During May, our net asset value return was 5.5% and shareholder returns were 5.6% in comparison to the FTSE All World return of 6.0% in sterling terms.

Equity markets gained over the month, driven by strong growth in corporate earnings and continuing AI enthusiasm. Optimism that the US and Iran were moving towards an agreement to end hostilities aided risk appetite.

US equity markets rose by 6.3% over the month, driven by increased confidence that economic growth would remain resilient, and corporate earnings would continue their strong growth. Labour market data was strong, with inflation showing persistence, leading markets to price in the possibility that the Federal Reserve will raise interest rates this year. In contrast, UK equities (0.6%) were more muted. UK annual inflation fell to 2.8% in April and labour market data was sluggish, making it less likely that the Bank of England would sharply increase interest rates. European equities rose 4.4%, despite headline inflation rising in April, driven in part by higher energy prices. Indeed, several European Central Bank policymakers warned that this may necessitate a rate rise at the June meeting. In Japan (6.0%), healthy economic growth data and a weaker yen boosted risk assets. However, concerns about the impact of elevated energy prices raised the possibility that the Bank of Japan will raise interest rates in the near term. Elsewhere, Korean (34.8%) and Taiwanese (17.8%) stocks continued to post strong gains amid the AI-driven rally, with Korea the standout market performer as memory-related stocks surged.

The ongoing disruption of oil supplies through the Strait of Hormuz caused bond yields to rise mid-month before optimism for an agreement returned in the final days of May. US Treasury yields ended the month slightly higher, while German Bund and UK gilt yields declined.

The overweight position in SK Hynix (80.0%), the South Korean semiconductor chip manufacturer, was the top contributor to excess returns as it raced toward a trillion-dollar market capitalisation benefitting from the continued AI demand. On the other hand, the underweight position in Micron Technology (89.3%), the US-based semiconductor manufacturer, was a detractor from performance.

We ended the month at a discount of 8.2%, narrowing from 8.3% in April. Net gearing continued to be conservative at 4.7% (with debt at fair value) for month-end.

As at 31 May 2026