During June, our net asset value return was 1.6% and shareholder returns were 3.4%, in comparison to the FTSE All-World return of 0.7% in sterling terms.
Global equity markets delivered mixed results in June, as geopolitical developments and central bank policy divergence drove regional dispersion. Developments in the Middle East proved a key turning point: a US-Iran memorandum of understanding paved the way for an easing of hostilities, lower oil prices and a broader market recovery. Government bond yields declined modestly against this backdrop.
US equities declined in local currency terms, but edged up 0.7% in sterling terms, as the technology sector came under pressure amid concerns over stretched valuations and the sustainability of AI-related capital expenditure. European equities gained 2.8%, as optimism over falling energy prices outweighed soft economic data. UK equities rose 0.9%. Japanese stocks advanced 0.7%, supported by mostly upbeat economic growth data and a weaker yen. The MSCI Emerging Markets Index gained 0.2% in sterling terms, with China (-5.6%) a notable detractor as weak domestic growth data weighed on sentiment.
Central banks diverged in their policy stances during the month. The European Central Bank raised interest rates, citing upside inflation risks, with annual inflation in May rising to its highest level since September 2023. The Bank of Japan raised its policy rate to 1.0%, the highest level since 1995, though markets judged the pace of tightening to remain gradual, limiting the yen’s appreciation. The Bank of England held the Bank Rate at 3.75%. Similarly, in the US, the Federal Reserve left rates unchanged, though expectations of a rate hike this year increased as annual inflation in May rose to a three-year high.
The overweight position in Applied Materials (63.2%), a manufacturer of semiconductor production equipment, was the top contributor to excess returns during a month in which its CEO announced that the company needs two years’ notice of new orders from customers, highlighting the scale of AI-driven demand. The underweight position to KLA Corporation (59.4%), an equipment manufacturer that specialises in process control and yield management for the semiconductor industry, was the largest detractor from performance.
We ended the month at a discount of 6.5%, narrowing from 8.2% in May. Net gearing continued to be conservative at 4.5% (with debt at fair value) for month-end.
As at 30 June 2026
