The S&P 500 edged towards 7,800, buoyed by second quarter earnings that soothed nerves over AI spend and a mercifully uneventful inflation print. However, investors could be forgiven for reaching for their oxygen masks after Moderna rocketed 180% on clinical trial results for its personalised mRNA melanoma vaccine. Kudos for making Palantir’s 50% gain look distinctly pedestrian.
Back home, the UK’s heatwave fizzled out into an anticlimactic and rather damp bank holiday, with the FTSE 100 also following suit as it crawled back towards its February high. The FTSE 250, however, staged a minor renaissance, chalking up a 4% plus gain enroute to an all time high. Analysts have been busily revising earnings forecasts upwards, while corporate and financial buyers continue to see the value, hoovering up the yellow-stickered Tate & Lyle, Spire Healthcare and easyJet.
So, which shares and funds were red-hot with UK investors in August, and which were more reminiscent of a wet weekend?
These were the most (and least) popular shares with UK retail investors on three of the largest investment platforms last month:
AstraZeneca (AZN) had a rather turbulent month. Its proposed mega merger with Bristol Myers Squibb landed poorly, with investors questioning the logic of tying AZ’s fortunes to BMS’s looming patent cliff, not to mention the antitrust scrutiny likely to accompany the combined oncology portfolio. The shares fell nearly 10% in a single session before talks were abandoned.
It was also a mixed bag on the pipeline front. AZ discontinued trials of its lung-cancer immunotherapy challenger to Merck’s Keytruda, following in the steps of Wainua. But positive results in lung cancer and asthma trials lifted the shares by almost 10%.
Despite the volatility, UK investors continued to see value in one of the UK’s crown jewels. The broader biotech sector has hit record highs as investors look beyond the Magnificent Seven for growth, and AZ joined a select group agreeing to lower drug prices in exchange for tariff relief, removing a lingering policy overhang.
SpaceX (SPCX) may have topped buy lists but fell sharply back to earth after its first earnings report. Revenue nearly doubled year on year, but a 20 fold increase in AI spend dragged the shares below their $135 IPO price before they recovered to sit around $140.
Source: FE Analytics
Past performance is not a reliable indicator of future results
As ever with Elon Musk’s brainiac schemes, it’s hard for investors to pin down what they’re actually investing in. Starlink is the golden goose of the piece, with Musk hinting it could compete with the likes of Verizon and AT&T in the terrestrial space.
The launch business is edging towards breakeven but it’s the space vision that excites investors, from colonies on Mars to data centres in space. This may sound fantastical even for Elon Musk, but there’s commercial logic in harnessing a direct source of sunlight without the need for large-scale cooling. Whether that’s deliverable is another matter, not to mention the need for external funding.
Having taken a breather last month, NVIDIA (NVDA) returned to favour, though just as many investors took profits on a one year gain of 30%. With a $5 trillion market cap, quarterly earnings are very much seen as a bellwether for the wider tech sector.
Expectations may have been sky-high for the chip giant but its quarter two results smashed them out of the park, easing nervousness around a slowing of the AI spending boom. Sceptics may say that elephants can’t gallop but this elephant delivered a more than doubling in year-on-year revenue, with operating profit following suit. No mean feat when you consider that annual revenue was just $27 billion in 2023 but topped $200 billion in the last financial year.
The company also issued full-year guidance for the first time, pencilling in 70% revenue growth for FY2028, apparently constrained only by supply. It also launched a financing model allowing customers to use AI chips as collateral, backed by $500 billion of external capital, though the debate about usable asset lives for chips rumbles on.
Rolls Royce (RR), Legal & General (LGEN) and Vodafone (VOD) all saw buying on weakness, with geopolitical tensions and stubborn oil prices weighing on investor sentiment.
Palantir (PLTR) jumped 50% on spectacular quarterly results as revenue soared by more than 90% and full year guidance was raised. The rally reversed most of the earlier slide driven by fears that AI would erode software stacks.
Bears still point to the European pushback over data sovereignty, though Palantir’s software remains deeply embedded across the US government. With a forward P/E of around 110x, profit taking did seem rather inevitable.
Once again, growth seekers stocked up on Scottish Mortgage (SMT), which offers a healthy dose of SpaceX, chip giants TSMC and NVIDIA and ByteDance, perhaps best known for TikTok. All eyes were on whether SMT would start to reduce exposure once the first lock-in expired, though the share price fall has reduced its portfolio weighting from 25% to 18%. The managers don’t expect material changes and intend to retain the flexibility to hold a significant stake in the poster child for space investing.
Polar Capital Technology (PCT) is also a SpaceX fan, buying at IPO due to its merits as a “unique, vertically integrated business…at the centre of several attractive, underpenetrated markets” (Arguably space fits this bill better than most). NVIDIA and TSMC also sit in the top five, but it’s more Magnificent Seven focused than SMT. While SMT may sit in pole position, PCT has significantly outperformed it over the last year, serving up a 60%-odd return to SMT’s 35%.
Greencoat UK Wind (UKW) was also popular with investors, topping the buy list on interactive investor. The appeal is straightforward: pure exposure to the economics of UK wind farms and, with it, a dividend yield of just under 10%. However, concerns over the new energy price regime have weighed on the shares, leaving UKW trading at a near 20% discount. For income seekers, the combination of regulated cashflows, a high yield and depressed valuation proved hard to ignore. Meanwhile, The Renewables Infrastructure Group (TRIG) offers a broader remit, blending wind and solar assets to deliver a comparable 10% yield.
Income trusts were in high demand overall, with Murray Income (MUT), Henderson Far East Income (HFEL) and JPMorgan Global Growth & Income (JGGI) also making the cut.
The Fed is openly discussing rate hikes if inflation sticks, and markets seem to be pencilling in an ECB move. A Bank of England hike looks less likely, though three MPC members voted for a raise at the last meeting.
The bigger challenge is borrowing costs: new PM Andy Burnham faces the highest funding costs since 2008, with the 10 year gilt yield at 5.20%. Fiscal headroom is minimal, and while markets might welcome a Musk style chainsaw to public spending, further tax rises look more realistic. Not great news for consumer-facing stocks.
For now, investors may want to lock in this year’s tax free allowances, so here’s our pick of the best ISA platforms and best SIPP providers.
All data as at 02/09/2026 unless stated otherwise, returns based on share price total returns.
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]]>But if, like me, your investing style is more Hungry Hippos than strategic mastermind, there’s a far more productive form of financial voyeurism. Not the latest Love Island winner flogging crypto on TikTok, but peering into the latest 13F filings to see where the global super investors are placing their chips. Admittedly there’s a 45-day time lag, but these are dyed-in-the-wool buy-and-hold types so there’s plenty of intel for us mere mortal investors to extract.
According to Dataroma, these are the most widely held stocks among the super investors:
Despite the doom-mongering about a second bursting of the AI/dot-com bubble, the super investors weren’t for turning, with five of the Magnificent Seven making the top ten. No shock, either, that they’re steering clear of Elon Musk’s more brainiac visions for Tesla (TSLA), which (for those of us who still enjoy a dabble in fundamentals) is trading on a heady - and frankly inexplicable - 360 times earnings.
A more curious absentee is NVIDIA (NVDA), which limped in at a lowly twelfth, though buying and selling were broadly balanced. Top of the buyers was Duan Yongping (aka the ‘Chinese Buffett’), who almost doubled his stake for H&H International in the first quarter, only to halve it again in the second.
Microsoft managed to hold off a rearguard challenge from Alphabet (GOOGL), with 36 super investors now holding the latter. Look under the bonnet, though, and Alphabet’s trades were a sea of red sells with one notable exception: the King himself, Warren Buffett, who ploughed in more than $15 billion as Alphabet sold shares to fund its AI ambitions.
It’s an intriguing development given Buffett has never been a cheerleader for tech, preferring, as he puts it, “slow moving moats”. Observers assumed the new CEO of Berkshire Hathaway was making his mark, but it transpired to be Buffett’s own bet on Alphabet as a likely winner in the AI arms race.
Microsoft (MSFT) may have retained its crown, but there have been some quick wins, with Bill Ackman’s Pershing Square Holdings (PSH) and Dodge & Cox both snapping up chunky stakes. It proved good business, with the share price bouncing up to $500 on the back of a strong quarterly earnings beat and soaring demand for Azure’s AI services.
The most-bought shares in the second quarter reveal a mix of opportunistic tech buying and steady compounders:
The mega-caps continued to dominate buy lists, with Microsoft, Meta, Amazon and Alphabet all featuring heavily after the March tech rout knocked 20-30% off their share prices. The super investors clearly know a bargain when they see one, and Microsoft and Alphabet rewarded their loyalty with a 45% bounce in short order.
But it’s not just about making a quick buck, with the investing elite landing on the biggest spenders among the Magnificent Seven. Investors may be getting twitchy about seeing a payback from the billions ploughed into data centres, but the super investors seem happy to endorse the shift away from the asset-light models that first propelled these superstars into the trillion-dollar club.
While the capex hit to cash flow is well beyond the magic of bean counters, the extended depreciation lives adopted by the hyperscalers to smooth earnings are, according to the Big Shorter himself Michael Burry, “one of the more common frauds of the modern era”. The AI play aside, there’s still ample runway ahead, with AWS, Azure and Google Cloud continuing to command around 60% of global cloud services and Meta remaining a veritable machine in the advertising world.
Talking of asset-light businesses, Visa (V) looks well-positioned to capitalise on the structural shift from cash to electronic payments. It’s a steady compounder that’s delivered an 18% annualised return over the last decade or, to put it another way, $1,000 invested ten years ago would now be worth over $5,000. Chris Hohn clearly sees its defensive merits, representing 20% of TCI’s portfolio, while John Armitage’s Egerton Capital is also a fan.
S&P Global (SPGI) is another asset-light business caught up in the tech sell-off, as investors fretted about competition from the likes of Claude Opus. The super investors, including Chris Hohn and Pat Dorsey, clearly see more value in its proprietary data than the threat from AI, which could yet prove more of an asset than a Trojan horse. Either way, it’s been a reliable compounder, chalking up an annualised 15% return in the last 10 years.
Walt Disney (DIS), however, is stuck in the recovery room with a five year share price performance that’s been rather more Eeyore than Buzz Lightyear. Toy Story 5 is at least injecting a bit of pizzazz, while Wells Fargo caused a stir by suggesting Disney could add 40% to its share price by stepping off the high octane streaming treadmill and returning to its old wholesale model of licensing content to the highest bidder. Time will tell on that one.
Following the super investors may sound simple in theory, but the time lag means that the opportunity may be long gone by the time retail investors have visibility, not to mention the funds needed to mirror such large portfolios.
Then again, why bother with the grind of stock-picking when you can simply own one of the most famous investment vehicles of all time? Berkshire Hathaway (BRK) earns its place on the super investor buy list for good reason, delivering a ten-year annualised return of 13% from a broad portfolio spanning multiple earnings streams. Its $400 billion cash pile has also become a profit centre in its own right, giving it a huge war chest to deploy if markets go south.
Or if you want to buy British, Terry Smith’s Fundsmith Equity has posted a respectable annualised 9% return over the same period. Its quality tilt has undeniably weighed on more recent returns, leading Smith to introduce a momentum screen and, in turn, a meaningful shake up across the portfolio.
On that note, it’s time to leave the super investors in peace for another quarter. Will the tech giants continue to curry favour, or will the money drift back to boring is beautiful? All will be revealed in a few months.
In the meantime, there’s a lot to be said for getting a trusty 100,000 miles out of a Skoda Octavia than ten from a flash-in-the-pan Lambo. Or, in Buffett’s case, a 14-year-old Cadillac with hail damage - proof that you don’t need to look like a millionaire to invest like one.
All data as at 26/08/2026 unless stated otherwise. 13F filings sourced from Dataroma.
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]]>These days, that change is fast paced. Technology is evolving so speedily that new sectors are being born and existing ones disrupted regularly. We’re seeing this in spades today.
Artificial intelligence is often seen as the fourth industrial revolution. That comes with ground-breaking disruption, as new winners are established and others fall from grace. This creates sometimes vicious oscillations in stock markets, as investors constantly rethink which companies and sectors will take up the baton and which will fade into obscurity.
In such a fast-moving world, it’s hard for investors to have their fingers constantly on the pulse. Assessing each individual industry or company for AI disruption risk before Mr Market gets there first is a Herculean task.
We think that this is where active fund managers can come into their own. Their job, and the job of the analysts who work below them, is to assess this exact thing and to get ahead of any rotations to the benefit, in the case of investment trusts, of shareholders.
With emerging markets having now moved to the sharp end of AI adoption, Fidelity Emerging Markets (FEML) stands out as a strong option for investors wishing to employ the services of experts to navigate these changing times, in our view.
FEML benefits from the deep knowledge of its management and analyst team, employing a truly differentiated investment style that utilises the full spectrum of tools made available by the investment trust vehicle, all of which we’ll return to later.
It seems that the sands are shifting every day. Semiconductor stocks are currently the ones having their time in the sun. Semiconductors are the small microchips used in much of what needs power to run – think electric cars, smartphones, AI networks, and data centres.
Semiconductor companies straddle the whole chip chain. Some design the chips, others print the chips’ designs onto the silicon wafers, and another tranche makes the equipment needed to manufacture and/or design the chips.
Asia, and by extension emerging markets more broadly, has become a key part of this chain, given many of the biggest companies, such as TSMC, SK Hynix, Samsung Electronics and MediaTek are among the largest companies in the indices.
While the likes of Korea have been volatile recently as some investors look to lock in the impressive gains they’ve already made – a surely inevitable consequence of such strong share price performance – the fundamental picture remains strong.
Indeed, as of 30 June 2026, US tech giants NVIDIA and Super Micro Computer grew their revenues year-on-year by an impressive c. 65% and 47% respectively, according to Bloomberg. Yet, those figures pale in comparison to YOY revenue growth of some of the companies in Taiwan’s tech supply chain, with the likes of Wiwynn or Accton Technology growing their revenues by c. 164% and 125% respectively over the same period. All this while many emerging market innovators trade at cheaper multiples than their developed market counterparts.
It’s not only a Korea and Taiwan story, though. China is rapidly gaining share in numerous fast-growing segments, including batteries, semiconductors, and semiconductor components.
You can look further down the supply chain for more rich ideas within emerging markets, too. Copper is having a moment in the sun, in part because of the vast amounts of the metal needed up and down the AI network.
Hyperscale AI data centres can need as much as 50,000 tonnes of copper, according to the Copper Development Association. A conventional data centre needs more like 5,000 to 15,000 tonnes.
Tin is another beneficiary, given its use in electronics including AI servers, semiconductors and solar panels.
On the flip side, one area of disruption we’re seeing AI cause is within IT services. Advanced AI tools are making it increasingly easy and cheap for businesses to perform routine coding, testing and maintenance tasks that would otherwise have been outsourced, threatening traditional IT services firms’ revenues.
India has, for years, benefitted from ever-increasing revenues for its IT services businesses. It is likely to provide a headwind for now. That is yet to be fully priced into share prices, suggesting we could see more pain ahead.
Through all of this, FEML remains a bastion of active management, using its enhanced toolkit and the flexibility of the investment trust wrapper to take advantage of these bifurcations.
FEML’s real differentiation comes from its use of derivatives, using gearing judiciously, but with real conviction when appropriate. This can be in the form of increasing gross exposure to extend its long positions when the opportunity set is rich, as well as from its ability to take short positions in companies where the managers believe fundamentals are deteriorating.
It is also able to use pair trades to capture upside from industry winners in the long book, as well as downside from industry losers in the short book. Short positions are implemented on an opportunistic basis and are capped at 30% of total net assets, with individual short positions limited to 100 basis points.
FEML is taking advantage of the Asian chip boom, retaining top positions in the big three chip and memory producers, alongside other Taiwanese tech supply chain names such as Elite Material and Wiwynn. While holding an underweight to China in aggregate, the portfolio has an overweight to Advanced Micro-Fabrication Equipment, a Chinese firm that makes chip production equipment. The battery maker Contemporary Amperex Technology (CATL) is another key overweight.
Tin miner Alphamin Resources, meanwhile, stands out in the space given the aforementioned tailwinds behind the tin market. Alphamin’s world-class assets produce c. 7% of all the tin mined globally, with its lower costs supporting profitability and leading to strong cash generation.
On the other hand, a big underweight to India, driven in part by concerns around AI disruption to IT services, means the country accounts for just 4% of net assets. Elsewhere within the short book, there is a silver miner with weak management and poor-quality mines, which rallied on the back of a spike in the price of silver earlier in the year, which is seen as unsustainable.
This all talks to a nuanced view of the outlook for emerging markets from a management that is deeply knowledgeable and experienced. Nick Price developed Fidelity’s emerging EMEA group in 2005 and brings close to three decades of investment experience, while co-manager Chris Tennant, who adds an extra 15 years’ experience, started his career as a metals & mining analyst and shorting specialist, providing an excellent grounding for FEML’s strategy.
The recent pullback in emerging markets looks, to us, like an inevitable consequence of investing in a higher volatility asset class. In our view, emerging market equities remain attractive at this juncture.
As the current management team of FEML approaches its five-year anniversary at the helm of the strategy, a pound sterling share price total return in the five years to 11/08/2026 of c. 77% net of fees is well above the benchmark MSCI Emerging Markets Index’s c. 48%, proving the added alpha that can be generated with their strategy.
The discount has understandably narrowed in recent years, but remains wide at c. 5.9% at the time of writing, offering further potential for re-rating and, therefore, an attractive entry point considering the long-term drivers that remain in place.
Heraclitus also noted that “whoever cannot seek the unforeseen sees nothing, for the known way is an impasse”. Essentially, one needs to continually look for and adapt to changing dynamics, as standing still and following the crowd is the best way of going nowhere in stock markets.
We think this is a good analogy for FEML’s strategy – and a reason why we think the trust remains a strong pick for adventurous investors keen to take advantage of today’s fast-paced environment.
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]]>In a similar fashion, but minus the bloodshed, government bonds have often been seen as having near-invincibility within balanced investment portfolios. During a 40-year bull market, bonds have more often than not shielded investors through bouts of stock market volatility.
All told, the yield on the 10-year US Treasury bond fell from c. 16% in 1981 to a smidge above 0.5% by 2020. As a result, the 60/40 portfolio has become somewhat of an unimpeachable truth: 60% of your portfolio in equities has driven growth, while 40% in government bonds has been the ballast.
However, as there was a catch to Siegfried’s immunity, so there has been a catch to bonds’ protective power. With Siegfried, it was a small sliver between his shoulder blades that remained mortal thanks to a single leaf from a linden tree falling there during his bath. With bonds, it has been rising inflation.
The burst of rising prices we saw through 2022 saw interest rates soar, leading bond yields higher, too. The 10-year UST rose from 1.52% at the end of 2021 to 4.25% by late October 2022, meaning that at a time when stocks were plunging – the S&P 500 fell c. 27.5% between 01/04/2022 and 13/10/2022 – bonds’ protective powers were missing in action.
As we all know, rising bond yields mean falling bond prices, meaning instead of offsetting part of equities’ decline, bonds dragged portfolios lower, falling by a similar magnitude to stocks.
Things haven’t improved. The 10-year UST rose dangerously close to 5% in October 2023 before drifting back, but hasn’t gotten anywhere near even 3.5% and is on the rise once more.
In fact, bond yields are at decade-long highs in pretty much every major economy in the Western world. Taking an even longer duration bond, the 30-year UST’s 5.24% yield, as of 21/08/2026, is the highest since 2007, while this side of the Atlantic, we’re at a level not seen since 1998 and approaching 6%.
Unlike Siegfried’s one very specific weakness, bonds have a number of blind spots that are now arguably coming to the fore. Further interest rate rises remain a distinct possibility, given risks that high oil prices stoke renewed inflation at a time when markets and economies remain resilient. Investors are also increasingly vigilant over the high levels of debt-to-GDP in most countries. While this has yet to matter, we see no signs that governments want to rein in spending, potentially causing problems down the line.
One unforeseen risk to government-backed paper has been the sheer volume of corporate debt issued by the hyperscalers, as they continue to double down on their financing of the data centres needed to continue the artificial intelligence revolution. A recent article in Barron’s quoted the average yield on hyperscaler bonds maturing in 2035 at 5.7%, a c. 1 percentage point premium to the 10-year UST yield.
That may, for many, be a tight enough spread, but in an age when AI investments remain popular, it’s possible that government bond yields may need to reprice higher to compete.
Undoubtedly, government bonds still deserve a place in well-diversified, balanced portfolios, particularly at yields more attractive than we’ve seen for decades, but the days of an unthinking 40% allocation feel a long way away, especially if the 40-year bond bull market is over and we’re six years into a bear market of similar severity.
Hence, investment trusts might need to play a bigger role in investor portfolios moving forward, as they decide which assets might do a similar job of buffeting the stock market’s inevitable bouts of volatility in the future.
Staying within the fixed income realm, Sequoia Economic Infrastructure (SEQI) offers an idiosyncratic opportunity to lock in a premium yield to government paper, currently c. 8% - an equity-like return in and of itself.
SEQI lends money to infrastructure projects, including data centres, but also more humdrum areas such as roads, railways and renewable power generation. Its loans, therefore, are heavily backed by real assets and are made to borrowers that typically receive steady and contractual cashflows. In addition, you’re buying at a discount of c. 8%, as of 20/08/2026, which we see as having scope to narrow more than it already has.
BH Macro (BHMG) is right near the top of options for those looking to replace part of their bond holdings as they transition away from the traditional 60/40 portfolio, in our view. BHMG offers exposure to the flagship macro hedge fund from Brevan Howard, one of the most successful hedge fund firms globally. It largely invests across derivatives linked to global fixed income and FX markets.
BHMG has a record of delivering strong risk-adjusted net asset value returns in absolute terms, with its attractions enhanced by its historic track record as a potent diversifier: its best periods for returns tend to be when equity markets struggle and volatility is high. BHMG was one of relatively few investments available to ordinary investors that made money during 2022. Hence, a time when equity markets are strong, it could be argued that BHMG’s c. 5.8% discount offers one of the best values for money in the investment trust sector today.
At a time when we think that more than two assets are needed to cushion the inevitable blows coming investors’ way over the course of the next decade or so, perhaps a more hands-off option would strike you as attractive. Here, we’d highlight both Majedie Investments (MAJE) and Global Opportunities Trust (GOT).
MAJE aims to generate attractive real returns through what it calls a liquid endowment strategy. It does have exposure to equities, both directly and through active funds, along with absolute return funds, commodities and emerging market credit. We think it could offer an attractive complement to a core global equity allocation.
Similar goes for GOT, where managers Alan Bartlett, Dr Sandy Nairn and James Sym have a truly unconstrained remit, to invest in whichever assets they believe have the best risk/reward. Equities are generally their asset of choice, but they can hold up to 50% in cash if they feel the need. Today, cash levels are close to 40% due to the very high cyclically adjusted valuations globally. This provides them with exposure to stock markets, but also gives them dry powder to add as and when they see prices coming down.
When Hagen of Tronje vows to avenge Queen Brunhild’s honour, he learns of Siegfried’s one true weakness and, after losing in a race to a freshwater spring, plunges a spear into Siegfried’s back, piercing his heart, as he bends down to drink from the stream.
We think there’s a risk that a number of different weaknesses may conspire to end bonds’ dominance as the only alternative to offset investors’ equity allocations when the going gets tough and investors need to be clever about where they choose to re-allocate any bond allocation they still have. Fortunately, there’s plenty of attractive choices in our universe.
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]]>The number of UK investors that own at least one investment trust fell to c. 9% (from 12%), according to a survey by Boring Money. That’s the lowest number since the financial research firm started tracking the data in 2021. It should be noted that open-ended fund ownership also declined from 23% to 19%.
It will be no surprise that it’s been exchange traded funds (ETFs) that have been taking up the slack. ETF ownership rose to 20% in the most recent report, up from around 5% just six years ago.
There was a definite chink of light, though. While investment trust ownership among 35-to-44-year-old investors fell five percentage points to 7%, investors under the age of 35 increased their ownership of investment trusts by two percentage points to 9%.
That’s encouraging as this generation is proving to be one of the savviest when it comes consistently to setting money aside to invest. We have, after all, been in a near-two-decade-long bull market for most, if not all, of their adult life.
Movements such as FIRE (financially independent, retire early), have caught on quickly and are predicated on investing a high proportion of your disposable income. There’s also an increasing onus on individuals to save for their pension if they want to escape the rat race. The sheer scale of information on long-term stock market returns has helped, too.
The resulting frugal habits have had an impact on how the young invest, with more of a focus on low fees being the order of the day, both in terms of the vehicle (hence, the explosion of interest in ETFs) as well as platform (a conservative 99% of the finfluencer content Instagram feeds me mentions Trading212).
The investment trust industry will undoubtedly survive and will probably eventually come out the other side in a stronger position, especially if it can continue to show its benefits to younger investors.
There remains a wealth of opportunities for growth-oriented investors to jump on the investment trust bandwagon. A couple of significant themes that crop up both on my Instagram feed and in the monthly check-in of most-bought shares, as well as our sister website’s run-through of the most popular ETFs, are space and chips.
Young investors are rushing to the next big things in innovation and the opportunity within the investment trust landscape is widespread. The obvious starting place is with Seraphim Space (SSIT), a pure play on the inter-galactic theme investing mainly in privately owned firms.
Venture capital specialist Seraphim’s co-founder and CIO James Bruegger told us earlier in the year that the opportunity in SpaceTech could be bigger than in artificial intelligence and with its focus on small and micro sized companies, SSIT is well placed in our view to deliver the stellar returns demanded these days.
While the ordinary shares are on a premium rating (albeit down from a chunky 54% to around 7.2% today), the C shares that were issued in May trade at a c. 16% discount. That might not last as the team deploys the £137m it raised, which it started doing last week.
SSIT doesn’t invest in Elon Musk’s SpaceX, arguably the company that put the SpaceTech industry on the map. Fortunately, there are plenty of options for those wanting exposure to the satellite and AI firm but in a more diversified vehicle.
Scottish Mortgage (SMT) remains the flagbearer for the investment trust sector, offering a really interesting and differentiated exposure than a pure Nasdaq 100 ETF might, given not only its c. 18% position in SpaceX, but also top holdings including the Taiwanese chipmaker TSMC, China’s TikTok owner ByteDance and MercadoLibre, known as the Amazon of Latin American.
The c. 7% discount on which SMT is trading offers compelling value in our view, particularly when allied with the fact that many of its underlying holdings are arguably very highly valued.
The two technology trusts, run by Allianz Technology Trust (ATT) and Polar Capital Technology (PCT), which also have big positions in the chipmakers should also appeal to the younger cohort. Both are simultaneously riding the AI boom and trading on discounts of c. 7%.
We think that although these discounts are narrower than they were in 2023, they remain counterintuitively wide when you factor in the clamour for the types of stocks in which they collectively invest, proving that there still looks to be deep value in the investment trust arena.
The same can be said for emerging markets, the merits of which are starting to chime with younger investors who recognise Asia’s role in the AI supply chain. Two trusts using the investment trust wrapper to its fullest are benefitting from this shift.
Fidelity Emerging Markets (FEML) can go long areas it sees having strong growth prospects and short those industries in decline, while Ashoka WhiteOak Emerging Markets (AWEM) balances punchy exposure to the largest EM firms with a clear bias to the under-researched small- and mid-cap segment.
For those younger investors searching for a more defensive but still aggressive port in the AI-bubble-not-bubble storm, the UK provides just what they’re looking for. Impressive returns have been provided by Temple Bar (TMPL) in the large-cap part of the market, and Fidelity Special Values (FSV) as a go-anywhere mandate.
We see Rockwood Strategic (RKW) as another trust using the wrapper to the fullest. It has generated strong returns by investing in an almost private equity-like manner into the smallest market cap segment in the UK. Manager Richard Staveley and the team work closely with their high-conviction portfolio to proactively improve their ratings, rather than sitting back and hoping things magically improve overnight.
While some will no doubt point to the growth of ETFs as proof that investment trusts have, over the course of 158 years, had too much of a good thing and that the run has to come to an end eventually, we’d prefer to look at things through the lens of another oft-quoted saying: good things come to those who wait.
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]]>But short-term bursts rarely translate into durable returns, with the current gains built on narrow leadership and valuations that leave little margin for error. History shows these cycles inevitably fade as market leadership rotates, and the consistent outperformers are the ones staying anchored to intrinsic value rather than chasing short term sentiment.
Fidelity Asian Values (FAS) has spent three decades doing exactly that. A £1,000 investment on its launch in 1996 would now be worth almost £8,300, three decades years later, compared with £7,300 for the benchmark. This steady compounding has been delivered through every market dislocation from the Asian Financial Crisis to the dot com bubble, reflecting a disciplined value approach built around capital preservation.
Asia is a vast and heterogeneous hunting ground for stock pickers, with close to 20,000 listed companies. FAS’s benchmark agnostic mandate provides managers Nitin Bajaj and Ajinkya Dhavale with the freedom to ignore index weightings and focus purely on bottom up stock selection, supported by one of the largest on-the-ground research teams in the sector.
Their process starts with valuation: the managers carry out extensive due diligence to understand why a company is trading on a low valuation and the potential scope for a re-rating. This value contrarian process targets out-of-favour pockets of the market, while steering clear of those driven solely by momentum, providing a clear margin of safety.
The managers also favour an understandable business model, an established position in a durable market and a strong management team that treats minority shareholders fairly. On the financial side, Nitin and Ajinkya look for strong and repeatable cash generation and avoid companies burdened by high debt, temporary margin uplift or revenue streams overly dependent on a single theme.
This disciplined value framework is anchored in company fundamentals and built to preserve capital and deliver strong returns over the long term, regardless of whichever styles or cycles happen to be in vogue. That doesn’t mean avoiding the AI theme altogether but steering clear of companies where expectations already look fully-priced.
Investors seeking Asian equity exposure might naturally gravitate towards a passive strategy, but the broad regional label masks some hefty concentrations. In the MSCI AC Asia ex Japan Index, Korea and Taiwan now account for more than half of the benchmark, thanks to the dominance of technology-related names such as TSMC, SK Hynix and Samsung Electronics.
What looks like diversified regional exposure is, in practice, a concentrated position in a handful of mega caps. And this concentration feeds volatility, with the MSCI Korea Index falling almost 20% in July due to concerns over the durability of AI spending. Putting this in context, a 20% drawdown requires a 25% gain to break even - a clear illustration of the downside risk of chasing momentum driven markets.
This brings us back to the waiting game over short-term trading. Since FAS’s inception in 1996, Asian small-cap value stocks have comfortably outperformed both large-cap growth and large-cap value indices. The investment philosophy is simple: low expectations drive low valuations, creating scope for a meaningful rerating if companies deliver better-than-expected results.
Instead, the portfolio is tilted towards value, with almost double the index weighting in value stocks. The result is a portfolio of higher-quality businesses trading at a lower valuation premium, with a lower price-earnings ratio than the benchmark index but a higher return on equity. This balance of quality and value is reflected in the trust’s rating, which stands at the lowest discount in its peer group.
The trust currently has a significant weighting to Indonesia: the MSCI Indonesia Index has dropped more than 30% over the past year as capital rotated into Asian tech, leaving the index trading on a forward price-earnings ratio of 9 times, less than half that of Taiwan. Although allocations are not made on a top-down basis, Indonesia offers favourable demographics, a conservative macro backdrop and sound corporate governance. Its geography also makes national expansion more challenging, resulting in oligarchic markets with high barriers to entry.
As a result, Nitin and Ajinkya have identified a number of cash-generative companies trading at valuations that offer a substantial margin of safety. One example is Indofood Sukses Makmur, a noodle producer with dominant market positions across multiple countries. Despite the company delivering a 14% annual increase in EBIT over the past five financial years, weak sentiment towards Indonesian equities has pushed the shares down to a trailing price-earnings ratio of just 6.6 times.
FAS also has a significant exposure to China, where weak sentiment and macro challenges have driven valuations to low levels, with some stocks trading on price-earnings ratios of only five times.
One such holding is ManpowerGroup Greater China, which trades on a trailing price-earnings ratio of just under six. The managers view its scale and geographic reach as a clear advantage in a fragmented market. The business is asset light, cash-generative and offers an attractive dividend yield, with net cash amounting to around 80% of its market capitalisation.
Over the last three decades, the trust has shown that consistency and durability beat short-term exuberance. Looking ahead, its focus on undervalued, cash generative businesses is built to keep compounding returns for investors - whatever the next 30 years may bring.
Fund data as at 30/06/2026, index data as at 31/07/2026, company data as at 06/08/2026, returns based on GBP and share price returns unless stated otherwise. MSCI Asia Pacific Ex Japan Small Cap Index replaced MSCI Asia Pacific Ex Japan as the fund’s official benchmark from 1 February 2020.
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