Post ‘Liberation Day’ the outlook for bonds has become more uncertain. Despite high yields, concerns have grown as the market attempts to navigate the impact of tariffs, which could cause a surge in inflation and require higher interest rates from central banks.

Although Jason Borbora-Sheen, manager of Ninety One Diversified Income fund, recently told Trustnet that bonds can outperform equities over the long term, he acknowledged that it is not a bulletproof asset class and warned that, at times, it can be “more of a threat than an opportunity”.

He attributed this to inflation's stickiness. Demographics, deglobalisation, and, most recently, politics, have created a volatile inflationary backdrop that could persist for much longer than investors think, causing bonds and equities to become much more correlated, he argued.

While he believes in this scenario bonds can still outperform equities, it also means investors cannot assume bonds will have a static role in a portfolio. Sometimes, they will be a threat, and other times they will be an opportunity.

Performance of fund vs sector over the past 5yrs

Source: FE Analytics

Below, he explains why he does not want the fund to be viewed as a multi-asset strategy, why being cautious was both the best and worst call he made in the past five years and why investors have the wrong attitude towards income.

What is your investment process?

The fund is trying to play the role of what fixed income historically did or what people look for from a low-risk alternative. Essentially, we do not want to be seen as a multi-asset fund, instead we see ourselves as a fixed-income replacement.

It is built from the bottom up based on “bond-like” securities and then it’s put together based on how those things correlate to one another. We aim to manage the risk of capital loss through derivatives such as options and futures.

What differentiates your fund?

Our objectives are quite different. As mentioned, we are not a multi-asset strategy in the traditional sense, and we want to sit within the alternatives bucket rather than performing the asset allocation role of an overarching multi-asset portfolio. We are most successful when investors understand that we are a complimentary exposure.  

Other strategies that try to fill this role are very top-down focussed and try to play their books towards specific outcomes. Instead, we want to select securities that match the goal of the fund and then use top-down controls to ensure we can navigate various macro-environments.  

We think we are very different to what clients do themselves. Most clients focus on capital appreciation and equities and think about income incorrectly. We also hold very different securities, such as New Zealand or Australian bonds and use derivatives like options and futures that clients may be unaware of.

Could you explain how investors think about income incorrectly?

Many investors view income as a side project. There is a philosophy that you should think about income at retirement age and during your working era, the focus should be on capital appreciation.

Because of this people will look at an asset and ask, ‘Can I buy it for £10 now and sell it for £20 later'? But if you can buy an asset for £10 now and get a pound of income per year, you will get to the same point with a more certain pathway. This is because, when it comes to income, the worst-case scenario is that you have a default or missed payment, whereas capital appreciation is subject to natural market fluctuations.

If you want to achieve a total return, you should be ambivalent about where it comes from and I think investors have got that wrong and left a lot of money on the table.

Why do investors need a fixed-income replacement?

The move up in gilt yields feels monumental right now but historically it is not an enormous change. It does not take a genius to realise that a 4% yield on a 10-year bond now is better than 2% years ago, but what matters most to clients is their shorter-term experience, the one- or three-year return. That could all still be negative.

Because of our different approach to security selection, such as holding infrastructure, our yields have gone from 4% to 5.5%, as the rate environment has helped fixed income. So, we participate in the upsides, but because we are a replacement strategy, we can mitigate the current downsides much better.

In that sense, I think a fixed income replacement remains a relevant and compelling proposition.

What have been your best and worst calls in recent years?

We have been cautious about our duration since 2022, which worked out. By managing the downside risk with futures and options we did well during the 2022 bear market and were one of the best-performing funds in the sector but also caught some of the upside in 2023.

Right now, the duration is about three years, which is just above average.

In 2021, being too cautious on riskier assets was probably our worst call.  We had started to hedge our credit exposure because we thought the move in inflation would be negative, but we were too early and got that wrong.

What do you do outside of fund management?

I do a lot of swimming, and I like whisky. I take a lot of trips to local distilleries, which are always amazing.

At the start of the year I made a set of bold predictions, noting that, while unlikely, the five suggestions were very possible. But perhaps I was not bold enough and should have backed myself as the next Nostradamus.

It has taken just four months for the first of my suggestions to come true: at least three of the Magnificent Seven members have already dropped 30% or more.

At the time I thought the US dominance would start to unravel and highlighted Nvidia as my pick to be one of the worst performers of the group.

This may seem obvious now, but back then – all four months ago – many were predicting another comfortable year for the artificial intelligence (AI) players, with US president Donald Trump expected to be pro-business. Fast forward to today and we know this has not been the case.

As things stand, Tesla is at the bottom of the pile, making a loss of 41.4% so far in 2025. Nvidia is second at 27.8%, while Apple, Amazon and Alphabet are all down more than 20%, as the below chart shows.

That doesn’t look like my prediction has come true, I admit, but diving into the numbers shows that things have indeed been as bad as I feared.

Looking at the maximum loss an investor could have made since the start of the year if investing at the worst possible time in each of these stocks, Tesla (down 44.8%), Meta (33.1%), Alphabet (30.9%) and Amazon (30.9%) have all now achieved the suggested 30% drop from peak to trough predicted at the start of the year.

Performance of Magnificent Seven shares over YTD

Source: FE Analytics

Before you fear my ego is so large that the entire Trustnet website could not contain it, allow me to take myself down a peg.

I did not see Trump’s tariffs coming, nor did I think the first-third of the year would be as volatile as it has been. My suggestion was based on valuations and the belief that, at some point, any earnings disappointment would be pounced on by the market, taking the shine off the Magnificent Seven.

While the latter point was right, I did not expect it to happen so soon.

To knock myself further, three of my other predictions are to do with the end of the year: emerging markets will end 2025 as the best performing equity region; the US will end down; and active managers will beat passives.

None of these look particularly likely at present, although the US one seems my most likely winner.

Nor does the idea that UK interest rates will fall to 3.5%, although there is still some hope for this if the UK economy is rocked by tariffs, causing growth to suffer while inflation holds steady. In this scenario, the Bank of England could see fit to prioritise growth and cut rates more aggressively.

Admittedly, this prediction may have been borne more out of hope than expectation, considering I have a mortgage renewal coming up in 2026.

Finally, there was a sixth idea that I mooted to the team but was shot down for being too farfetched: the return of Neil Woodford running money for investors.

While this is still a long way off, his latest W4.0 venture – allowing subscribers to invest alongside the disgraced former fund manager for a fee – is certainly along those lines. I could have chalked that prediction up as a success as well. If only I had been bolder!

Fidelity Index World and Vanguard LifeStrategy 100% Equity both provide low-cost passive exposure to global equities and are immensely popular, having amassed £10.6bn and £8.5bn in assets under management, respectively.

They are also quite different. Fidelity Index World is a classic, straight-forward, passive fund, replicating the MSCI World index by holding all the stocks within it. Like its benchmark, it focuses on developed markets and has 71.5% in the US (as of 31 March 2025).

Vanguard LifeStrategy 100% Equity is a different kettle of fish. Rather than replicating a single global index, it invests in 10 regional passive funds within the Vanguard stable and has no designated benchmark. Due to its structure, Vanguard’s ongoing charges figure of 0.22% is higher than Fidelity Index World’s 12 basis points.

Vanguard’s fund has a significant home bias with 25% in UK equities and, unlike Fidelity Index World, it has exposure to emerging markets and smaller companies.

Below, Trustnet compares and contrasts the passive global equity behemoths.

Which fund has performed better?

The geographical exposures of the two funds are reflected in their relative investment performance. For Vanguard, having 25% in the UK and 10% in emerging markets has been a headwind for much of the past decade but served the fund well during this year's sell-off.

Performance of funds vs sector over 10yrs

Source: FE Analytics

Why does Vanguard have a home bias?

Vanguard said its strategic home bias “stems from a historic preference for domestic investments among UK investors”. This 25% UK target is static but is reviewed regularly by Vanguard’s Strategic Asset Allocation Committee to ensure it continues to align with clients’ preferences.

The firm also offers a LifeStrategy model portfolio solutions (MPS) range for financial advisers, with one version that includes the home bias and another without it, which instead has a global market capitalisation weighting.

Vanguard regularly rebalances the underlying funds back to its strategic target weights and does not try to add value through tactical asset allocation.

Alex Farlow, associate director, multi-asset research at Square Mile Investment Consulting & Research, said some investors like the static nature of the LifeStrategy range given how difficult it is to consistently add value through tactical asset allocation.

Separately, having 25% in sterling-denominated assets can be helpful for UK-based investors who do not want to take on currency risk, especially as sterling has been stronger than the dollar recently.

Over the past 10 years, however, sterling has weakened significantly versus the dollar, Farlow noted.

Looking under the hood

Another difference between the funds is the number of holdings, said Richard Philbin, chief investment officer (investment solutions) at Hawksmoor Investment Management. “If you did a look through at the number of holdings between the two funds, there will be many, many more in the Vanguard fund.”

Fidelity Index World fund owns more than 1,350 companies that constitute the MSCI World Index.

By contrast, the Vanguard U.S. Equity Index fund – just one component of the LifeStrategy product – invests in more than 3,500 companies. This is because it tracks the Standard and Poor’s Total Market index, which covers mega, large, medium and small-cap stocks (rather than the more popular S&P 500).

“What is also interesting to note is that the Vanguard funds invest across different index providers – FTSE, S&P, MSCI for instance – and all three index providers have slight nuances to their approach, companies in the index, criterion used for inclusion and so on,” Philbin pointed out.

Fund management teams

Fidelity Index World is managed by passive specialist Geode Capital Management in Boston. It was established in 2001 as a division of US-based Fidelity Investments and became independent in 2003. While Geode is responsible for investments, Fidelity International handles sales, marketing and compliance for the fund.

Danielle Farley, a passive investment analyst at Hargreaves Lansdown, said this is an unusual arrangement for passive funds but “we think Geode’s scale and passive investment specialism combined with Fidelity’s operations and commercial expertise makes for a good partnership”.

Geode has a well-resourced team and its investment professionals have an average of two decades of experience or more, she added.

“Cost management is very important to Geode. The fund managers try to make up for the factors that detract from performance, such as dealing commissions, taxes and the cost of running the fund,” Farley said.

Farlow said Vanguard also has strong resources, an impressive team and a long track record in passive investing, and Square Mile has given both funds a ‘Recommended’ rating.

Which fund should investors and advisers choose?

Which fund investors opt for will depend on what geographic exposures they want, said Jason Hollands, managing director of Bestinvest.

“LifeStrategy has been designed with a UK-based investor in mind who wants a home bias to UK assets, whereas Fidelity Index World is purely market-cap weighted in its allocations. This UK overweight has been helpful in recent weeks given the sharp sell-off in US equities,” he noted.

Yet the main reason Fidelity Index World is on Bestinvest’s Best Funds List – and Vanguard LifeStrategy 100% Equity isn’t – is fees.  “A key factor affecting deviation from global indices is costs. The Vanguard fund has 0.22% ongoing costs, significantly higher than the 0.12% ongoing charges figure of the Fidelity World Index fund,” he explained.

Farlow said financial advisers may prefer Vanguard for consistency, as they can use other LifeStrategy funds for clients with different risk profiles. The remaining LifeStrategy funds are multi-asset portfolios with a bond component and between 20-80% in equities. There is “an element of I know what I’m getting” with the LifeStrategy range and its home bias, he said.

Farley concluded that the two funds can be used in different ways depending on an investor’s needs. “Fidelity Index World could complement other funds in a portfolio that are focused more on the UK or emerging markets,” she explained.

“The Vanguard LifeStrategy 100% Equity fund provides broader exposure to global markets and could be a simple way to form the share portion of a portfolio but comes at a slightly higher cost.”

Bond and equity markets have been roiled by volatility since the start of US president Donald Trump’s second term and his stop-start announcements on tariffs are making it difficult for fund managers to make forecasts. The best course of action therefore is to avoid taking big bets, according to Bryn Jones, head of fixed income at Rathbones.

Last week there was a big shift in the rates market as Trump flip-flopped on policy, especially at the long end of the gilt and treasury yield curves, which the Rathbone Greenbank Global Sustainable Bond manager described as “quite alarming to see”.

“The 50 basis point moves in long bonds in a week is something I haven’t seen much in my career before. But my experience tells me, you don’t panic in those periods. While last week was a weak week for us, in the context of rates and credit moves, you can gain that back in the space for a couple of days.”

Trump’s “headline bingo” continued this week. The president’s verbal attacks against US Federal Reserve chair Jerome Powell, who he called “a major loser”, shook up credit and equity markets until Trump reversed course and said he had no intention of firing Powell – prompting a market rally on Wednesday.

Treasury secretary, Scott Bessent and Trump also “backtracked a little by saying ‘we’re going to be nice to China’,” Jones added, but warned that “come tomorrow the news will be different.”

Selling on Monday and buying back on Wednesday would have been far riskier than standing pat this week, he pointed out. As such, he said doing nothing “is actually quite important”.

“You don’t want to get whipsawed in these environments from the whack-a-mole politics that’s coming out of Washington. My experience tells me, if you trade reactively, you end up on the wrong side of both trades,” said Jones.

His patience has been key for investors over the years. His Rathbone Ethical Bond fund made 33.6% over the past decade – a top-quartile return in the IA Sterling Corporate Bond sector, while his Rathbone Strategic Bond fund has made 30.4% over the past decade, an above-average performance in the IA Sterling Strategic Bond sector.

Performance of fund vs sector over 10yrs

Source: FE Analytics

The former was added to AJ Bell’s favourite funds list this week with Paul Angell, head of investment research at the firm, describing it as “a highly credible sterling corporate bond offering, with a long-established approach to ethical investing”.

“In Jones, the fund has an extremely experienced lead manager, who’s supported by a small but dedicated team of fixed income investment analysts. The fund usually takes on more credit risk compared to others in its sector, while interest rate risk is actively managed within two years of mainstream indices,” he continued.

AJ Bell removed the CT Responsible Sterling Corporate Bond fund to make room for Rathbones, noting the Columbia Threadneedle fund’s duration and credit risk are “managed within much narrower bands versus a mainstream index”.

“This conservative approach has led the Threadneedle fund to post some underwhelming relative returns over time,” Angell explained.

Rathbone Greenbank Global Sustainable Bond is Jones’ newest venture. Launched in 2023, it has beaten its average peer over the past 12 months. In this portfolio, Jones is sticking with long-term positions.

One of his higher-conviction ideas is to be prepared for weaker dollar assets. To do this, he is underweight US treasuries and overweight German bunds. “Clearly the US is in a framework of trying to weaken the dollar and reduce its borrowing costs,” he observed. 

However, he recently “locked in some outperformance” by slightly reducing the US underweight, as the fund has “significantly outperformed its benchmark as a result of being underweight the US”.

Jones also has a substitutes bench of names he is waiting to buy when market weakness offers an opportunity. But things are moving too quickly at present, as the manager found this week, when he began to pick off some of these names. The swing to a risk-on mood on Wednesday meant that liquidity rapidly dried up in the high-yield market and prices quickly rose to a level he felt was too high.

“At some point, the weakness will throw up cheap valuations and we await further news on tariffs, counter tariffs and negotiations before formulating a view to unwind our low-risk bucket and get more aggressive with any risk taking,” he added.

For now, it is still difficult to read whether yields will rise, whether the economy will enter stagflation or whether weak growth will lead to interest rate cuts, so “I can’t be taking huge bets”, he concluded.

Tangible panic in credit markets after ‘Liberation Day’ saw US president Donald Trump issue a 90-day pause on reciprocal tariffs on 9 April 2025. This leaves us with a 10% universal tariff coupled with a massive 125% tariff on China.

While Trump may have stepped back from the edge, these numbers still imply a weighted average tariff of 25%.

Our view remains that the final act is still yet to be written. Tariff ping pong between the US and China continues with both presidents Trump and Xi Jinping indicating they are unwilling to back down, though one suspects a deal can be made such that both can claim victory. Failing that, it's hard to see how a global recession can be avoided.

How Europe responds is also critical. If the bloc chooses to extend the existing Digital Services Tax, it will be very damaging to US mega-cap tech stocks. 

Most North American trade is in intermediate goods, heightening the risk of supply chain disruptions, as well as the risk of upward pressure on inflation on top of lower economic growth.

A weaker currency in the face of tariffs will also feed into inflation, more so than what was experienced during the first round of Trump tariffs in 2017 where the dollar remained stronger.

Estimates suggest that, all else equal, a 25% tariff could add almost 2% to core personal consumption expenditures (PCE) inflation, which is currently running at 2.8%.

Business and consumer confidence will continue to remain weak while uncertainty around tariffs and the unpredictability of the Trump administration continues. Add in the Department of Government Efficiency’s (DOGE) potential spending cuts, which could see a significant tightening in fiscal policy in the US, and uncertainty and pressure on growth ratchets higher again.

The risk remains that Trump’s shock therapy approach to re-industrialisation is just too much for the US or global economy to bear and the US stumbles into stagflation.

Despite this, the starting multiple of US equities is still 21x earnings and tariffs are yet to be factored into bottom-up forecasts. Asset prices will not only be impacted by earnings per share downgrades but also a higher discount rate will inevitably be applied to compensate for Trump’s irrationality.

We have seen this playbook before in China where policy became unpredictable with president Xi's ‘Common Prosperity’ programme.

While policy uncertainty is widening in the US, it's arguably narrowing in Europe and China. Net exports to the US account for about 2.5% of Germany and China’s GDP – at least some of this will be offset by fiscal stimulus. Furthermore, the US accounts for only 6% of China's total imports.

Germany's announcements around defence and security and its €500bn infrastructure fund equate to a total fiscal boost of 3% of GDP per annum. China hasn't made the same definitive announcements but the direction of travel is clear.

The wide range of outcomes means there will be opportunities for active managers to take advantage of market distortions. We began to position our funds more defensively from the middle of February and given the degree of policy uncertainty it makes sense to continue to lean defensively – but we do see pockets of opportunity. 

One of the largest holdings in our portfolio is Barrick Gold. We think the gold price can be resilient in a hard or soft landing, with demand underwritten by central banks diversifying away from dollar-denominated assets.

If the economic outlook weakens, we expect retail investors to come back to gold, having drawn down their holdings over the past three years. At current spot price, Barrick is still priced on a sub 10x multiple with volumes expected to accelerate as production ramps back up.

We've been buying utilities in Western Europe, high-quality consumer exposures in China that will be stimulus beneficiaries (such as China Resources Beer).

We also think Latin America could emerge as a relative winner. Mexico is firmly at the negotiating table and the reality is low-end manufacturing isn't going to come back to the US – but it could come to Mexico or South America.

Brazil is one of the very few countries out of the firing line as the US has a trade surplus with Brazil. Further, if we see a repeat of 2017, China can shift demand for agricultural products from the US to Brazil, further supporting its domestic economy.

It's possible that the unintended consequences of Trump's policies could make ‘the rest of the world great again’.

If conviction increases that the growth shock is real, we will continue to lean into the defensive allocations in our portfolio. But we don't want to get too bearish. The US Federal Reserve could reverse quantitative tightening, there will be some stimulus out of the US as tariff revenue is recycled into tax cuts, and we will see stimulus out of Europe and China.

Given such extreme policy uncertainty, investors must be thinking about tail risk protection in their portfolios to mitigate against unexpected drawdowns.

More broadly speaking, we think the days of US mega-cap exceptionalism are waning. The market can continue to broaden via regional shifts (driven by this change in fiscal impulse) and sector and style shifts (driven by the democratisation of artificial intelligence and a broad infrastructure-led investment cycle).

Alison Savas is an investment director at Antipodes Partners. The views expressed above should not be taken as investment advice.

Investors miss the point with artificial intelligence (AI), according to Blue Whale Growth FE fundinfo Alpha Manager Stephen Yiu, who said that the debate around whether it is a bubble or not only makes sense if you misunderstand what the technology is all about.

The first thing people need to realise is that AI is not about “Star Trek-like robots firing guns” or “aliens who are going to rule the world” – a framing of the issue that is sometimes found in the media.

AI has not changed – or taken over – our lives yet, with Yiu expecting it to follow the same journey as the smartphone, rather than that of a scary overlord.

When the iPhone was launched back in 2009, there were just a handful of apps to download from the App Store, now we have millions. He declared: “We are going to have millions of AI applications that we would want to be part of.”

“Today, we are at the early innings of AI and nothing remarkable has come about yet. But the signs are there together with the first few applications,” he said.

To better understand what these applications might be and do, the manager gave an example of what is being developed right now.

One AI-powered technology that could be somewhat familiar today is language translation. AI will allow us to break the language barrier and communicate across different languages through an AI application. The manager predicted that this will be available by the end of the year.

Another “gamechanger” will be applications to improve travel (for example streamlining airport software) and customer service.

Today, the British Airways website has a chat box that uses AI but it can often only ask the user a couple of questions and point them to the right person to talk to – admittedly, “very primitive and not very useful”.

But with the new AI technologies in development, there will be AI agents connected to the back end of the British Airways systems. The flight scheduling system, the booking system, customer service, and the accounting system – they will all have one AI agent.

“All these AI agents will be able to liaise between themselves, check your booking, payments, flight delays, reimbursements, everything. That is very powerful,” Yiu said.

This is already happening and quite straightforward – “purely software development with a bit of AI overlay; quite similar to Chat GPT but in a more enterprise-software domain”.

Another, perhaps more exciting application, would be personalised AI agents. To remain in the travel realm, my AI agent will know my itinerary, if my flights got cancelled, my British Airways membership number, and it can deal with the BA agent instead of me.

“Just look at what ChatGPT can answer based on all the data being generated on the internet – just imagine if that technology applies to single people, if we could build a person-specific GPT.”

“It is also not difficult to do – people give up so much data about themselves voluntarily on the internet.”

Yiu agreed with one thing, however, that the media usually says to characterise AI – that it is “very bad for the economy”.

“Especially, AI is very bad for the workforce. We are going to have a universal basic income in place, because there are going to be significantly fewer jobs available for people who want to work,” the manager said.

“That’s not a productivity issue, there will just be a lot of value generated by AI platforms, and that spending will come from us consumers.”

All of this will require a lot of money, Yiu admitted.

In the first trimester of 2025, big tech was spending $300bn towards AI – money that could have been spent elsewhere, for example, to fund buybacks, shareholder dividends or acquisitions, but they decided to spend it on AI instead.

From April onwards, Yiu became increasingly worried that US president Donald Trump’s tariffs could cause a global slowdown and sold out of Meta, picking up Nvidia shares instead at deflated prices.

“In today's context, in AI, there's only two companies – one is Nvidia, the other one is Broadcom,” he concluded.

Stock markets are being plagued with uncertainty following president Donald Trump’s ‘Liberation Day’ tariffs, as investors struggle to navigate his rapidly changing policies, whether on trade or his feud with the Federal Reserve.

In this uncertain market, Ken Wotton, manager of Strategic Equity Capital, said UK shares have become a “relative safe haven”.

While trading around headlines is perilous, below, UK and global stockpickers point to a range of UK shares that they have been adding to in the current market volatility.

Brooks Macdonald

Wotton purchased more of his highest conviction holding, wealth manager Brooks Macdonald, during the recent market volatility. The wealth manager now represents more than 10% of the total portfolio.

Year to date, Brooks Macdonald’s share price has slid 16.4%. This is part of a bleak period for the firm over the past 12 months, with shares down 25%. However, this decline in the share price enhances an “already compelling valuation opportunity", according to Wotton.

Share price performance YTD

Source: FE Analytics

He explained: “We believe the business is at an inflexion point as it seeks to restart its ambitious growth plans and drive shareholder value over the coming years.”

The fundamentals look increasingly promising, with low financial leverage, high margins and beneficial structural tailwinds, he added.

For example, it is now listed on the main London Stock Exchange following a move from the AIM market, while it also purchased three new advisory businesses and sold its international branch to fund share buybacks, indicating it has capital to spend. As a result, it is poised for long-term growth despite the current market volatility.

London Stock Exchange Group

Elsewhere, Ben Van Leeuwen, deputy manager of the Lindsell Train Global Equity fund, pointed towards the London Stock Exchange Group.

Its share price is up by 3% this month, despite a dip following Liberation Day. This builds on a strong longer-term track record, with shares up 27.3% over the past year and 52% over the past five.

Share price performance over the past year

Source: FE Analytics

Leeuwen added that the firm’s electronic trading platform is used by a range of end users as an essential part of their day-to-day work. As a result, the business has enormous pricing power and a loyal customer base, which makes it resilient in challenging macro-environments.

He concluded: “Durability and resilience have arguably not been at the top of investors’ shopping lists in recent years. If markets continue to exhibit heightened volatility in these uncertain times, perhaps that will change.”

Experian

Lindsell Train’s Madeleine Wright, who is deputy manager of the Finsbury Growth and Income Trust, also pointed to credit reporting company Experian, which they have continued adding to after 2 April.

While data companies are correlated with US mega-cap tech, Wright argued it is a fundamentally different business. “Rather than having to be at the forefront of technology development in the same way as, for example, an Nvidia, the models of a stock like Experian rely on ownership of unique proprietary data that has been built up over many decades,” she said.

As this type of service is extremely difficult to tariff, the share price has performed well this year and is up by 2.5% in 2025 so far, despite an initial decline following Liberation Day.  

Share price performance YTD

Source: FE Analytics

“We believe investors may be underestimating the extent to which earnings growth will accelerate for Experian,” Wright said.

The business is capital light, with more than 25% return on equity, she explained. Additionally, it is undervalued compared to its peers, hovering around a 30x price-to-earnings (P/E) ratio compared to US competitors such as FICO, which are closer to 60x.

As a result, despite being one of their worst detractors in the first quarter, the Finsbury team has added to the position in Experian because a small change in earnings growth “could deliver a big change in warranted value”.

Entain

Finally, Wilfrid Craigie, investment analyst on the AVI Global Trust, identified Entain, the parent company of gambling giant Ladbrokes, as the UK share that caught his eye in 2025.

The share price has slid 16.8% this year, contributing to a total decline of 33% in the past 12 months. However, this means the business trades “at a steep discount to the sum of its parts”.

Share price performance YTD

Source: FE Analytics

Despite dropping in April on the back of the US tariffs, Craigie argued it is compelling as gambling businesses are relatively defensive, with extremely high barriers to entry and do not rely on exports or trading. As a result, Entain has the potential to do well, even if tariffs continue to dominate the news.

However, Derren Nathan, head of equity research at Hargreaves Lansdown, said that while Entain is in a strong position to grow, “question marks will remain over the strategy” until it can replace its chief executive officer, who departed in February.

Markets were on the rise yesterday as US president Donald Trump seemingly reconsidered his positions on Federal Reserve Chair Jerome Powell and on tariffs, but this won’t be enough to spare us from an impending bear market if these experts are right.

Bear markets can last years but recoveries happen quickly and investors who run for the exits could get left behind when things turn.

On Monday, we revealed the best and worst Investment Association sectors to own after a bear market, highlighting those that topped the charts in the 12-month and three-year periods after the latest bear markets finished. The study spanned from the Ukraine war of 2022 to the dot-com bubble of 2002.

Today, we publish the same study applied to the investment trusts universe and highlight similarities and differences to the open-ended side of the market.

As per the previous instalment, we defined a bear market as those periods when the S&P 500 hit losses of at least 20%, we excluded the sectors without a long enough track record as well as the IT Not Yet Assigned and IT Unclassified sectors, and colour-coded the average returns of those that remained by quartile.

Source: Trustnet

Bonds

The most evident trend in the Investment Association version was the underperformance of fixed income, but this wasn’t evidenced here as clearly because the asset class isn’t one that people usually access through investment trusts.

The IT Debt Loans & Bonds sector, whose nine constituents invest in general loans and bonds, didn’t stand out particularly either positively or negatively, with a worse-than-average performance before and during the Covid recovery and a slightly more positive period after the supply-chain shocks cause by Russia’s invasion of Ukraine.

The other two debt-focused peer groups, IT Structured Finance and IT Direct Lending, haven’t gone through a pre-2020 bear market and were therefore excluded from the analysis.

Vehicles in the IT UK Equity & Bond Income sector can only invest up to 20% in bonds and have most likely been propped up by the equity allocation, which can go as high as 80%, making it one of the better sectors to invest in during the three years following Covid and between October 2022 and October 2023.

Alternatives

Instead of bonds, the worst investment company sector has been venture capital trusts, IT VCT and IT VCT AIM Quoted. The companies they invest in – young, innovative and often privately-owned UK companies – might be more exposed to shocks and take longer to recover. Both sectors have been among the worst to invest in  as the bears have turned to bulls.

Another bet that hasn’t played out historically has been hedge funds, whose use of derivatives and short positions makes them riskier and not as steady in post-bear market scenarios when stocks rise.

Still within alternatives, infrastructure trusts have taken a bigger hit than infrastructure funds, with the IT Infrastructure sector among the worst performers in four recovery periods out of the seven analysed.

This might be because these managers can split their portfolios between debt and equities. The IT Infrastructure Securities sector, which only includes infrastructure shares, has done much better and was the best performer in the three years following the dot-com bubble.

IT Financials & Financial Innovation trusts took longer to recover after the 2008 financial crisis, making a 39% loss in the three-year period between 2009 and 2012 and also disappointed in the three years after Covid.

One of the few alternative investments that did well more often than not was commodities and natural resources, which had a particularly good run after Covid and the dot-com bubble.

Equities

Most equity sectors had up years and down years, showing how there is no one-size-fits-all when it comes to investing in different backdrops.

That said, the IT UK Equity & Bond Income, IT Technology & Technology Innovation and IT India/Indian Subcontinent sectors have been above-average more than they have been below it. However, smaller companies proved the most successful in consistently navigating recovery periods.

The IT Global Smaller Companies sector shot the lights out with 392% and 829% returns after one and three years post-financial crisis, which no other asset class has been able to match.

European and Asia-Pacific smaller companies also remained above-average in most time frames, while the IT UK Smaller Companies didn’t keep up as well when compared to other smaller companies across the globe.

Contrary to funds, trusts with a focus on Asia Pacific more widely didn’t hold up particularly well, especially in the early 2000s.

US tech behemoths have been struggling in recent months but the pain has ramped up since president Donald Trump’s ‘Liberation Day’. Since then, returns from the ‘Magnificent Seven’ stocks (Amazon, Apple, Meta, Tesla, Nvidia, Alphabet and Microsoft) have ranged from poor to outright disastrous.

The best of the bunch has been Alphabet, down just 3%, while Elon Musk’s Tesla has plummeted 15.8% since 2 April.

It compounds a tough 2025 so far, in which Microsoft has dropped 13% – the best return in 2025 of the seven stocks – while Tesla has haemorrhaged 41.1%.

Shares price performance of Magnificent Seven stocks YTD in dollar terms

Source: FE Analytics

The most recent falls came after Trump announced a swathe of tariffs on almost every country in the world set at a 10% minimum (although many were far higher).

He then backtracked, knocking this down to 10% for all except China and pausing any higher charges for 90 days until negotiations had taken place.

China retaliated to the US president’s aggression with increased tariffs of its own. This has caused a tit-for-tat, with Trump upping tariffs on the Asian powerhouse even further and sparking fears of a full-blown trade war between the two nations.

Last week Nvidia said trade disputes would cost the chipmaker $5.5bn, as tightened controls on US exports to China mean it can no longer export its H20 chips to Chinese customers without a special licence.

While some fund managers maintained this was not the time to panic, Hugh Grieves, co-manager of the Premier Miton US Opportunities fund, said the market is misevaluating the extent of the problems for the tech giants.

Taking the case of Nvidia, he said there are only four US hyperscalers that can purchase the vast number of chips required for Nvidia to maintain its current profits.

Outside of this, the only other real major buyer is China. “There’s no one in Japan [for example] that is going to spend tens of billions of dollars on these products,” he said.

While chip sales could be “funnelled through Singapore” and other Asian countries, without China, demand for Nvidia chips is likely to fall.

But Nvidia is unlikely to be the only casualty of the US-China trade war. Yesterday, Tesla missed first-quarter earnings and revenue expectations as it warned that a ‘rapidly evolving trade policy’ presents risks to its costs and product demand.

Grieves expects other major tech companies to make similar announcements going forward. Amazon may be at risk because as much as 70% of its inventory comes from China. “You can’t double the prices of all of those goods overnight and expect to sell the same amount. Demand destruction is pretty significant,” he warned.

Amazon is one of Nvidia’s biggest customers but if Amazon’s profit margins shrink, that could curtail its ability to invest in artificial intelligence (AI).

Then there is Meta (the owner of Facebook), which is another key spender in the AI space. The firm relies on two Chinese retailers – Temu and Shein – for a healthy chunk of its advertising revenue and profits, he said, which could stop if the trade war continues.

“They took advantage of the de minimis value customs exemption to be able to ship into the US without paying tax. That has been shut. I don’t know if they have a business in the US anymore. If they don’t, they aren’t going to advertise in the US. So if [a chunk of] Facebook revenue goes to zero, is it still going to spend on AI?” he asked.

“Maybe it will, but it is going to look horrible on a relative income statement because if your profits are going down and your capital spending is going up, it is not going to be pretty.”

Meanwhile, others such as Apple, which was given a reprieve by Trump as smartphones were made exempt from tariffs, could still lower guidance in the future, he warned.

However, analysts are unlikely to forecast any of this, meaning they will have to “accept they’ve got stale numbers” until these companies report the true impact of tariffs, he argued.

“Then everyone is going to stick their hands up and say ‘oh what a surprise, we never saw that coming’,” said Grieves.

As such, he said we are in an AI bubble akin to the broadband bubble that ran alongside dot-com euphoria in the early 2000s.

“I have been vocal for some time saying AI is a bubble. Expectations are way too high and there are no killer products – certainly none that are going to generate hundreds of billions of dollars in revenue, which is what is required from the huge investment” from the largest US tech companies, he said.

The comparison here is with fibre cables. Although internet traffic did boom in the decades that followed the dot-com bubble – the assumption that drove the frenzy in the first place – costs “went through the floor”.

“So the value proposition for all these fibre-optics brands collapsed. The business models collapsed. All the names people knew and loved in the dot-com bubble disappeared. I think you are seeing something similar at the moment. The costs of providing these AI services is coming down courtesy of the Chinese,” said Grieves.

“To say we are one and done is optimistic. I remember in October 2000, Cisco came out with lower guidance. ‘Oh this is it, the numbers have been reset’ they said, but that was just the beginning, it wasn’t the end.”

For mega-cap tech stocks, the longer “we go on without some killer products”, the more likely the US hyperscalers “start to scale back their capex plans”, he warned, increasing the risk of further disappointment.

Devotees of cult television may distantly recall ‘Monkey’, which many years ago found an unlikely home in the BBC’s teatime schedules. It told the story of Sun Wukong, also known as the Monkey King, a colourful figure in China’s literary, religious and cultural history.

To Western audiences, not least in light of its atrocious dubbing and arcane plots, ‘Monkey’ was essentially incomprehensible. It was riotously entertaining in its own unique way, but actually trying to make sense of what was happening was a waste of time and energy.

China’s investment landscape might seem similarly bewildering today. Against a backdrop of mounting international tensions – most starkly evidenced by renewed trade conflict with the US – the appeal of the world’s second-largest economy is perhaps less than crystal clear.

There is a school of thought that China has been uninvestable for some time. Amid the fallout from the Trump administration’s Liberation Day and earlier assertions that Beijing is ready to fight “a tariff war… or any other type of war”, (as the Chinese Embassy in the US said in a post on X in March) it is easy to see why such a view might hold sway today.

Move beyond the doom-and-gloom headlines, though, a rather different picture may emerge.

Here are five reasons why China could still be worthy of investors’ attention and why in this case, unlike with ‘Monkey’, it could pay to understand what is actually going on.

The transition from imitator to innovator

Traditionally, China has been thought of as a ‘fast follower’. The vast majority of its companies have favoured replication and incremental improvement over genuinely ground-breaking innovation.

This model appeared firmly entrenched barely five years ago, when the government cracked down on private enterprise in general and technology companies in particular. Yet the policymaking stance is now determinedly pro-growth, with new stimulus measures unveiled at regular intervals and once-ostracised entrepreneurs back in the fold.

Increasingly, the message from Beijing is that businesses must strive to gain a foothold at the cutting edge and will not be penalised for succeeding. Precision tool manufacturer Precision Tsugami, which recently announced a number of orders related to artificial intelligence and robotics, is a good example of how smaller companies are benefiting from this significant shift in tone.

Continued progress on ESG

Led by the new US administration, a growing number of Western corporations are rowing back on their environmental, social and governance (ESG) commitments. By contrast, China has been stepping up its efforts to become an ESG leader.

There is obviously still some way to go in terms of the S of ESG, but progress on E and G issues has been considerable – including an ambitious emissions-trading scheme, undisputed dominance in sales of electric vehicles (EVs) and the formulation of a first set of basic standards for corporate ESG disclosure.

More simplistically, if one measures governance by a commitment to shareholder returns, most Chinese corporates have been disciplined in paying out dividends and stepping up share buybacks, despite a difficult economic backdrop.

The positive direction of travel is hard to deny. In tandem, it is worth remembering that goals prioritised by the Chinese government are often met more rapidly than widely thought possible. CATL, which launched only 14 years ago and is now the world’s number-one maker of batteries for EVs and energy storage, is a poster child for what can be achieved.

Depth of integration in the global economy

There is, of course, a political angle to the US’s imposition of swingeing trade tariffs on Chinese goods. But the key objective – one now supported by Republicans and Democrats alike – is to halt China’s economic rise.

Investors could be forgiven for supposing China might eventually become ‘another Russia’ – that is, a country crippled by Western sanctions and other measures. The fear is that this scenario would be notably likely if Beijing were to take military action against Taiwan.

Yet the reality is that China is already deeply entwined in the global economy. Even allowing for greater Western onshoring and/or relocation, this integration would be difficult to reverse.

For instance, an overwhelming proportion of Apple products are still assembled in China. It certainly would not be in China’s self-interest to decouple from its export markets – and it would prove highly destabilising for Western economies to pursue that goal, too.

The forces of deglobalisation and localisation

Notwithstanding the above, with the US vigorously pushing its ‘America first’ agenda and populism and nationalism on the rise elsewhere in the West, the march of deglobalisation looks set to continue. What is interesting is that this may not be bad news for several Chinese businesses, which have been reducing their own reliance on foreign goods and/or are benefiting from consumers’ preference for local brands.

Take cosmetics company Proya, which was last year named one of the fastest-growing businesses in its province after posting year-on-year growth of almost 38% in 2023. The company is steadily claiming domestic market share from Western rivals such as L’Oréal and Estée Lauder, which are notably more expensive.

Kingdee, a producer of ERP (enterprise resource planning) software, is another winner in this respect. With Beijing urging Chinese companies not to use Western ERP providers such as SAP, it is broadening its offering to meet the needs of businesses of all sizes.

Pent-up demand

There are many reasons why China’s working-age population of around 900 million is so reluctant to spend. The lingering impacts of the Covid-19 pandemic, a prolonged real estate crisis and a weak social safety net are arguably foremost among them.

Consequently, one of the biggest challenges China faces is to reinvigorate consumption in a nation where household spending has always been low relative to that of most developed countries. Sparking domestic demand is regarded as vital to unleashing a new era of growth.

Some estimates suggest the net increase in China’s household bank accounts since the onset of the pandemic equates to $9.8trn – more than double Japan’s 2023 GDP. So Chinese consumers could unleash an unprecedented wave of spending if and when the desired transformation does occur – and the opportunity set for investors, especially among smaller companies, is likely to expand even further.

Gabriel Sacks is an investment director on Aberdeen’s global emerging markets equities team. The views expressed above should not be taken as investment advice.

Active funds have been hit with larger losses than their passive rivals in the 2025 market downturn, FE Trustnet research has found, despite arguments that active management can help to avoid the worst of sell-offs.

Global stocks have been trending downwards for most of the year, on the back of concerns around trade tariffs from the new US administration, rising recession risks and expensive but concentrated markets.

The MSCI AC World index fell 16.7% in sterling terms between its peak on 22 January and 22 April 2025. This decline was led by a sell-off in the US, after the US exceptionalism narrative started to crack and investors rotated away from the world’s largest economy.

Performance by geography between 22 Jan and 22 Apr 2025

Source: FinXL

Active managers often argue they have a better chance of limiting losses in market downturns, thanks to the flexibility they have to adjust holdings or raise cash. In theory, this allows active funds to avoid the worst-hit sectors and respond faster than passive strategies locked into index weightings.

In practice, many active managers fail to deliver consistent downside protection when it matters most. Poor timing, market misreads and concentrated bets often leave active funds exposed to the same declines as the market, or worse.

FE Trustnet research suggests this has been the case over 2025, as the average active fund in most sectors has made a lower return than their passive counterpart. As shown in the chart below, active funds have underperformed passive in 32 sectors in the Association Universe, while they have outperformed in just 17.

Performance of average active and passive funds between 22 Jan and 22 Apr 2025

Source: FinXL

The chart’s teal line shows the total return of the average active fund in each sector while the grey line shows the average passive fund. The orange line is the difference between the two types of fund.

Active funds in the IA Technology & Technology Innovation sector have put in the worst showing: their average loss of 24.6% is almost 5 percentage points higher than the 19.7% fall from the average passive.

Tech stocks have been at the epicentre of the sell-off. Mega-cap US tech names such as Tesla, Nivida and Amazon (three of the ‘Magnificent Seven’) have led the market for several years but have fallen hard after worries about an economic slowdown caused investors to avoid expensive stocks.

In light of this, active fund Liontrust Global Technology has been the worst performer in the IA Technology & Technology Innovation sector over 2025, falling 31.6%. Tesla, which has fallen 45% (in US dollars) since 22 January, is the fund’s largest holding.

Other active tech funds posting heavy losses this year include AB International Technology Portfolio (down 30.6%), Polar Capital Global Technology (down 29.1%) and Herald Worldwide (down 28.3%).

On the other hand, the peer group’s seven best performers are all index trackers, including SPDR MSCI Europe Communication Services UCITS ETF – the only member of the sector to make a positive return this year.

Active funds investing in European stocks – an area where investors have been more positive on given the volatility around the US market – have also struggled relative to their passive peers.

Of the 20 European equity funds with the biggest losses this year, 18 are active strategies and are down by more than 10%. BlackRock Continental European fared the worst, losing 15.1%, followed by Premier Miton European Opportunities and Allianz Europe Equity Growth Select.

Meanwhile, 15 of the top 20 European funds are passives, led by SPDR MSCI Europe Utilities UCITS ETF and its 15.8% total return.

In the three UK equity sectors – IA UK All Companies, IA UK Equity Income and IA UK Smaller Companies – the 90 worst funds are all active. IFSL Marlborough Multi-Cap Growth made the biggest loss, down 17%, followed by SVS Dowgate Wealth UK Small Cap Growth, FP Octopus UK Micro Cap Growth, abrdn UK Value Equity and Unicorn UK Smaller Companies.

However, some active UK funds have held up in the sell-off. Admittedly, the best UK equity fund is passive (iShares UK Dividend UCITS ETF, up 3.3%) but the next eight are active. CT UK Monthly Income, RGI UK Equity Income, Artemis SmartGARP UK Equity and Rathbone Income are among them and the only other funds to be in positive territory.

IA North America is another sector where active funds have made higher losses than passives in the 2025 downturn, shedding 19.4% versus a fall of 17% from the average tracker.

Here, 19 funds have lost more than 25% since 22 January and 14 of those are active. Lazard US Equity Concentrated’s 30.1% loss is the largest in the sector, followed by Fisher Investments Institutional US Small and Mid-Cap Core Equity and iMGP US Small & Mid Company Growth.

In contrast, the best funds in the sector (although all have a made a loss) tend to be passives, led by ETFs investing in consumer staples and low volatility stocks.

Donald Trump’s indecision on everything from tariffs to whether he is going to fire Federeal Reserve chair Jerome Powell is giving investors whiplash, causing volatility and uncertainty. Some investors have responded by pulling back and favouring more cautious assets such as gold or bonds.

But this is not the case for everyone. While some have become more risk averse, Alex Watts, senior analyst at interactive investor, said other investors are doubling down, believing that there are opportunities to be found due to weaker valuations.

Below, experts identify the high-risk investment trusts and funds that might suit investors who believe now is the time to be more adventurous.

Redwheel Global Intrinsic Value

Ben Yearsley, director at Fairview Investing, turned to the Redwheel Global Intrinsic Value fund, managed by Ian Lance and Nick Purves.

Yearsley explained: “There has been a lot written about US and tech over the past few years to the extent that it has seemed the only story in town. Breaking news, it isn’t.”

Since its inception in December 2023, the fund has been up 8.7%, beating the average sector and the MSCI ACWI. While it was also a victim of the Liberation Day sell-off, sliding by 6.6% since 2 April, it performed better than the US-dominated MSCI ACWI, which tanked 9.2%.

Recent volatility has demonstrated the challenges with large overweights towards US and growth stocks. Areas such as the UK or Europe that have been viewed as out of favour are exactly what investors might need to rebalance their portfolio, Yearsley said.

Performance of fund vs the sector and benchmark since inception

Source: FE Analytics

He added: "I think price still has an important part to play – surely the starting price you pay impacts your long-term total return? The yield on offer also gives you a massive head start on your total return,” Yearsley said.

With a yield of around 5%, as well as Lance and Purves’ years of experience managing successful value strategies such as Temple Bar Investment Trust, Yearsley said the Redwheel strategy had the necessary components of a great fund, despite the emphasis on out-of-favour markets.

Guinness Asian Equity Income

Watts pointed to the Guinness Asian Equity Income fund, led by Edmund Hariss and Mark Hammonds, as a compelling high-risk investment.

Its high conviction, low turnover approach and 30% allocation to China have been risky recently as the trade war between China and the US has escalated. Nevertheless, the macro environment of the Asia Pacific ex-Japan market means the portfolio is positioned to ride this out, Watts explained.

He said Asia Pacific markets emphasise domestic consumption and intra-regional trade, with China trading more than "$960bn worth of goods with ASEAN (Association of Southeast Asian Nations) countries in 2024".

Instead of backing down to the US, China is deepening its trade with other Asian countries, Watts said. Harris and Hammonds have taken advantage of this by favouring domestic companies, with just 11% of portfolio company revenues derived from the US, according to Watts.

The fund is up 73.5% over the past 10 years and Watts noted that the managers’ successful navigation of “Trump’s tariff-heavy first term” was another point in their favour.

Performance of fund vs sector and benchmark over the past 10yrs

Source: FE Analytics

“The fund offers a prudently managed and time-tested approach to tapping into long-term headwinds and diversifying your portfolio”, very suitable for investors who have regained some of their risk appetite, Watts concluded.

Vietnam Holding

Meanwhile, Matthew Read, senior analyst at QuotedData, pointed to Vietnam Holding Limited. Despite Vietnamese equities experiencing a “short dislocation” following the announcement of tariffs, Vietnam still has “one of the most attractive macro backdrops in emerging markets”, that the trust is positioned to take advantage of, Read said.

In response to the recent wave of tariffs and “short-term dislocation in Vietnamese equities”, it has remained nimble. Since Liberation Day, it has trimmed its exposure to exports and increased its focus on domestic companies, banks and retail, which are less susceptible to global market volatility, Read said.

These domestic businesses benefit from Vietnam’s macro tailwinds and “already high growth story”, such as ongoing infrastructure reforms, ambitious GDP targets and a young and dynamic population.  The strategy has done very well over the past five years, beating the MSCI Emerging Markets Asia index by 110 percentage points.

Performance of trust vs sector and benchmark over the past 5yrs

Source: FE Analytics

Finally, the potential for Trump to rethink his trade policies or the possibility of a better trade deal means that, if the market calms down, Vietnam Holding can benefit, Read said.  

However, if volatility continues to rise, Vietnam will be “less correlated to more developed markets, with valuations significantly below global peers” – something even more cautious investors could be underestimating.

The IA Global sector is awash with red in 2025 but a handful of funds remain in the black. Achieving positive returns year-to-date is no mean feat, given that the MSCI World has fallen 13.3% and the MSCI All Country World Index is down 12.6%.

The average fund in the IA Global sector has sheltered investors from the severest losses but bore the brunt of this year’s sell-off, falling 9.6% year-to-date as of 21 April 2025.

Yet a few global funds have made money despite US equities (the mainstay of their benchmarks) tanking. These rare outperformers include Heptagon Kopernik Global All Cap Equity, Latitude Global, Lazard Global Equity Franchise, Robeco BP Global Premium Equities and Antipodes Global.

To remain above water, funds needed to be overweight Europe and the UK but underweight the US. Exposure to precious metals, miners, utilities and consumer staples would have also helped.

Value investing gained ascendancy because value managers tend to veer away from expensive tech stocks, which have sold off the most in 2025. Value funds in positive territory include Ranmore Global Equity, Artisan Global Value, Oldfield Partners’ Overstone Global All Cap Value strategy and MFS Meridian Contrarian Value.

They were joined by several sector specialists, including iShares Gold Producers UCITS ETF, L&G Future World Infrastructure Index, SSGA SPDR MSCI World Utilities UCITS ETF and SSGA SPDR MSCI World Consumer Staples UCITS ETF.

Global funds in positive territory YTD

Source: FE Analytics

Eight funds also managed to deliver positive returns between 23 January and 21 April 2025 (after the MSCI World index peaked on 22 January).

Out in the lead was iShares Gold Producers UCITS ETF, up 27.5%. Four actively managed funds and three passive strategies followed with more modest returns, as the table below shows.

Global funds achieving absolute returns since 23 Jan

Source: FE Analytics

The £52m VT Price Value Portfolio and the £5.1m WS Charteris Global Macro placed large bets on precious metals and miners, which have paid off. They also share an unconstrained approach to global equities and a preference for undervalued companies.

Price Value Partners aims to preserve capital and generate relatively low-risk absolute returns. The firm’s investment process was inspired by Benjamin Graham and it endeavours to buy shares in high-quality businesses at a valuation that allows for a margin of safety.  

The Price Value Portfolio’s largest holdings as of 31 March included Pan American Silver Corp., Hecla Mining, Genesis Minerals, iShares Physical Silver ETC, WisdomTree Physical Silver, Artemis Gold and Torex Gold Resources.

Charteris takes a big picture view of global economic themes and trends, then invests predominately in blue-chip companies whilst seeking to mitigate downside risks.

The global macro fund held 18.9% in cash as of 31 March (it can have up to 20% in cash) and its largest holdings include MAG Silver, gold miner Agnico Eagle, copper miner Antofagasta, Standard Chartered and Coca-Cola.

Lead manager Ian Williams can switch all, or part, of the portfolio into G7 government bonds if he believes global equity markets are vulnerable to a setback, although he had not gone down that route as of 31 March.

Ranmore Global Equity and Heptagon Kopernik Global All Cap Equity stand out for exceptional medium-term performance as well as preserving wealth this year. They have navigated a variety of different market conditions to achieve top-quartile returns over one, three and five years.

The $1.4bn Heptagon Kopernik Global All Cap Equity fund had just 9% in the US as of 31 March 2025 and 45.3% in emerging markets. Its top 10 holdings include Impala Platinum Holdings, Anglo American Platinum, LG Uplus Corp and KT Corp (two South Korean telecom companies) and NAC Kazatomprom JSC, Kazakhstan’s national uranium importer and exporter.

In a similar vein, the $590m Ranmore Global Equity fund had just 18% in North America as of 31 March with 27% in Europe, 21% in Asia ex-Japan, 13% in Japan and 9% in South America. Its largest holdings are Petrobras, Associated British Foods, Mattel, Tesco and Shinhan Financial Group.

The fund’s manager, Sean Peche, said: “For the first time in I don’t know how long, international investors have a reason to sell the US and a reason to buy elsewhere – and not just on valuation. You’ve got political disruption, the return of Donald Trump, alienation of allies, whereas] now we’re seeing stimulus in Germany and China, and governance reforms in Japan and Korea. That creates real asymmetry.”

Peche also thinks the concentration of investors’ capital in the US creates risks. “If you’re 70% allocated to the US and the winds shift, whether it’s tariffs, political volatility or regulatory clampdowns, that’s a lot of sheep trying to leave the same field at once,” he explained.

Kopernik Global Investors in Tampa, Florida, also has a contrarian culture. Chief investment officer (CIO) David Iben and deputy CIO Alissa Corcoran, who manage the all-cap fund, aim to capitalise on market dislocations and build portfolios with low correlation to other managers.

Some investments look identical but are anything but. Take funds and investment trusts run by the same manager and following the same investment strategy. Even though they look the same, performance can differ wildly. So why is this?

Both funds and trusts present opportunities and challenges for managers, with those that run both highlighting three key distinctions that investors need to be aware of, namely liquidity, boards and shareholder communication.

Liquidity

One of the core distinctions between trusts and funds is the approach to liquidity. Ken Wotton, managing director at Gresham House, explained that “open-ended funds must always hold enough cash or liquid assets to meet redemptions”, meaning they are less likely to be fully invested or to put investors’ cash into harder to trade assets.

Although it means investors can always sell their units (unless a fund is forced to shut its doors due to unprecedented withdrawals),  it can limit managers and could force them to “sell assets at an inopportune time”. By contrast, shares in a trust are traded directly on the stock market rather than being redeemed from the fund, meaning managers have the freedom to hold more illiquid assets, he explained.

“That freedom allows us to take a genuinely long-term view and concentrate on highest conviction ideas without being constrained by daily flows,” he added.

For example, more than 70% of the portfolio in his Strategic Equity Capital Trust is weighted towards its top 10 holdings. By comparison, the Gresham House UK Smaller Companies fund has just a 35% weighting to its top 10.   

Joe Bauernfreund, chief investment officer at Asset Value Investors added: “One of the key benefits of trust structure is the reassurance of permanent capital”.

This gives managers much more flexibility and freedom to pursue interesting opportunities, whereas “regulatory requirements around diversification mean we cannot hold positions with the same level of concentration in a fund".

Communication with shareholders

Easier communication with shareholders was also identified as a crucial advantage of the trust structure. Because investors in a trust are shareholders, it is much easier to promote “transparency and regular communication,” according to Bauernfreund. Trust investors are therefore usually better informed and more up to date than their counterparts holding the fund might be.

Shareholders can participate directly in trust management through annual general meetings (AGMs) and make their opinions more regularly known.

Simon Edelsten, manager of the Goshawk Global Fund and former manager of Artemis Global Select and Mid Wynd International Trust, agreed that this is an important benefit of trusts. “You know who your investors are, whereas in a fund it is difficult to know that and even more challenging to contact them,” he explained.

“The best approach to fund management is not just to perform. It is to justify your performance first and then perform off the back of it, and that is a lot easier in a trust.”

Sometimes, he explained, managers can be out of luck and it is difficult to tell when this might have occurred in a fund. In a trust, where managers know their shareholders and can explain the process, investors can ask if the strategy has contributed to the performance, making it easier to build a loyal base of investors.

"If you can get that communication right, I think trusts can definitely be easier to run", he concluded.

Boards of directors

Another differentiating factor between funds and trusts for these managers is the existence of an independent boards. Wotton explained that, in a trust, the board is generally made up of elected independent experts.

They add a layer of “governance and oversight” but because they are independent, they represent shareholder interests first and foremost. As a result, they serve as a way of “holding managers to account” and improve shareholder engagement.

“Well-run boards” are a great asset in helping the trust run more efficiently, with tools such as share buybacks helping mitigate challenges such as widening discounts, he added.

While managing trusts under board oversight could be challenging, Edelstein argued it was well worth it. He said: “If you have an investment trust with a very independent board that\ has good chemistry with the manager and the shareholders, it is tough to beat.”

For example, he explained that when managing Mid Wynd, he worked closely with the board and had a lot of trust from them. “Investors could see it, so we could trade at a premium. In trusts, you get to build this virtuous circle," he added.

The world is facing a generational infrastructure challenge and a growing funding gap. Estimates suggest that $140trn in investment is needed globally by 2050, yet nearly $64trn of that remains unfunded.

The UK is no exception. The country requires £1.6trn in infrastructure investment by 2040, with at least £700bn still unfunded even under current fiscal plans.

This backdrop should be a tailwind for investors. Infrastructure offers exposure to long-duration, inflation-linked, cash-generating assets across sectors such as transport, energy, digital connectivity, healthcare, and housing. And in multi-asset portfolios, it plays a valuable role as it is typically less volatile than equities, more growth-oriented than bonds and increasingly central to the green transition.

So, here’s the paradox: if demand for infrastructure is so strong, why are UK-listed infrastructure trusts trading at steep discounts to net asset value?

Mind the gap

Since September 2022, the share prices of major UK infrastructure investment trusts have fallen by between 20% and 30%, even as reported net asset values (NAVs) have remained relatively stable. This has resulted in wide discounts.

The divergence is driven by both top-down macro pressures and bottom-up operational frictions. On the macro side, it is largely an interest rate story. Post-global financial crisis, infrastructure trusts were pitched as income alternatives, offering attractive dividend yields when bond yields were low.

But as gilt yields surged in 2022, that relative appeal faded. Capital rotated back into traditional fixed income, and infrastructure trust share prices fell, bringing dividend yield spreads closer to their historical range.

At the same time, operational and structural pressures have weighed on sentiment. Construction cost inflation, grid connection delays, refinancing risk, and power price volatility – particularly in renewable-focused trusts – have reduced earnings visibility.

Meanwhile, some vehicles carry development-stage risk, use external contractors heavily, or have limited operational control. Add in stricter environmental, social and governance (ESG) screens and a relatively retail-heavy investor base, and it’s no surprise valuations have come under pressure.

Some of these UK-specific issues can be mitigated by diversifying globally. At the global level, public core infrastructure has maintained a beta of 0.4 relative to the MSCI World Index since early 2025, underscoring its defensive nature during periods of heightened market volatility.

By diversifying across regions and sectors, investors can effectively reduce sector and country-specific risks.

Different vehicles, different experiences

But infrastructure exposure isn't just about what you own—it’s about how you access it. Public and private vehicles often invest in the same underlying assets but the investor experience can diverge significantly depending on the type of investment vehicle used. 

Listed infrastructure trusts are priced daily, subject to market sentiment and tend to move more quickly with changing interest rate expectations and short-term equity flows. This mark-to-market feature creates liquidity, but can create volatility, especially in uncertain macro environments.

This became clear in 2022, when rising interest rates increased listed infrastructure’s sensitivity to broader market swings. Historically, these vehicles had low beta to equity benchmarks and were often treated as bond proxies.

But as monetary policy tightened, sentiment-driven selling introduced volatility unconnected to asset performance. In effect, listed infrastructure began trading more like equities.

Private infrastructure funds, by contrast, are valued quarterly and are traded infrequently. While this means they are far less liquid than publicly traded infrastructure investment trusts, they also exhibit significantly lower volatility and are not subject to equity-like swings due to changes in sentiment.

Their structure also creates better alignment of interests between investors and managers, with patient capital allowing funds to focus on long-term value creation insulated from the daily swings in sentiment that pressure managers to make short-term decisions.

This alignment of incentives is a key factor in the strong performance of private core infrastructure since 2021, achieving an average return of 9.1% on a rolling 12-month basis.

Conclusion: The case for infrastructure remains but vehicle selection matters

UK-listed infrastructure trusts are trading at steep discounts despite more stable underlying asset values and growing national investment needs. While some of the discount can be explained by fundamental factors, the structural realities of the UK public market (daily pricing, sentiment-driven flows, and limited investor breadth) have contributed to the decline.

For investors looking to gain exposure to the broader infrastructure theme that are comfortable with equity-like risk, these discounts may offer a compelling entry point, with elevated dividend yields and the potential for re-rating as market conditions stabilise.

For those focused on reducing overall portfolio volatility and can tolerate illiquidity, global private infrastructure may offer a smoother, more stable profile anchored by a longer-term investment horizon and less reactive pricing. 

The key is to focus on vehicles whose structures align with the role infrastructure is meant to play in the portfolio, whether that is generating income, lowering overall portfolio volatility, or providing inflation-linked growth.

Aaron Hussein is a global market strategist at JP Morgan Asset Management. The views expressed above should not be taken as investment advice.

Gold has exploded in value in recent years. On 15 April, the precious metal was trading at more than $3,200 per ounce, a surge of 57.9% over the past three years.

As markets have been tested by waves of volatility this year, particularly recently following president Donald Trump’s Liberation Day tariffs, investors have become increasingly optimistic about the precious metal.

Fidelity International’s Caroline Shaw and Chris Forgan entered the year bullish on gold and said they have remained that way following Liberation Day volatility. Across their range of multi-asset strategies, gold is consistently one of their top 10 allocations.

Prices of commodities over 3yrs

Source: FE Analytics

However, not all fund managers were quite so keen. Will McIntosh-Whyte, multi-asset manager at Rathbones, said he was sceptical of the precious metal’s high price and sold most of his exposure late last year.

Below, the managers explain their outlooks for the precious metal this year.

Fidelity: There is no reason why gold will stop performing

Forgan and Shaw are optimistic on gold and have held a meaningful position in the yellow metal for several years.

The managers have a cautious view of the current investment landscape and regard gold as an attractive hedge against stock market volatility.

The increase in central banks purchasing gold has been conductive to the gold price and gold has been performing above expectations recently, making it very appealing, Forgan explained.

Indeed, of the 57.9% rise in gold over the past three years, 26.9% of that has happened in the past 12 months alone.

Performance of S&P GSCI Gold Spot over the past year

Source: FE Analytics

Even if trade volatility declined, Forgan argued the precious metal still has plenty of room to run because “uncertainty around the direction of central bank policy is not going anywhere”. If central banks begin to cut rates more aggressively in response to market developments, the resulting fall in bond yields would continue to make gold attractive, he explained.

Shaw added that investors can get exposure to gold in several ways beyond buying the metal itself. For example, she pointed to gold mining companies. As listed equities, investors get the benefit of investing in a higher risk, higher return asset class while maintaining allocation towards a traditional safe haven.

“There was a point last year where gold and gold miners were rising, but the gold mines have got a little bit more oomph to them and they were flying,” Shaw noted.

Fidelity’s multi-asset managers recently trimmed their position in miners because they entered this year a bit more cautious, so did not want to take on the extra volatility of owning gold equity shares but still wanted exposure to the metal itself.

Forgan concluded: “In the current environment, we like the defensiveness of gold and think there is no reason it will not continue to perform for us."

Rathbones: Rising valuations are a concern

Will McIntosh-Whyte, multi-asset manager at Rathbones, sold most of his gold allocation towards the end of last year, when the price was closer to $2,700. “While I think it [gold] has a place, I am currently wary about it,” he said.

Gold and yields usually have an inverse relationship, “yet as yields have gone up, gold has continued to outperform,” he pointed out. “It is not trading in line with any historical expectations.”

When assets begin trading against the norm like this, it becomes increasingly difficult to value and justify allocations, he said.

The other challenge with gold is that it doesn’t have an income so "you do not get paid to hold it" and there are plenty of opportunities elsewhere to generate yield, such as fixed income, which the Rathbones multi-asset team has been favouring over gold.

The average government bond yield is around 4.5%, an inflation-beating return, he noted. While he acknowledged that inflation has been proving sticky, particularly following recent tariffs, there are a range of opportunities within fixed income that could provide an attractive return while being similarly low risk to gold.

As an example, he argued that government bonds from the UK, New Zealand or Portugal can deliver a compelling return while having less opportunity cost. 

“It is difficult for us to justify holding gold, when we are getting paid 4.5% just for owning government bonds,” McIntosh-Whyte added.

Chipmaker Nvidia’s share price dropped 12.5% last week after the technology giant and staple of the ‘Magnificent Seven’ announced it would take a $5.5bn hit from tightened controls on US exports to China, which mean it can no longer export its H20 chips to Chinese customers without a special licence.

The firm expects the hole in its revenues due to a backlog of stock and committed sales, for which it will now be charged.

It continues a bleak run for the artificial intelligence (AI) darling, which has lost some 30% in dollar terms since its peak in early January, when Chinese tech firm DeepSeek rocked the tech industry with the release of a low-cost chatbot developed using older Nvidia chips.

Share price performance of stock in dollar terms YTD

Source: FE Analytics

Is there more pain to come for Nvidia and other chipmakers?

Much of the pain for investors has been felt since US president Donald Trump’s ‘Liberation Day’ tariffs. Although these have since been paused for the majority of countries (albeit with a 10% base rate still applied), China’s tariffs were increased, heightening speculation of an all-out trade war between the two countries.

Neuberger Berman head of thematic, YT Boon said that in the short term, the US is trying to “get China to the negotiation table” and the ban on H20 chips is “the latest tool the Trump administration is using to put pressure on China”.

“Advanced AI chips like the H20 are China’s ‘Achilles heel’ as it embarks on its AI and technology localisation strategy, as China does not have the capability to make these chips yet. Without these advanced AI chips, China’s AI development will face significant challenges at a time when the Chinese economy is now looking for AI as a new growth driver,” he said.

Nvidia wasn’t alone, with AMD also announcing a $800m write-off, but he thinks this should be the end of the pain for investors.

“We believe this is essentially a complete write-off of all the AI chip inventory. This should mean that there is no more downside risk from here, as the latest developments mean there will be no more AI chip exports to China going forward,” said Boon.

In fact, he suggested now was a good time to invest in the chipmakers, as any negotiation between US and China, and a relaxation of the chip ban at a later stage, could create serious upside and a backtrack of these write-offs.

“As such, risk/reward is skewed towards the upside from here after the recent write-offs,” he said.

“While in the short term we expect continued volatility, we see medium- and longer-term upside as valuations are now particularly cheap, even on trailing EPS [earnings per share], or using lower earnings forecasts.”

Will further contagion spread to the rest of the tech sector, making Nvidia the ‘canary in the coalmine’ for the sector?

Mark Sherlock, head of US equities at Federated Hermes, said the issues relating to Nvidia were “a one-off” for three reasons.

First, it is the only company in the big tech universe that has its primary revenue exposure to the semiconductor sector, which the US government has targeted to stifle China’s innovation prospects and mitigate US national security concerns.

Second, Nvidia’s dominant market position in AI semiconductors is a plus as its “compelling value proposition and deep/durable moats” meant Chinese customers became dependent on them.

“Although domestic Chinese players are improving their value propositions, last week’s announcement will nevertheless slow down China’s ability to innovate and become the global leader in artificial intelligence,” he said.

Lastly, although Nvidia is not alone in having substantial revenue exposure to China (Apple and Tesla had 17% and 21% revenue exposure to China in 2024, respectively), there is “a more balanced competitive landscape in these markets (e.g. Huawei in smartphones, BYD in electric cars)”.

“In addition, it is worth acknowledging that whilst the US government is planning to introduce sector-specific tariffs, announcing a temporary exemption for smartphones/computers/other electronic devices in relation to reciprocal tariffs last weekend was a relief for Apple,” said Sherlock, which could show the government will step in to protect these tech names if required.

Richard Clode, portfolio manager on the global technology leaders team at Janus Henderson Investors, agreed.

“Nvidia has de minimis business left in China and, of the tech giants, only Apple and Tesla have ever had meaningful China revenues. Google, Amazon and Meta don’t operate in China and Microsoft has hardly any exposure,” he said, suggesting contagion to the other Magnificent Seven stocks is unlikely.

Bear markets come and go, but losses to one’s finances bite and can even scar. Jerky investors who rush for the exit get chased by the bear – not only do they crystallise their losses but they are also more likely to miss out on the gains when things turn – and they can turn quickly and unexpectedly.

This is why it is unwise to try to time the market, but much better to remain invested (hopefully in the right sectors) and wait for better times.

Below, Trustnet looks back through history to find out which Investment Association sectors had the best returns one and three years after the conclusion of a bear market, defined as those periods when the S&P 500 hit losses of at least 20%.

This is timely as it almost happened again earlier this month and there are fears that a recession could push the US market into bear territory once again before the end of 2025. Having previously looked at the equity investment styles that perform best in down markets, here we look at the assets that perform well at the end of the downward cycle.

The periods that qualified were: Iran’s invasion of Kuwait, with a bear market ending on 11 October 1990, the dot-com bubble, ending 9 October 2002, the Great Financial Crisis, ending 9 March 2009, Covid, ending 23 March 2020, and the supply-chain shock following Russia’s invasion of Ukraine, with its bear market ending on 12 October 2022.

We excluded the sectors without a long enough track record, as well as the IA Unclassified and IA Not Yet Assigned sectors.

Finally, we ran the average returns of the remaining sectors and colour-coded them by quartile. The result is the table below.

Source: Trustnet

While no IA sector emerged as a clear winner in all periods, bonds have been in the bottom quartiles more often than equities. This is likely because of momentum – recovering investors’ confidence drives a rally in equities.

UK gilts were among the worst performers after the dot-com bubble, the financial crisis and Covid, contending the bottom position in the list with the money market. While rushing for the exits and hiding in cash when things go wrong seems like the best option to limit losses, it also means leaving gains on the table in the following one to three years – this happened consistently throughout the five bear-market recovery periods.

Not only gilts performed poorly – the IA Sterling Corporate Bond, Sterling Strategic Bond and Specialist Bond sectors were also below average.

The next-worst category included those investments that are partially in debt strategies – multi-asset funds. Flexible investments remained a middle ground in all periods, solidly delivering average to slightly below-average returns, while the IA Mixed Investment 20-60% Shares and 40-85% Shares sectors have been marginally worse as they have more in bonds.

Commodities have consistently done quite well in the periods highlighted, especially after Covid, when they were among the best-performing asset classes. Infrastructure also held up relatively well, except for after the most recent bear market in 2022.

Moving to equities, global funds has proved a safe-enough bet as markets recovered, with similar results across IA Global, IA Global Equity Income and IA Global Emerging Markets. However, none of the three has ever shot the lights out.

The UK market has consistently kept up with rising momentum. The stand-out area has been UK smaller companies, usually remaining above-average and achieving a fantastic run one year after the Covid slump, although they couldn’t repeat that result in the first year after the Ukraine war started. The IA UK All Companies sector has done increasingly well as time went by, similarly to the domestic Equity Income sector.

The US has been slightly more volatile, with the IA North America reaching the top of the table in 1990 and US small-caps only marginally beating their UK counterparts, but they suffered hits after the dot-com bubble and the Ukraine war, respectively.

Further afield, Asia has held up well, while China had more extreme results – after a stellar run in the 1990s, it has gone from riches to rags more recently, turning into the worst performer one year after the invasion of Ukraine and the subsequent supply shocks.

The data in this study doesn’t show where to invest next, but is proof that market leaders change and not every rally in history was driven by the same asset class. Investors are better off remaining diversified as timing the markets is tough.