fad of the day, we believe it represents multi-decade investment opportunities that span a huge range of long-term trends in transportation and technology, energy evolution, plus health, wealth and demographics.

Supply chains

For example, one area of significant change lies in global supply chains. For 30 years, companies sought to source products wherever supply was cheapest. This led to often long and complex supply chains. These relied on a world where international relationships were stable and unchanging.

That model has proved to be unsustainable. Today’s CEOs are asking not where supply is cheapest, but where it is safest. This is the result of a multitude of factors – protectionism, fragile geopolitics, the disruption caused by the Covid pandemic and the need to reinforce critical infrastructure.

Covid exposed the fragility of global supply chains. The protectionism that started under Trump 1.0 has significantly gathered pace under Trump 2.0. There has been the ‘China plus One’ strategy that has seen companies diversify away from China on geopolitical grounds, providing a boost to more ‘West-friendly’ countries such as Indonesia and Vietnam.

 Overall, there has been a drive to bring supply closer to demand. That has meant huge investment in automation as companies seek to remain competitive.

Industry leaders simply cannot ignore geopolitical risk when considering their supply considerations. Trading blocs are shifting and old alliances are being disrupted. At the same time, there is increasing competition for scarce natural resources.

As these tensions deepen, we’re seeing countries build domestic capabilities in key industries, particularly semiconductors, while ensuring their supplies of critical minerals are sound.

There is also a demand for energy resilience. The Ukraine and Iran wars have been a wake-up call on how fragile the supply of fossil fuels can be, how significant the impact can be when they are disrupted and the need to invest in other, renewable sources of energy to keep the lights on and industry running.

Energy has become a strategic liability and potentially a swing factor in the development of other power hungry technologies such as AI.

This creates a significant opportunity across multiple industries. The abrdn Future Supply Chains ETF holds companies which we believe are likely to be beneficiaries of onshore production, such as liquefied natural gas (LNG) infrastructure group Gaztransport et Techniga (GTT), the market leader in LNG containment technology that holds a range of infrastructure assets in Mexico and emerging markets, alongside automation leaders such as Fanuc in Japan.

Raw materials

At the heart of every major global theme is a reliance on raw materials. AI cannot operate effectively without the critical mineral needed for semiconductors. The global electrification trend can’t happen without certain key metals such as copper.

Beyond copper, there is a bucket of specialty metals including aluminium, nickel, lithium, rare earths and uranium that sit behind some of the most important developments in the global economy.

The abrdn Future Raw Materials ETF focuses on companies involved in the exploration, mining and distribution of these metals. Copper, for example, is widely used both in energy generation – wind turbines and solar panels – and in transmission – getting electricity to where it needs to be. It is also used for electric vehicle charging stations and in the cars themselves.

As geopolitical risks intensify, it reinforces the case for ensuring lasting access to these materials. Energy security is becoming a priority for governments and the development of energy independence, through renewable power or nuclear, for example, requires these raw materials.

If anything, we believe the scale is underappreciated. Electricity grids need to transform, while AI, robotics and data centres are also helping to drive demand for energy.

These multi-decade themes, along with growing resource nationalism as countries seek to protect their access, have been driving demand for the metals. At the same time, supply is constrained.

The time it takes to bring on new supply is increasing, as mines grow more mature and extraction more complex. We believe that raw material companies are likely to benefit not just in the near term, but over many years as these themes evolve.

Real estate

Real estate is seldom seen as a forward-facing sector, yet all these long-term themes rely on it. Real estate investors cannot ignore future trends. The example of Blockbuster video and its arch-nemesis Netflix shows how structural changes can fundamentally alter the demand for real estate from high street bricks and mortar to the data centres that house the technology required for a life online.

The type of buildings tenants need is changing all the time. Ten years ago, no one wanted to talk about logistics. It was a boring backwater for the real estate market.

E-commerce changed that completely and last mile delivery became essential. As supply chains shifted, it brought the need for supply to be closer to demand and real estate plays an important part of facilitating this shift.

Other secular trends are also having an impact. The growth of the defence sector since the full-scale invasion of Ukraine, for example, requires modern, state of the art logistics.

Demographics are also reshaping real estate. In the UK, there are now 12.7m people over 65, yet a modern care home industry does not exist. AI also requires real estate – Nvidia chips end up in data centres.

Within the abrdn Future Real Estate ETF, we aim to take exposure to the themes of tomorrow, including data centres, complex industrial networks, senior housing, investing in not just one building, but in platforms and in operators that have scale.

Ross McSkimming is head of equities investment specialists at Aberdeen Investments. The views expressed above should not be taken as investment advice.

European mid-caps have bucked the trend of the past 10 years, outperforming both small- and large-caps in the region, according to Trustnet research.

The research found that large-caps dominated over the assessed period in all regions bar Europe, where MSCI Europe ex UK Mid Cap gained 191.3%.

Performance of European small-, mid- and large-caps over 10yrs ending 31 May 2026

Source: FE Analytics

The overarching reason for mid-cap outperformance boiled down to what the European market lacks: a concentrated stock-pool of mega-cap tech stocks. This means European large-caps have missed out.

Darius McDermott, managing director at FundCalibre, said: “In the US, Japan and Asia, technology – and more specifically AI – has been the defining trade with as much as 40% of the S&P 500 now reliant on the AI theme.”

In comparison, Europe’s large-caps are dominated by consumer staples, healthcare and luxury goods – sectors that have had a mixed decade.

“Even Novo Nordisk, once a crown jewel of European equity markets, has fallen from nearly €1,000 to around €300 a share, yet it remains the second-largest stock in Europe,” he noted.

“That lack of renewal at the top demonstrates why the dynamism in European markets currently sits further down the cap scale.”

In contrast, McDermott expects the trend of AI large-cap dominance to “only rise when Anthropic and OpenAI eventually join the market”.

While Europe’s large-caps have been weighed down by companies that have struggled to compete with the AI-driven rally, its mid-caps have benefited from a broader and more dynamic mix of industries that has proven resilient in comparison.

Mike Clements, manager of VT Tyndall European Unconstrained, said: “Europe is a good picks and shovels way to play many themes related to AI and data centres, and these have often been found in small- and mid-caps.”

He highlighted Soitec as an example – a France-based manufacturer of substrates used in the manufacturing or semiconductors.

The stock has a market capitalisation of around €4.1bn and its stock price has increased by more than 350% year-to-date.

Stock price performance YTD

Source: Google Finance

More broadly, the region is heavily weighted towards financials, industrials and healthcare, industries that have performed more strongly in the face of ongoing volatility and uncertainty driven by issues such as US tariffs.

Barry Glavin, head of the equity investment platform at Amundi, also pointed to new fiscal initiatives in Europe on defence, infrastructure and energy independence, which has most benefited domestically oriented companies.

“In general, the mid-cap universe is more domestic and therefore tilted to benefit from this,” he said.

Lisa Wang, head of EMEA investment strategy at Franklin Templeton Investment Solutions, also pointed to business structure.

“Some large European industrials remain diversified, multi-division groups that investors may value below the sum of their parts because of complexity, trapped capital or perceived capital allocation inefficiency,” she said.

“More focused mid-cap businesses with clear exposure to long-term themes can be easier for investors to identify and value their growth potential.”

In addition, European mid-caps sit in an attractive stage of the corporate lifecycle, in that they are large enough to benefit from established customer relationships, global reach and proven profitability, while still small enough to deliver above-average growth, she added.

Breaking down the decade

However, mid-caps were not the strongest section of the market throughout the 10-year period. As pointed out by Clements, in the period from the end of the first and most prominent wave of Covid to the start of the conflict between Russia and Ukraine, European small-caps outperformed while mid- and large-caps struggled.

“This was when global supply chains were still a mess, causing the larger, more global companies a logistical headache, while small-caps with their more domestic focus were benefiting from a surge in spending whilst sidestepping some of the logistics issues,” Clements said.

Performance of European small-, mid- and large-caps between Covid and Ukraine war

Source: FE Analytics

In contrast, in the following three-year period, up to the election of Friedrich Merz as chancellor of Germany on 6 May 2025, renewed uncertainty around European geopolitics and surging energy costs prompted investors to prioritise the global nature and natural liquidity in European large-caps.

Performance of European small-, mid- and large-caps from war in Ukraine to the election of Friedrich Merz

Source: FE Analytics

There was then a shift in market sentiment around the time of Merz’s election, when the new chancellor announced plans for the €500bn infrastructure and defence fund which was funded by relaxing Germany’s long-standing fiscal debt brake.

“Ever since this moment, we have seen European small- and mid-cap stocks stage a strong recovery as they are likely to be the main beneficiaries of this surge in spending across the continent,” Clements said.

Performance of European small-, mid- and large-caps since the election of Friedrich Merz

Source: FE Analytics

Will this trend continue?

Managers said European large-caps are unlikely to overtake small- and mid-cap performance in the medium-term, as the shift towards European sovereignty, reshoring of supply chains and the surge in investment into defence and infrastructure favours mid-sized businesses.

“Many of the companies providing specialist components, equipment, software and engineering services sit in the mid-cap segment and could benefit from a broader capital expenditure cycle,” said Wang.

“AI could also create value through its adoption across industrial, healthcare and service businesses as mid-caps with proprietary expertise could be well-placed to benefit.”

However, competition from China in higher-value manufacturing remains a significant challenge, Wang warned, while energy costs and the broader economic backdrop will also determine longer-term success.

In addition, there is simply more headroom, as small- and mid-caps continue to trade at a discount to large-caps on price-to-earnings (P/E), whereas they have historically traded at a premium.

“Earnings growth tends to be higher and balance sheets have improved significantly over the last decade,” Glavin said. “So, we see a strong case for European small- and mid-caps to continue to perform well.”

Bond funds were in favour in June, with investors piling in more than £1bn into fixed income portfolios, according to the latest Calastone Fund Flow index.

The wave of cash into the asset class was the third-largest in a single month since the firm’s records began. The report noted it was a result of investors rebalancing their portfolios away from expensive equity markets and towards assets offering steady income.

It continues a trend that has occurred through the first half of 2026. In total, bond funds attracted £2.3bn between January and July – although almost half came in June alone.

Edward Glyn, head of global markets at Calastone, said: "Investors are still willing to take risk, but they're becoming much more selective about how they do it. Rather than adding more money to equity markets after their strong run, many are building more balanced portfolios that combine growth potential with greater resilience.

"Bond funds are benefiting from an unusually attractive combination of high income and the prospect of capital gains if interest rates begin to fall. At the same time, geopolitical tensions, an uncertain economic outlook and elevated equity valuations are encouraging investors to rebuild the defensive side of their portfolios.”

It is not just bonds benefiting, however. Multi-asset funds took in almost £2bn in June, with £11.9bn added in the first half of the year, a record sum.

Glyn said: "The exceptional demand for multi-asset funds reflects the same theme. Investors increasingly want diversified portfolios at present without having to make big calls on whether stocks or bonds will outperform next. Multi-asset funds [are an] appealing choice at a time when the outlook remains unusually uncertain.”

Money market funds also returned to positive territory last month with a net £215m being taken in. However, this is a small rebound from the prior two months, in which investors withdrew more than £1.3bn.

While money market funds were positive in the first quarter, with net inflows of £285m, they suffered net outflows of £1.1bn in the second quarter and therefore for the half.

"Cash funds continue to attract some inflows, but the much stronger demand for bonds and multi-asset strategies suggests investors are moving beyond simply preserving capital. They are looking for portfolios that can generate returns while remaining resilient if markets become more volatile,” said Glyn.

To fund these purchases, investors have clearly been moving away from stock markets. Equity funds were sold off strongly in the first quarter of the year (net outflows of £3bn) and only recovered £389m in the second quarter.

Overall, equity funds shed £437m in June, despite broadly flat returns, with Asia Pacific funds particularly hit, with net selling of £312m. These portfolios suffered their 38th month of consecutive outflows in June, the report noted, with £7bn leaving the asset class since May 2023.

They were far from alone. All equity fund sectors experienced outflows last month, with the exceptions of global and US equity portfolios, which gained a net £328m and £200m respectively.

Persistent shipping bottlenecks and reserve rebuilding will push Brent crude to $75-80 a barrel over the next six to 12 months, even though it fell after the ceasefire between the US and Iran, according to J. Safra Sarasin Sustainable Asset Management’s Raphael Olszyna-Marzys.

Analysts at Citi expect Brent to fall to between $60 and $65 a barrel by the end of the year, a forecast built on the assumption that the US-Iran truce holds and traffic through the strait of Hormuz continues to normalise. Morgan Stanley expects Brent crude to end 2026 at $75 a barrel, while UBS' forecast is $80.

Olszyna-Marzys, international economist at J. Safra Sarasin Sustainable Asset Management, does not dispute that some normalisation is underway but sees the mechanics of that recovery pointing toward higher prices rather than lower ones.

"The oil forward curve has slipped into mild contango at the very front end: September futures now trade above the spot price for the first time since the war began, suggesting that the market is, at least marginally, oversupplied, pushing down on prices," he said.

The economist expects near-term prices could dip modestly below today's level near $70 before climbing back into the $75-80 range.

His argument rests partly on how little Hormuz traffic actually needs to recover for exports to normalise. Before the war, around 15 million barrels a day of crude passed through the strait, rising to roughly 20 million barrels a day once refined products are included.

Alternative routes have since reduced that dependency, with Saudi Arabia shipping more via its East-West pipeline and the Red Sea, and the UAE routing crude through Fujairah while building a second pipeline that could eventually carry almost all its output without touching Hormuz.

Performance of oil over 2026 in US dollars

Source: FE Analytics

Working through those alternative volumes, Olszyna-Marzys estimates that only around 7.5 million barrels a day of crude would need to transit the strait to restore pre-war export levels from the region. Refined products are harder to reroute: roughly 5 million barrels a day of diesel, petrol and jet fuel still need to leave by sea.

Put together, he judges that flows at 60-65% of former Hormuz levels would be enough to normalise exports, assuming demand holds broadly steady.

But actual traffic remains well short of that mark as total vessel movements through the strait are running at roughly a quarter of pre-war levels and inbound traffic is closer to a fifth.

Olszyna-Marzys puts that gap down to how the recovery has been sequenced so far: "The immediate priority was to allow stranded vessels to leave the Gulf. Empty tankers, many of which have been redeployed elsewhere, will take time to return."

The bigger question is whether traffic can climb back to the 60-65% threshold at all, but he is doubtful it will happen smoothly.

"The situation remains fragile and traffic could struggle to recover to the 60-65% threshold. Ships are avoiding the main shipping lane, parts of which remain mined and instead hugging the Omani coast, where waters are shallower and currents stronger. Tankers continue to rely on protection from the US Navy against intermittent drone attacks."

No full demining operation has yet begun, he added, a process he expects to take months once it starts. "All this suggests that the risk of disruption remains elevated," he said.

Insurance markets appear to agree. Hull war-risk premiums have eased from around 5% of a vessel's value to roughly 2%, but that remains far above the 0.25% level that prevailed before the conflict began.

Demand has its own dynamics feeding into the forecast. China has absorbed much of the shock during the war, drawing down an estimated 400 million barrels from its inventories, comparable to the combined drawdown across all advanced economies.

Olszyna-Marzys expects that pattern to reverse and reinforce prices from here. "Efforts to rebuild, and in some cases expand, strategic reserves are likely to support demand in the coming quarters, placing a floor under oil prices and, if anything, exerting upward pressure on them," he argued.

Even accounting for structural shifts in demand, he sees a persistent gap between supply and pre-war consumption. He estimates that around 1 million barrels a day of demand may have been permanently destroyed through faster adoption of electric vehicles and other efficiency gains, yet considers a full reopening of the strait unlikely.

Using a price elasticity of demand assumption of -0.2, his modelling points to oil needing to settle near $75-80 a barrel later this year to bring the market back into balance.

However, the inflation implications of this, in his view, are manageable rather than alarming: "Compared with pre-war forecasts, higher energy prices are likely to add around one percentage point to inflation.

"Some second-round effects are inevitable, but they should remain limited given the spare capacity that still exists across many European economies. Indeed, inflation in the UK has surprised on the downside in recent months."

Markets initially priced a series of rate increases across Europe in response to the conflict, but those expectations have since been scaled back sharply.

Investors now anticipate only one additional 25-basis-point increase from the European Central Bank, less than one full hike from the Bank of England by year-end and no tightening at all from the Swiss National Bank. Olszyna-Marzys regards this repricing as appropriate.

The picture looks different in the United States, where markets have begun pricing a more hawkish Federal Reserve. He attributes that shift mainly to domestic economic developments rather than to the outlook for oil: "In the US, markets have begun to price a more hawkish Fed. Yet that shift reflects domestic developments far more than the outlook for oil prices."

Bonds have had a difficult decade as rate rises, inflation shocks and credit scares made consistency hard to come by. And yet a small group of fixed-income funds managed to hold an FE fundinfo Crown Rating of five for the majority of the past 10 years.

Updated biannually, crown ratings assess three-year fund performance across alpha, volatility and consistency of returns. The top 10% of funds earn five crowns, signalling above-average stock selection, consistent benchmark outperformance and lower risk.

In this final instalment of Trustnet's crown ratings series, we screen the two bond sectors with the longest-reigning funds – IA Specialist Bond and IA Sterling Strategic Bond – for the strategies with a current five-crown rating that have had a top rating for the most time since 2016.

Four funds shared the top spot, each holding five crowns in 12 of the 20 periods since 2016, corresponding to 60% of the decade.

The largest by some distance is Algebris Financial Credit, a €16.6bn IA Specialist Bond fund with an ongoing charge of 0.58% managed by FE fundinfo Alpha Manager Sebastiano Pirro.

It spent 2016 to 2021 predominantly between four and five crowns, holding a top ranking in every period from the end of 2019 through to end-2021. It suffered some dips in 2022 and 2023 but has held a five-crown rating since the end of 2024.

Over three years, it returned 37.2%, the strongest figure among the funds in this screen.

Its portfolio is distributed between 69% in global fixed interest, 16% in UK fixed interest  and the remainder in money market instruments.

The £279.7m AXA Managed Income held five crowns in every period from mid-2016 to end-2018, then fell sharply to one crown throughout 2019 and 2020 before recovering, holding five crowns in every period from the end of 2021 to today.

Over three years it returned 26.6%, and over one year 6.1%. The fund's largest sector allocation is financials at 40.3%, followed by industrials at 23.8% and asset and mortgage-backed securities at 18.3%. UK fixed interest accounts for 63.5% of assets, with global fixed interest at 33%.

The £436.8m Jupiter Monthly Income Bond fund managed by Alpha Manager Hilary Blandy also made the list above. It had a six-year unbroken run with five crowns from mid-2016 through to the end of 2021, before falling to one crown across 2022 and 2023, then recovering to five by end-2024.

It has a FundCalibre ‘Elite’ rating thanks to its “simple short-duration approach [which] reduces both volatility and risk.”

Even if credit spreads and/or interest rates rise, the fund’s short-duration nature means it can quickly reinvest maturing cash at new rates, FundCalibre analysts explained.

“Blandy is a highly experienced manager and she has done a great job with this fund so far. The monthly income payment is also a nice feature, and when combined with the fund’s yield, makes this an attractive option for income seekers.”

The final spot went to Quilter Investors Diversified Bond, a £405.7m IA Sterling Strategic Bond fund with the lowest ongoing charge in this screen at 0.45%. It has crown data for 80% of the decade and within that window it held five crowns in 12 periods, matching the others at the top of the table.

The fund holds 83.5% in global fixed interest and 8.4% in money market instruments, with financials the dominant sector at 63.5%.

Just behind, Janus Henderson Multi Asset Credit took fifth place with five crowns in 11 of the 20 periods assessed. The £670m IA Specialist Bond fund – the second-largest on the list – is co-run by Colin Fleury, John Lloyd and Alpha Manager Tim Elliot.

Its crown history has been more volatile than those above, alternating between four and five crowns for much of the decade, with a dip to one crown across 2019 and 2020 and again in 2022, interspersed with five-crown stretches in 2016 to 2018, 2021 and 2023 to 2025.

GAM Star Credit Opportunities rounds out the list, with five crowns in 10 of 20 periods –half the decade. It targets income and moderate capital growth by investing in the subordinated debt of predominantly investment-grade issuers, operating on the premise that high-quality companies rarely default on their junior debt.

Its portfolio leans heavily towards financials, including banks and insurers, with non-UK bonds hedged back to sterling.

RSMR rates it as a satellite holding within a broader fixed income allocation, citing the team's experience and the fund's low sensitivity to interest rate movements.

Previously in Trustnet's Crown ratings series, we covered: IA Global, mixed-asset sectors and specialist funds.