Caledonia Investments (LSE: CLDN) is one of the market's more esoteric investment trusts. Founded by the wealthy Cayzer family, which once owned one of the world's most powerful shipping conglomerates, the £3.1 billion fund now functions as a multi-asset growth and protection vehicle.

Caledonia has been part of the MoneyWeek investment trust portfolio since 2013. We like its diverse approach and its aim of earning solid long-term returns of 3%-6% above inflation, while managing risk during periods of uncertainty and instability. The Cayzers own 51% of the trust, putting it under the stewardship of a powerful long-term shareholder.

However, while the trust has undoubtedly achieved its performance target over the past three, five and ten years, its recent record still leaves something to be desired with regard to its share price, which languishes on a 35% discount to net asset value (NAV).

Three-way split in Caledonia's portfolio

Caledonia's portfolio is split into three roughly equal pools: quoted equity, private equity funds and private capital. At 25% of net asset value, the private capital pool is the smallest of these three segments. This portfolio comprises ten high-quality UK mid-market businesses with “prudent capital structures”. The largest holding here – and in the portfolio overall – is AIR-serv Europe. This firm designs, manufactures, and maintains forecourt equipment like air, vacuum and jet wash machines. Since being acquired in 2023, its value has grown from £143 million to £215 million as of the end of August. Last year, the company paid Caledonia a £24.5 million dividend.

These types of holdings give the trust an edge over other wealth protection vehicles. Other trusts in the sector usually rely on third-party funds, equities and alternative investments, Caledonia has direct control over these holdings and is not subject to additional fees. It can also buy and sell when it sees fit – if an asset such as AIR-serv is working well, there's no need to sell. Other private capital holdings include hospitality operator Butcombe (4.1% of NAV or £127 million) and garden centre operator Blue Diamond (1.9% of NAV or £60 million). The latest addition is a 61% stake in Conquip Engineering.

Listed equities are 32% of NAV at present. This pool comprises around 30 equity holdings, including tobacco giant Philip Morris (2.9% of NAV or £91 million), Texas Instruments and Microsoft.

Finally, there's the private equity fund pool. At 32% of NAV, this is equal to the direct private holdings, but with holdings in 80 funds across 45 private equity managers, there's more diversification. Caledonia says it's often the only European investor in these vehicles, which are predominantly focused on buy-out deals in the North American mid-market segment.

Caledonia's stubborn discount

Aside from the goal of beating inflation by 3%-6%, Caledonia also uses the FTSE All-Share Total Return index as a benchmark for its performance. Over the past decade, the trust's NAV has beaten the consumer price index including housing (CPIH) by a factor of three times and matched the FTSE All-Share.

However, both NAV and share price have trailed the FTSE All-Share over three and five years, while the share price over five years has fallen short of its inflation-plus target. Management has tried a share split to improve liquidity and has been buying back stock to unlock value. Since 1 April, it has spent £30.6 million buying shares at an average discount of 37%. This has boosted NAV by 3.5p per share, but the discount remains stubbornly wide. More work is needed here.

That said, Caledonia's edge lies in its diversification. In an ever-rising market, its strategy is always going to lag. The test will come in the next crash, when we see if it outperforms investors who increasingly seem besotted with the AI bubble.

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Soaring oil prices have pushed UK inflation to a five-month high. Consumer prices rose 3.1% in the year to August. Motor fuel prices rose nearly a quarter, with petrol rising to 161.3p per litre and diesel hitting 181.8p. Brent crude is back above $100 a barrel. Trading at $108 as of Wednesday, it has risen 78% since the start of the year.

While there is no end in sight to America's war with Iran, until recently the White House had seemed to be gaining the upper hand in the economic battle. Despite the closure of the vital Strait of Hormuz artery, oil prices had stayed below $100 for several months. That was in large measure thanks to clandestine shipments through the strait – high-risk “dark crossings” made by crude tankers with their transponders turned off so as to evade Iranian detection, say Dmitry Zhdannikov and Anushree Ashish Mukherjee for Reuters.

Together with pipelines that circumvent the Strait of Hormuz, the “industry consensus” is that roughly two-thirds of pre-war Persian Gulf volumes are still making their way out of the region. All told, such “dark shipments” may have reached 500 million barrels between June and August, enough to put a meaningful dent in the world's thirst for fuel.

Now the pendulum is swinging the other way. Last week, Saudi Arabia was forced to close its vital east-west pipeline following attacks by Iranian-backed militias in Iraq. That may cut global oil supplies by as much as 3.6 million barrels per day, equivalent to 3.6% of global demand, according to analysis by Kpler.

Pipelines have been a major tool for bypassing Hormuz, but these strikes are a reminder that they can be destroyed, Anne-Sophie Corbeau of Columbia University tells the BBC. In war, pipelines are “sitting ducks”.

Meanwhile, the alternative Red Sea route is coming under renewed threat from Yemen's Houthi militia, says Gideon Rachman in the Financial Times. The Houthis are a tough nut to crack. They have been fighting better-equipped enemies for more than two decades. The persistence of the Taliban, another US adversary that ultimately outlasted Washington's patience, comes to mind. Another vital energy route is being squeezed just as the northern hemisphere enters winter.

Surging oil price at the root of the debt crisis

Surging energy prices and inflation are the root cause of the global spike in government borrowing costs, says Aaron Back in The Wall Street Journal. The benchmark US ten-year Treasury this week topped 5% to hit its highest level since 2007. After years of deficit spending and the “twin crises” of Covid-19 and Russia's invasion of Ukraine, the world's developed nations entered this year in a “weakened fiscal position”. That was “the dry timber that the Iran war now threatens to set ablaze”.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The video games industry has seen more change in recent times than almost any other. Over the past 15 years, gaming technology has “moved very quickly, the behaviours and culture have grown and expanded exponentially, and there has been a constant stream of changes that has made the industry exciting”, says Greg Weller, head of gaming partnerships at Generation Media. Some of the changes have been positive. The industry has become “an established, mainstream constituent of the entertainment industry”, with an estimated 3.6 billion people around the world now playing games in some form, says Gavin Smith, a senior commercial banker at Arbuthnot Latham.

However, “rising development costs, greater regulatory scrutiny and the concentration of player attention around a handful of major franchises could end up limiting that growth”, says Smith. Artificial intelligence, too, clearly has “significant transformative power”, though it's too early to say whether this will be good for the sector.

The industry's reputation for being “recession-resistant” has already been tested, with companies cutting around 45,000 jobs since 2022, as Adam Smart, global director of products for gaming at AppsFlyer, points out. Still, the opportunities outweigh the risks, making it a great time to invest. Consultant BCG estimates the market will grow by about 6% a year, reaching a value of $350 billion by 2030. Other estimates put the growth rate even higher.

Browser-based video games are the future

The big growth has come from games that you can play on your mobile phone or through your web browser as they are “really easy for virtually anyone to play” without having to splash out on expensive gaming hardware, says Matthew Dolgin, a senior equity analyst at Morningstar. Many of them also have a social element or are integrated into social media, which is bringing more and more people into gaming, including many of those who wouldn't otherwise have ever considered playing video games.

At the same time, the balance of power between mobile companies and the app stores has shifted. Until recently, developers just accepted that 30% or more of their revenue would go to Google Play or the Apple Store, says Stein Janssen, chief operating officer at browser-based games website Poki. But this has been increasingly challenged in the courts and in legislation. Apple has faced an investigation from the European Commission as well as lawsuits. Janssen expects this pressure to lead to a reduction in the cut that Google and Apple are able to take from sales of mobile games.

Indeed, many mobile games companies are starting to bypass Google and Apple completely by “starting their own stores for people to download games or buy in-game items”. Others are switching from mobile games funded by payments (either up front or in-app) to ones that are free, but rely on advertising revenue. Browser-based games are the future, says Janssen, as they can be played immediately, rather than waiting for a download.

Shifts in the big-budget video games subsector

Mobile and browser gaming may be the fastest-growing part of the industry, but the big budget games (or the AAA games as they are sometimes known) are still doing well. Revenue for this subsector will grow by a still respectable 4.7% a year for the next four to five years, according to BCG. Whenever “there are truly engaging games on the market new people start playing, and every year we see new generations of gamers log on”, says Andrew Bowell, CEO of immersive entertainment studio Iconic Interactive. Throw in the older generations who are already at home with games and the industry “should continue to grow”.

At the same time, outside expanding areas such as Asia, much of the growth is less about attracting new players and more about how revenue is collected – or in other words, about getting existing players to spend more, says Noam Korbl, CFO at PropFirms. Large parts of the industry have “moved from selling a boxed product once to charging for continued access, cosmetics, season passes and subscriptions”. Recurring spending from an existing player base is “far more predictable than hoping a single release performs well in its launch quarter, and investors tend to pay more for predictability than for creativity”.

Another big trend affecting AAA gaming is what Smart calls “platform convergence”, where the “old lines between console, PC and mobile blur as cross-platform play and cloud gaming let the same title reach players everywhere”. This means that studios and publishers now receive “diversified revenue streams”. This doesn't completely insulate them from the financial consequences of a flop, but it does mean that a shock in one segment, system or region “doesn't necessarily sink the whole industry”.

Video games conquer films and TV

Modern games have moved away from being just single products to being “franchises made up of a wide-ranging bundle of intellectual properties, with distinctive characters and even music”, all of which “lend themselves to broader application than just computer games”, says Aminder Khatkar, a partner at Brandsmiths. Such intellectual property (IP) can (and has) been exploited for lots of different things, including experiential events, but the most obvious application is in film and TV. There is a “definite convergence”, says Khatkar, between gaming and TV and movies.

The conversion of characters and franchises that have their roots in gaming into films and TV shows represents “one of the biggest opportunities across the media industry”, says Smith. Recent adaptations such as drama series The Last of Us and Fallout have shown that “gaming IP can attract substantial audiences beyond gaming itself”. Successful gaming franchises have “established fan bases, global reach, and richly developed worlds that sustain audience engagement across a range of formats”. In some cases, gaming IP is becoming more valuable than traditional film or television enterprises. Nintendo, for example, is expanding franchises such as Pokémon, Zelda and Super Mario into films, merchandise and theme parks.

The number of games being adapted into TV shows or films is increasing, says Stefan Seidel, a professor of information systems at the University of Cologne. Well over 200 adaptations have been commissioned since 2019, according to market research firm Ampere Analysis. And when an adaptation succeeds, “it lifts the games that already exist”. After the Fallout television series, for example, “the years-old Fallout 4 video game climbed back into the top five of the US sales chart, and daily players of the older games stayed far above pre-series levels for months”.

Interestingly, the circular effect is bigger for TV adaptations than films. The typical TV show increases the number of people playing a particular title by more than 200%, compared with 48% for films, according to Ampere's research. Still, even the boost from film is substantial and far greater than the increase in numbers that comes from updates and new downloadable content. The games industry is starting to become a much bigger and lucrative version of the toy industry, says Heather Delaney of Gallium Ventures, where TV shows based on the toys have long boosted sales.

Will virtual reality live on?

Delaney is a bit cooler on virtual reality (VR), which many previously saw as the wave of the future. Indeed, Facebook changed its name to Meta in October 2021 due to its belief that the future lay in what it called a “Metaverse” of people communicating (and playing) through virtual-reality headsets. Recently even Meta has been pivoting away from both the Metaverse and VR in general, closing three of its VR studios and laying off 10% of staff in the area, in favour of “adaptive reality” glasses that merge digital content with the physical environment. VR turned out to have too many limitations when it comes to gaming, not least the feeling of isolation while playing.

Meta's “gradual retreat” from VR “probably tells us something about where the wider subsector is heading”, says Smart. Enthusiasm for VR came at a time when people “were stuck at home” during the Covid pandemic and looking for escapism. Still, VR is unlikely to entirely disappear as it has attracted a “passionate core audience” and when done well can provide “one of the most exciting experiences in gaming”. The launch of new hardware, such as Valve's Steam Frame, may attract a new audience to VR.

Others are more optimistic. Meta may have cut back its investment on VR, but it has not completely abandoned it and it is still trying to push the technology, albeit in a way that is less high-profile, says Khatkar. Indeed, Meta's partial retreat shows the sector no longer needs to be “artificially propped up” by big tech firms but is strong enough to be left to individual companies producing software that can meet the demand, says Matt Celia of Light Sail VR. More than 20 million Meta Quest headsets have now been sold, with one in four teenagers in the US owning a VR headset, and a new product upgrade is likely in the near future. More than a million people use the headsets every day, “which is relatively high for an emerging technology”. Several independent studios and apps have started to make money from VR games.

AI won't kill the video games industry

One of the biggest questions hanging over the industry is the impact of AI. Some of the fears are clearly justified. It's hard to deny that the demand for processing power and chips created by AI “has pushed up the cost of consoles and computer equipment”, says Sean Kealy, VP of equity research at Panmure Liberum. But fears that AI will allow anyone to easily create games at zero cost, making games companies redundant, are also exaggerated – at least for the foreseeable future. AI “is not capable of producing a video game in and of itself, by itself, straight away”.

The release of footage generated by Google's cutting-edge AI world-building tool Project Genie, which caused the share price of many developers to fall when it was released in February, demonstrates the limitations of modern AI. “Video generation struggles to maintain coherent frames over more than a few minutes, with the entire world behind you different from the one that you walked through just seconds previously,” says Kealy. He also points out that there are open questions around copyright, not just in terms of the use of copyrighted content in AI, but also in terms of copyrighting AI-generated content.

There's a long way to go before the human element in games creation can be bypassed completely, agrees Seidel. The more likely outcome is that AI will be used in something like the same way as the industry has over the past few decades used “procedural generation” – where game elements such as the appearance of monsters and treasure are randomly created. After a lot of trial and error, games companies found this worked best when it was accompanied by designers “who kept evaluating and adjusting what the tools produced, and who continued to design the parts of the world that mattered most by hand”.

At the same time, AI could help the industry in two main ways. Firstly, it will help keep costs under control. With the typical cost of making a game having “risen over time from $50 million to $500 million”, anything that helps the industry “take a leaner approach to game development” will be good for developers, says Bowell. There could be particularly big time-saving efficiency gains when it comes to creating characters, environments and texturing. The use of large language models will also make the interactions between gamers and computer-controlled characters (NPCs) more “non-scripted and dynamic, which in turn will make games more interesting and replayable”, says Massimiliano Calamai, games director at Smallthing Studios.

Over time, the positive and negative aspects of the AI revolution will make “distinctive intellectual property and strong distribution even more valuable”, says Marc Fernandez, the chief strategy officer at Neurologyca, which tries to produce AI that better understands context. The big winners will be studios with “valuable IP, engaged communities, and the ability to turn adaptive, personalised worlds into long-term player engagement”.

We look at some of the most promising investments to profit from all these trends below.

The best gaming investments to buy now

Take-Two Interactive (Nasdaq: TTWO) owns Rockstar Studios, the company behind the successful Grand Theft Auto franchise. Gamers are eagerly anticipating GTA VI, the latest instalment in the franchise. It is “an example of exceptional intellectual property that can help sell software, move hardware and command the culture”, says Greg Weller of Generation Media. The company also owns games studio 2K, which has several successful franchises, and mobile developer Zygna, which allows it to also benefit from the boom in mobile gaming. Take-Two has a strong record, with revenue nearly doubling between 2001 and 2006. The stock trades at a reasonable 21 times expected 2028 earnings.

If Take-Two is a growth story, then Ubisoft (Paris: UBI) is about value. The company has faced many challenges and has struggled with sales and profitability, says Matthew Dolgin of Morningstar. But with rival Electronic Arts now a private company, Ubisoft is the best option for those who want to invest in a traditional games company with multiple large franchises, which include the Assassin's Creed and Far Cry series. Ubisoft looks cheap on multiple valuation metrics, trading at less than half the estimated value of its net assets.

CD Projekt Red (Warsaw: CDR) is an example of just how volatile the fortunes of games companies can be. It has struggled since the release of a hotly anticipated game resulted in mixed reviews. Its sales and share price are now well below pandemic peaks. Development delays have also been a problem. However, the company still makes money from licensing the brand rights to its hit series of Witcher games and is preparing several big releases in the next few years, including Witcher 4 and Cyberpunk 2077 II, which should substantially boost revenues. The stock trades at 25 times estimated 2027 earnings.

Sony (Tokyo: 6758) is not a pure play as it only makes about a third of its sales from games and related services, with music and entertainment systems also being major sources of revenue. The importance of gaming to the firm is only set to rise, however, following its decision to partially spin off its financial services business. It sells games hardware, most notably the PlayStation (which includes a VR headset), as well as its own software. Some of its game franchises, most notably the post-apocalyptic drama The Last of Us, have also become successful TV series. The stock trades at 16 times expected 2028 earnings.

Nintendo (Tokyo: 7974) is a games company with a long pedigree. It still produces a regular stream of new titles and hardware (most recently the handheld Switch 2) and it has also been finding new sources of revenue. Nintendo has been working harder to make money from its major franchises outside gaming. The Super Mario Galaxy Movie, for example, has already made more than $1 billion at the box office and a major new film based on The Legend of Zelda series is due out next spring. The stock trades at 21.5 times projected 2028 earnings.

One smaller UK-listed company worth looking at is Everplay (Aim: EVPL). Everplay has three businesses, including German developer Astragon and Storytoys, which produces educational apps for children between the ages of two and eight using licensed IP. The big business is Team 17, which publishes independent games such as Worms and Wardogs. The latter recently sold a million copies on the first day of its release. Everplay has an impressive record of monetising the IP of the developers that it works for, says Sean Kealy of Panmure Liberum. Revenues have more than doubled between 2020 and 2025 and the stock trades at only 10.3 times projected 2027 earnings.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

“We really do earnestly believe AI could kill all humans!”, says Anthropic researcher Evan Hubinger on X. He thinks there is more than a 10% chance we could all be dead “within the next decade”. Talk of AI's apocalyptic potential is in the air. Senior figures at AI labs are said to be terrified by the capabilities of recent models, which could be used to create bioweapons or elude human control and go rogue. The panic hit a new level at the weekend when a group of AI CEOs, including Dario Amodei – Hubinger's boss at Anthropic – publicly backed calls for a slowdown in AI development.

Anthropic: the AI company at the centre of a media storm

Scary stuff. Perhaps Silicon Valley really has been seized by a collective spasm of conscience about the consequences of building AI. Or maybe this is a PR campaign so slick and devious that it would make Alastair Campbell weep. For one thing, the timing is highly suspicious. Anthropic, the AI startup at the centre of the current media storm, is preparing to launch the largest initial public offering (IPO) in history in a matter of weeks.

A basic tenet of critical thinking is to pay attention to vested interests. Dario Amodei is not a neutral commentator. He is trying to secure an IPO valuation of up to $2 trillion. Yet much of the tech media, keen for a dramatic story, uncritically treats the self-serving pronouncements of AI executives as objective statements of fact.

The more conspiratorially minded pointed out that the tweet by Jacob Coxon, the Anthropic researcher whose resignation triggered the latest news cycle, was viewed 140 million times despite the fact that his account had almost no prior activity. While Coxon's concerns are probably genuine, the way his message was picked up and boosted by multiple influential figures appears less than organic.

On the face of it, it's not obvious how dire warnings about existential risk would be beneficial to the AI industry. Big tobacco spent years suppressing information about the dangers of its products. So why are AI executives so keen to talk about how their technology could be used by terrorists or lead to the extinction of swathes of white-collar work?

Is Anthropic doom trolling?

The answer, as Cal Newport, a computer science professor at Georgetown University, argues, is the pervasive use of a marketing technique he calls “doom trolling” (a spin on phone addicts' “doom scrolling”). Fear sells. Outrageous claims about the dangers of large language models (LLMs – the currently favoured AI technology) go viral, generating vast amounts of free media coverage for the company that originated them. Talk of existential risk makes AI products appear hugely powerful and desirable.

This buzz helps to distract from the less exciting reality. Yes, LLMs can do impressive things in highly structured domains such as coding and translation, where clear failure conditions help limit their tendency to go off the rails. In other areas (including journalism), their catastrophic tendency to make up information greatly circumscribes their usefulness.

In short, the LLM is a new software category, but investors are not going to pay trillions of dollars for a newer version of Microsoft Excel. Instead, these tools must be imbued with a dark, apocalyptic glamour. Such doom-mongering is longstanding industry practice. As Parmy Olson notes on Bloomberg, in 2019 OpenAI said it would hold back its GPT-2 model from general release on the grounds that it was too dangerous – this for an LLM that struggled to answer primary-school-level reasoning tasks. Terrifying indeed.

This year the AI doom campaign has been turned up to max. Barely a week goes by without claims (all originating from within the AI companies themselves) that a bot has gone on a rogue hacking spree, CEOs, including Anthropic's Dario Amodei, have backed a slowdown in the development of AI or that a new model can't be released because it creates serious cybersecurity risks (it is then released shortly afterwards anyway). The effect has been to generate precisely the sort of frenzied atmosphere that one would want to surround a trio of high-stakes AI-linked IPOs: SpaceX in June, Anthropic scheduled for October, and OpenAI sometime next year.

Who benefits from AI doom trolling?

The AI industry's calls for regulation carry the whiff of “regulatory capture”. Government red tape is more burdensome for upstarts than it is for big established players. New safety regulations could help AI leaders throttle the competition. There is persistent suspicion that Anthropic's Amodei would like to see regulations that effectively excludes his main competitor – cheaper, open-source, often Chinese AI – from major Western countries. If you can't beat them, ban them.

It is also possible that calls for a slowdown represent an attempt to put a brave face on the fact that the AI arms race is becoming too expensive. OpenAI is on course to spend $45 billion this year alone on training and inference (the cost of running AI), but the performance of new models is running into diminishing returns. That isn't an ideal backdrop in which to successfully list a growth company. Instead of breaking the bad news to investors and tanking the valuation, why not piously tell the media you are choosing to slow down development because of your abundant love for humankind?

Don't fall for the hype

What does all this mean for ordinary investors? For starters, don't fall for the tech hype machine. Steer clear of this year's big flashy IPOs, a crowded trade if ever there were one. Secondly, diversify widely. Continue to look for the sort of underexplored investment themes that we cover in depth. And finally, keep your head. There is no knowing how long the current AI fever will last, nor exactly how wide the damage will be when it breaks, but you can at least regain some tranquillity by tuning out the endless talk of doom. Perhaps AI really will kill us all in some hypothetical future. But for now, it is the AI-marketing hype that represents a clear and present danger to our collective mental health.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

One of the biggest appeals of investment trusts is their ability to pay out dividends, even during tougher economic times.

However, some investment trusts are better than others at consistently increasing the amount they return to their shareholders.

The Association of Investment Companies (AIC), an industry body representing investment trusts, tracks so-called ‘dividend heroes’ – investment trusts which have raised dividends for at least 20 consecutive years.

Annabel Brodie-Smith, director at the AIC, said: “Investment trusts can achieve these impressive long records of dividend growth because they can smooth their flow of dividends.

“A trust can retain up to 15% of the income it receives each year, and this reserve of income can be used to boost dividends when markets are difficult.

“Dividends are never guaranteed, but these long records of resilient dividend growth are much appreciated by income investors.”

The investment trust dividend heroes with the longest dividend-raising streaks

The City of London Investment Trust (LON:CTY) topped the AIC’s list, having increased its dividend payout every year for the last 60 years. The trust invests in UK-listed equities, with top holdings as of 31 July including HSBC, Shell and NatWest.

The trust says its focus is on providing a steady income stream to customers in dividends as well as delivering long-term growth on investments.

“By reaching this milestone we celebrate not only 60 years of consecutive annual dividend increases, but also the resilience of the UK market and indeed the benefits afforded to us by the investment trust structure,” said Job Curtis, fund manager at the investment trust.

“Our investment approach prioritises patience, valuation discipline and long-term thinking, all of which has allowed us to navigate the varied market conditions of the past six decades.”

Three investment trusts could join City of London in the 60+ threshold next year, having been consistently raising dividends for the last 59 years: Bankers Investment Trust (LON:BNKR), Alliance Witan (LON:ALW) and Caledonia Investments (LON:CLDN).

Bankers Investment Trust’s main focus is on holding a global portfolio of stocks selected for their potential to grow and generate increasing income over time.

Its largest holdings as of 31 August are in chip designer Nvidia, cloud and e-commerce giant Amazon and chipmaker Taiwan Semiconductor Manufacturing: holdings also include American aerospace and defence firm RTX as well as Japan Post Bank.

Alliance Witan is run by 11 fund managers who pick high-conviction stocks from around the world with the goal of delivering long-term returns through capital growth and a rising dividend.

Top holdings as of 31 July are Microsoft, Alphabet and Taiwan Semiconductor, alongside smaller holdings in drinks firm Diageo and Samsung Electronics.

Caledonia invests in public and private companies across the globe, but mostly in North American, UK and Asian-listed stocks, including family services company Stonehage Fleming and investment company Cobepa.

Which investment trust became a dividend hero in 2026?

BlackRock Greater Europe (LON:BRGE) became a dividend hero in May, when it reached its twentieth consecutive year of increased dividends.

The investment trust invests in equities across more than a dozen European countries, with 22.5% based in the Netherlands, 16% in France and more than 16% in Switzerland.

Stocks are held across a range of sectors such as technology, energy and healthcare. The trust has a dividend yield of 1.22% and has grown its dividend at an annualised rate of 3.06% over the last five years as of 11 September, according to Morningstar data.

Andrew Impey, chair of BlackRock Greater Europe Investment Trust, said: “We are pleased to have delivered 20 consecutive years of dividend growth to our shareholders, reflecting the resilience of BlackRock Greater Europe’s underlying portfolio holdings through different market cycles.

“This resilience is underpinned by BlackRock’s highly regarded and well-resourced European team, which seeks to identify the best investment opportunities across Europe, focusing on companies with durable competitive advantages and quality management teams committed to long-term value creation.”

Source: theaic.co.uk / Morningstar, as of 11 September, 2026

The Chinese economy is facing headwinds. There is weakness in consumer spending, its property market is still in a slump, and there’s weakness in business investment.

Speaking on the latest episode of MoneyWeek Talks, Dale Nicholls, manager of Fidelity’s China special situations fund says while there may be negative things to say about the country’s economy, there are also bright spots to look out for,

“In terms of the domestic business, things are relatively muted. But, as always there’s pockets of strength in certain areas.”

He pointed to some constituents of his fund which are producing good numbers, like high-end mall operators and some restaurant chains, and added that while there is a “relatively weak consumption market”, the firms that have the right business model are taking market share.

Artificial Intelligence (AI) is also an exciting area for the region. “The companies that are involved particularly with anything AI-related, there’s somewhat of a tech boom. Business is strong for the companies that are involved with that,” he said.

AI is a major growth area for the global economy, and the controversies around it are mirrored in China too. For example, the concerns around the extent of capital expenditure and the return on investment.

Nicholls said: “The big technology companies – the Alibabas, the Tencents of the world – the market’s reacted badly to them increasing capex, but this feels to me a little bit overdone.”

The investors who are scorning increased capex are not asking the right questions, Nicholls claimed, namely whether the firms have a reputation for bringing returns on their investment.

“A lot of these companies have pretty good track records of generating good returns, and the feedback we get from them on what the return they’re getting on their spend is pretty good,” he said.

Nicholls was confident that parts of the AI market in China still provide good value. “Some of those big tech names I would put in that category. They’ve been sold off but if you think about the businesses as the sum of its parts – things like cloud – you’re actually seeing accelerating growth now, so it’s definitely seeing things pick up.”

Is China winning the AI race?

Although the models produced by US-based firms are currently the global leaders in AI, Chinese models are giving them a run for their money.

“[China] has some of the most competitive LLMs (large language models) out there, but the market doesn’t seem to be giving them a lot of value for that. Particularly if you look at the standalone LLM companies listed in China, they’ve done quite well.”

Chinese models have already disrupted the Western AI market multiple times. The release of DeepSeek’s R1 model in January 2025 brought with it a lot of panic in the West as investors reacted to Chinese AI challenging Western models.

A similar panic was caused when Kimi K3, another Chinese AI model, caused panic was released in July.

“Kimi K3 is interesting because it’s quite different in terms of size relative to others, but the performance is right up there with global frontier models. It’s much bigger, and they’re pricing it that way as well. So not quite the levels of US models in terms of their pricing, but obviously much higher than the other open weight models that the Chinese have been offering.

“So I think it’s another indication of the innovation that’s happening on the ground.”

For more, watch the full episode of MoneyWeek Talks with Dale Nicholls in conversation with MoneyWeek’s Cris Sholto Heaton on YouTube – or listen on any podcast platform.

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The F&C Investment Trust aims to deliver long-term growth in capital and income for shareholders. It is a FTSE 100 constituent and is the oldest and one of the largest investment firm in the UK, with assets that exceed £7 billion. It invests in listed equities and private equity and has delivered 55 consecutive years of rising dividends. The trust is globally diversified and conservatively managed.

I have managed the firm since mid-2014, working with specialist stock-pickers from Columbia Threadneedle Investments and elsewhere in the market. This gives the trust exposure to different geographies, investment styles and sectors, including firms benefiting from long-term changes in what we spend money on, how we pay and use technology. The following holdings illustrate these themes.

Diverse stocks for long-term growth

Mastercard (NYSE: MA) is at the heart of the long-term move from cash towards card and digital payments. It earns fees on transaction volumes and values without taking credit risk, enabling an asset-light business model and exceptional capital returns. Its scale provides a significant competitive advantage. Consumers want cards that are widely accepted, while retailers want to accept the cards their customers already use, making Mastercard's network difficult for new competitors to replicate. Beyond the ongoing shift away from cash transactions in developed markets, there are opportunities for growth in emerging markets too. Mastercard is also expanding its value-added services, including cybersecurity, data analytics and open-banking services, providing further opportunities for growth.

Infineon Technologies (Frankfurt: IFX) is a leading supplier of the technology underpinning three significant long-term trends: electrification, energy efficiency and AI infrastructure. It has a strong competitive position built over many decades. Sophisticated power management is at the heart of many of the transitions currently underway, including the shift to electric vehicles, renewable energy and modernising the grid, and Infineon is the global leader in power semiconductors, which are essential in this area.

The rapid growth of AI is creating another significant source of demand. The data centres needed to train and run increasingly sophisticated AI models require huge amounts of computing power and electricity, making efficient power management increasingly important. This represents a significant new growth market for Infineon that barely existed a few years ago. While its shares have been volatile, we believe the current valuation does not fully reflect the potential.

Live Nation Entertainment (NYSE: LYV) is the world's largest live entertainment company and has grown revenues by 15% per year on average since the pandemic. The company is benefiting from a structural shift in consumer spending towards experiences over goods, with demand for live experiences, such as concerts, increasing as a result. The combination of ticketing through Ticketmaster, concert promotion through Live Nation and venue ownership and management gives the business a strong position across the live entertainment industry. Consumers can buy their tickets, see their favourite artist and attend a venue all within the same platform. This vertically integrated model creates a powerful competitive advantage, allowing Live Nation to benefit at several different points as demand for live entertainment grows.

The three businesses above operate in very different industries, but each has built a robust competitive position in an area benefiting from a long-term shift in demand. For investors, identifying companies capable of turning these structural changes into sustainable long-term growth can provide opportunities that extend well beyond the short-term market cycle.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Shares in housebuilder Vistry (LSE: VTY) jumped 18% on 25 August when it was announced that the Kent-based company would receive £350 million as part of the government's £39 billion social and affordable homes programme.

The funding package was significantly higher than the award under the previous programme (£278 million). It was also the largest possible award in the first round of funding allocations (£9.5 billion). Vistry said it will deploy the funds immediately to more than 3,000 affordable homes. Per-home funding is £116,000, up from £79,000.

Vistry delivers around 15% of the UK's social/affordable homes and is one of the best ways for investors to benefit from Labour's drive to get the country building again, but the firm has consistently disappointed investors. After the recent funding package, there could be some light on the horizon. At the current valuation, investors don't seem to be pricing in any growth.

How Vistry became the UK's most shorted company

It's fair to say that Vistry has a chequered history as a public company. Greg Fitzgerald, the former CEO and executive chair, built the firm, which was formerly known as Bovis Homes, through a series of deals, rebranding the group as Vistry in 2020 following its £1.1 billion acquisition of Galliford Try's housing businesses. Fitzgerald aimed to create a builder focused on partnerships with local housing providers and local authorities, rather than sales to private markets, which seemed the right course as politicians began to re-prioritise public-sector housebuilding. To that end, the group bought Countryside Partnerships for £1.3 billion in 2022.

Fitzgerald had the vision, but struggled to realise it. Vistry's vocal shareholders, US hedge funds Abrams Capital and Browning West (more than 20% ownership), haven't helped. The funds came on board with the Countryside merger and have since increased their stakes. In March 2023, it emerged that they wanted to offer Fitzgerald a bonus of up to £60 million if the shares hit £18 within three years. The proposal mimicked the agreement with Persimmon's former boss Jeff Fairburn, who was forced to resign following public outcry over his £75 million long-term bonus package. Vistry's remuneration committee voted it down, but the damage was done.

Since then, the firm has issued six profit warnings. In October, November and on Christmas Eve in 2024, it issued three consecutive warnings that higher-than-expected costs would hit the bottom line. This trend continued in 2026. In March, the shares plunged more than 20% in one day when Vistry announced Fitzgerald would retire and the firm lowered its outlook for the year. Then, in May, Vistry said material cost inflation would hit pre-tax profit by around 10% for the year. In July, these forecasts were scrapped altogether. The firm told investors it would report a pre-tax loss of about £30 million for the first half of 2026 on top of the £40 million reported for the first half of 2025.

This stream of bad news has crushed the shares. Although they have risen 20% since their multi-decade low in June, they're off 80% after peaking in August 2024. Vistry is now the most shorted company listed on the London market.

Is there any silver lining for Vistry shareholders?

Unfortunately for long-suffering shareholders, there could be more bad news to come. Reports suggest Fitzgerald pushed Vistry's land buyers to purchase any land they could get their hands on, some of which can't be used. It's believed that the new CEO, Adam Daniels, is working to undo these errors. Ultimately, sales will help him improve the balance sheet, but there could also be write-downs. Buyers know the company is in a rush to sell and they will push a hard bargain.

So where's the good news in all of this? Well, Vistry is operating in a structurally sound market with increasingly supportive stakeholders across the value chain. The government's £350 million cash pot has removed immediate speculation about a deeply discounted rights issue and private bank funding for social housing is starting to be crowded in. Lloyds and Santander have both announced boosts to funding for the sector this year.

As a new CEO, Daniels has a chance to get to grips with all past problems (the group is also replacing the CFO) and reset expectations. Vistry needs to take control of costs and move forward rather than stumbling over its own mistakes.

Vistry is a deep value play

While the company faces an uphill struggle, brokers are optimistic. Panmure Liberum thinks the company is taking the right steps to reduce leverage (with a year-end target of £100 million of net cash and average daily debt of £650 million in the second half compared with last year's £771 million) and has pencilled in housing completions of 16,330 for fiscal 2026, up from 15,658 as stalled developments from last year reach completion. The broker believes completions will rise further to 17,170 in 2027 and to 20,157 by 2030. Panmure has pre-tax reported profit falling from £196 million to £29 million in fiscal 2026, before rebounding to £173 million in 2027 and then £452 million by 2030.

Peel Hunt has a similar outlook, with a pre-tax profit of around £300 million pencilled in by the end of the decade. If Vistry comes close to these figures, the shares look cheap at current levels. Vistry is trading at an average forward price-to-earnings (P/E) ratio of 5.5 for 2027 based on Peel Hunt's and Panmure's figures. What's more, its tangible book value per share – mostly land and property yet to be sold – is 625p, a full 120% above the current price. With the shares priced at around half the sector average and more than 50% below book value, if Vistry can prove to the market it's back on track, the shares could double.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Since the turn of the century, the price of gold has risen more than fifteenfold, while the S&P 500 is a mere 8.5 times higher, after including dividends. Who'd have thought it? Selective dates, I hear you cry, but it remains true. In 2000, gold was on its knees after a two-decade bear market, while US equities were in a generational technology bubble, rather like they are today. Still, at no point have equities been stronger than gold this century, even at the depths of despair in 2015, following a 45% correction in the gold price.

Gold is a popular form of jewellery because of its beauty, timelessness and durability, but financiers like it because it is scarce and liquid. Being scarce means that governments can't print more, making it an effective store of value. Being liquid means you can trade gold in billions of dollars at the touch of a button, whatever the state of the global economy. Gold provides the backstop to the financial system.

Our governments have borrowed too much money, and it's an open secret that they'll never pay it back. But they'll pretend to do it the old-fashioned way, which is to print more money. That will devalue the currency, which ultimately means the purchasing power of money falls. The rising gold price will not only compensate for the falling pound in your pocket, but will also deliver something extra as the asset becomes increasingly sought after around the world.

Why gold is a universal form of payment

Central banks have always believed in gold. Imagine trying to transact large sums of value around the world before modern payment systems were created. An ounce of gold was recognised from here to Timbuktu and still is to this day. Central banks hold much of their reserves in gold, both to protect themselves from inflation and to meet foreign liabilities when required.

Before Nixon took the US dollar off the gold standard in 1971, the central banks typically held 60% of their reserves in gold. The figure spiked in 1979, after high inflation in the 1970s, as the price soared. Then we had the “Volcker Moment” in 1980. The then-chair of the US Federal Reserve, Paul Volcker, hiked interest rates to an unprecedented 20% to fight off inflation, which then embarked on a four-decade decline, up until Covid.

In the 1980s and 1990s, with inflation low and growth solid, the central banks lost interest in gold. Their share of reserves fell until 2008, just in time for the global financial crisis. Gold reserves then stabilised at 10%. After the invasion of Ukraine they started to rise for the first time since the 1970s. The 2022 war in Ukraine, which is still ongoing, saw the US and Europe freeze Russia's reserve holdings of US Treasuries. Central bankers, especially in the Middle East and Asia, took note. If Russia's reserves could be confiscated, so could theirs. The diversification into gold grew at the expense of US Treasuries, with China leading the charge.

Today, gold's share of reserves has grown to nearly 30%. Some of that can be attributed to a rising price, but the central banks have also added a staggering 4,500 tonnes to their holdings, worth $20 billion. With such high demand, gold has been able to shrug off the impact of higher interest rates.

The relationship between gold and real yields

Since gold pays no interest, it has traditionally moved inversely to bond yields. If rates are at 10%, it is more expensive to hold gold, in terms of opportunity cost, than if they are 1%. Inflation matters too: if yields are 10% and inflation is also 10%, the real yield is zero. Gold is said to be an inflation hedge that maintains its purchasing power over the ages. In that sense, the real yield has always been a more important driver for the gold price than the yield itself.

But there are different types of inflation. Consumer prices (CPI) reflect the cost of living, which many believe to be understated. Then there is monetary inflation, or the money supply, which has grown at an average rate of 7.5% for three decades. For most gold watchers, this is the number that really matters. If the amount of money increases, gold will appreciate and act as a balance.

It turns out that the growth of the value of the above-ground gold supply follows monetary inflation over the long term. Indeed, this is the basis for the World Gold Council's expected return framework for gold. They say the gold price should match nominal GDP growth over the long term. That is real growth and inflation combined. Since nominal GDP and the money supply normally match, gold follows the money supply, which is entirely logical.

It turns out that it does over the long term, but with cycles. There are times, like today, when demand from central banks and investors is high, and so gold rises faster than new money creation. And there are other times, such as the 1980s and 1990s, when gold gives up ground at a time when growth is robust and inflation contained.

In January this year, the price of gold touched $5,595. That marked a 434% gain from its $1,064 low in late 2015. The year 2025 was gold's second-best in modern records, with a 65% rise, last beaten in 1979 with a 126% gain. That was too much, too soon and there can be no doubt that gold got ahead of itself. Since then, there has been a healthy 29% correction. I think the worst is behind us and a gradual recovery is underway.

The recent boost came in August, when US Treasury secretary Scott Bessent announced an intervention in the Japanese yen and then two weeks later increased purchases of long-dated Treasury bonds. The amounts of money involved were on the light side, but the signalling was explosive. Governments are worried about the rising cost of borrowing and are prepared to intervene. Whatever they say, everyone knows it means printing more money, and there is much more to come.

The gold price will hit $7,000 by 2030

In 2020, I wrote a piece entitled The Rational Case For $7,000 Gold By 2030 for the London Bullion Market Association (LBMA), the world's trade body for gold. At the time, the gold price was $1,700 an ounce, and many dismissed my piece as pie in the sky. Yet the premise was simple: long-term expectations for inflation would shift from 2% to 4%.

So far, and according to official data, the shift has been gentle, but expectations are rising. The bond market, as measured by Treasury Inflation-Protected Securities (TIPS, inflation-linked US government paper), is not yet pricing in much higher consumer-price inflation, but is heavily concerned by public debt. Inflation expectations have not yet rung alarm bells, but with rising food and energy prices, and higher debt-servicing costs, it is a matter of time. Gold is signalling where the bond markets are headed, and that is not a happy place.

With $5,595 reached this year, my $7,000 target for 2030 looks plausible. I am confident that it will be achieved and wouldn't be averse to increasing that target given what is coming down the road. Many Western governments are broke, yet continue to be spendthrifts. The worse the situation gets, the more investors will flock to gold to protect themselves from the carnage caused by rising interest rates.

In the interests of balance, I'll explore the bear case. Under the right set of circumstances, that could be devastating for the gold price, just as it was in the 1980s and 1990s. But what would need to happen?

The US budget deficit is 6.1% of GDP. In practice, that means in 2026 they will spend $7.4 trillion against tax receipts of $5.6 trillion. That is a $1.8 trillion annual deficit. Then consider that their outstanding debt recently exceeded $40 trillion, a sum that keeps growing. In Germany, the deficit is 2.8%, in China 4.5%, in the UK 5% and in France 5.7%.

Austerity would mean balancing the budget, which the UK last managed to do in 2001. With a balanced budget, as the economy inflates and grows the ratio of debt to GDP soon declines. Do that for a decade or so, and debt servicing returns to being a minor expense. Take Ireland, where debt ballooned to 120% of GDP after the 2008 crisis. With an enforced austerity programme, it has now slid to 33%. Portugal was at 140%; now the figure is 91% and falling. The Netherlands, Denmark and Sweden all have low debt-to-GDP ratios despite being “progressive”. If the major industrialised nations balanced their budgets, or even signalled their intent to do so, the price of gold would fall. But with the US, the UK, Japan, China, Germany, France, Italy and others still behaving badly, we are not there yet – or frankly even close.

Gold is a buy until the political winds change, which will one day happen. The electorate in Argentina surprised us all when they chose president Javier Milei with his chainsaw. The people were fed up with an over-indebted, failed state, and they opted for austerity over chaos. The real surprise was that the support came from the youth, who gave him 70% of their vote.

It comes down to the simple fact that today's debt is tomorrow's problem. Governments that borrow to pay their bills are passing the bill to the next generation. There comes a time when austerity shifts from being perceived as an immoral choice to becoming the only choice. When that happens, it will be time to reduce your gold and switch back to bonds, possibly at very attractive interest rates.

Gold investments to buy now

You can invest in gold in a number of ways. My clients at ByteTree hold the gold exchange-traded fund (ETF) known as the iShares Physical Gold ETC (LSE: SGLN). They also hold the Silver ETF, iShares Physical Silver ETC (LSE: SSLN) and gold miners through the VanEck Gold Miners ETF (LSE: GDGB). Silver and the miners tend to do much better than gold in a rising market, but fare worse should the gold price fall.

British investors who want to touch their gold should hold Britannias or Sovereigns, which are free of capital gains tax. They can do this through a reputable dealer such as Sharps Pixley or The Pure Gold Company. But if you do buy physical gold, please keep it in a vault. And if you insist on keeping it at home, then the best security is not to tell anyone!

For the adventurous, add a little Bitcoin into the mix. I created the BOLD index, which combines bitcoin and gold on a risk-weighted basis. Bitcoin is often considered digital gold since the supply is constrained and it is a store of value. Rather than have a 50/50 split, I weight according to volatility.

That means more gold than bitcoin, since it is less volatile. That manages the risk and since the assets have low correlation and act independently, BOLD rebalances the portfolio each month. BOLD reduces the stronger asset, adding to the weaker asset, in a top-secret investment strategy known as “buy low, sell high”. The result is a strategy that has similar volatility to gold, but with higher historical returns. BOLD is available as an ETF, the 21Shares Bitcoin Gold ETP (LSE: BOLD).

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The on/off Middle East crisis is on again this week, sending up oil prices in response. Dated Brent – a key benchmark based on North Sea oil – is above $100 for the first time since July at the time of writing.

Every time oil moves in a significant way, it raises the question of how best to play higher prices. One answer to that depends on what kind of move you expect.

Dated Brent – which is the benchmark that you tend to hear most – reflects what is happening to demand for physical oil right now. It is an example of a spot price, meaning the price to complete a commodity transaction immediately. In the case of Dated Brent, the buyer is buying a cargo of oil that will be loaded on a predefined date in the next few days or weeks.

However, traders also pay close attention to futures prices – the price of a contract to buy or sell oil at some point in the future. That date may be in one month, three months, six months or further ahead. There is a long chain of contracts which can stretch out for years, but most activity is in the ones closest to expiry.

As an individual investor, you can't trade physical oil directly. You could trade oil futures, but using an exchange-traded fund (ETF) such as WisdomTree Brent Crude Oil ETF (LSE: BRNT) is simpler. Yet this distinction between spot and futures prices is still important when using an ETF.

How oil ETFs work

While ETFs for gold or other metals often hold physical metal and reflect the spot price, oil ETFs have traditionally worked by buying futures contracts for near-term months. As each contract gets close to expiry, the ETF sells its existing position in that contract and rolls over into another contract a month or two further out.

So the ETF will reflect the trends in near-term oil futures. It will also gain or lose from a less obvious source of return called roll yield. If futures prices for the nearest months are higher than those for more distant months, the ETF will be selling higher and buying lower each time, and will earn a profit from doing so. Conversely, if prices for nearer months are lower than more distant months, the ETF will be selling lower and buying higher, and the roll yield will be negative.

If – as is often the case in a crisis – spot prices spike by much more than futures, a typical oil ETF will not rise by as much as the spot price does. However, the new-ish Onyx Spot Return Crude Oil ETF (LSE: OIL) takes a different approach. It holds very short-term daily Dated Brent futures, which it continuously rolls over. As a result, it is a closer proxy for the spot price. This product launched in June and has beaten traditional ETFs since then (see chart). Whether it keeps doing so depends on whether spot prices remain much higher than futures and on whether the futures roll yield is positive or negative. Regardless, it's interesting to see a new way to trade immediate shocks to physical oil prices that relies less on shifts in futures.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Airlines have been one of the hardest-hit industries as a result of the war in Iran, and the industry is struggling to recover from a succession of punishing shocks.

The Covid pandemic was a challenging start to the decade for the airline industry, as it all but shut down global travel. Two years later, Russia’s invasion of Ukraine sent oil prices sky-high, pushing up input costs for airlines.

The story has been similar in 2026, with the US/Israeli conflict with Iran prompting the closure of the Strait of Hormuz, through which around a fifth of global oil supplies previously moved, adding further upward pressure onto the cost of jet fuel while pushing global inflation higher.

“High oil prices are turning the coming winter into a stress test for airlines,” said Lale Akoner, global market strategist at investing platform eToro. “Fuel and labour costs are rising, while geopolitical disruption and pressure on household budgets make it difficult to pass them on through higher fares.”

The International Air Transport Association warned in June that global airline profits would halve in 2026 due to higher fuel costs.

Airline stocks have been punished. The NYSE Arca Airline Index, an index of US-listed airlines, fell 11.9% in 2026 through to 10 September, while the STOXX Europe Total Market Airlines Index, which comprises European-listed airlines, fell 12.8% over the same period.

But while it is undoubtedly a challenging period for the sector as a whole, are there opportunities amid the disruption?

What does EasyJet’s acquisition mean for airline stocks?

One of the biggest consequences of the rout in airline stocks appears to be the acquisition of EasyJet (LON:EZJ) by US-based private equity firm Apollo.

EasyJet rejected a sequence of bids from private equity firm Castlelake, calling the bids “opportunistic” given they followed a sharp nosedive in the airline’s share price. EasyJet’s share price had declined by over 30% in the 12 months to the end of May, before Castlelake’s first bid.

Eventually, though, Castlelake’s rival Apollo made a bid that EasyJet’s board felt compelled to accept, and it now looks as though the airline will be acquired.

“EasyJet is now a different kind of investment, with Apollo agreeing to buy the airline for 715p a share,” said Akoner. “The deal, which appears likely to be completed, has largely insulated the shares from the latest fuel shock.

“However investors should be wary as most of the takeover gain has already been captured, leaving limited additional upside before the expected completion in early 2027.”

EasyJet’s takeover highlights the extent to which airlines are under pressure, and that this creates an opportunity that institutional investors are already exploiting.

“We think this difficult backdrop could still produce winners,” said Akoner. “Airlines are already cutting unprofitable routes, and weaker operators may have to go further. Fewer available seats should support ticket prices and allow the most efficient airlines to increase market share.

“For investors, the sector increasingly looks like a contest between companies with genuine cost and balance-sheet advantages and those relying mainly on passenger growth.”

Which airlines could be resilient?

Andrew Hollingworth, founder and portfolio manager at Holland Advisors, is of the view that the worse things get for most airlines, the better they are for Ryanair (DUBLIN:RYA) as it has permanent pricing power.

“Ryanair is the lowest cost producer,” said Hollingworth. “If they put their prices up by three euros, [no other airline] is remotely near them, so everyone’s got to pay. “

Most other airlines, though, only have pricing power when the winds are blowing in their favour.

“If the oil price is moderate or rising, but the economy is good, and demand on their routes is good, and they haven’t got new competitors, they can put their prices up and pass on cost inflation,” said Hollingworth. “But if the economy isn’t so good, but the fuel price is still rising, hard luck. There isn’t enough demand to pass on the cost inflation.”

Like Ryanair, Jet2 (LON:JET2) is also a low cost provider, but it offers more to customers through its scale economy than low prices alone.

“It’s not actually an airline, it’s a package holiday company,” said Hollingworth. “Jet2 gives you good value for money on a package holiday, but it also gives you customer service.”

That gives the company excellent customer loyalty, but Hollingworth doesn’t believe this is fully priced.

“The stock market's got it on a very low P/E ratio because it says ‘it's just another average tour operator like Tui,’ but that's not how the customer sees it,” he said. “The customer sees that they give them value for money, they give them good quality service.”

How to invest in airline stocks

If you think it’s time to buy rather than sell airline stocks, you have a few options (besides buying the shares of companies outright).

There are a number of thematic exchange-traded funds (ETFs) tracking the travel sector that offer exposure, such as the iShares STOXX Europe 600 Travel & Leisure UCITS ETF (DE:EXV9) which is a tracker fund following its namesake index, and the US Global Investors Travel UCITS ETF (LON:TRIP) which is an actively-managed ETF offering exposure to travel and tourism stocks. While both of these are diversified travel and leisure funds, airline stocks like Ryanair feature prominently in both portfolios.

Another option is the VT Holland Advisors Equity Fund, which is managed by Hollingworth. It holds Jet2 as its largest holding (with 8.1% of the portfolio) and Ryanair as the sixth-largest (with 4.4%) as of 28 August. Note this isn’t an airlines-focused fund, but one which aims to invest in compelling business models trading at favourable valuations across a range of sectors.

For listed private equity funds, discounts to net asset value (NAV) widened sharply when bond yields rose in 2022. Investors were anticipating that the valuations of private equity investments would follow share prices down after the customary lag.

Boards responded with share buyback programmes in an attempt to add value and close the discounts. Yet discounts remained stubbornly high as valuations stagnated.

When markets started to move higher two years ago, investors could reasonably have expected private equity fund valuations to follow. This should have led to a fall in discounts, regardless of buybacks. Yet the evidence for this is mixed.

Diverging fortunes for private equity funds

Pantheon International (LSE: PIN) and HarbourVest Global Private Equity (LSE: HVPE) have returned almost 20% in one year, while Patria Private Equity (LSE: PPET) is up over 50% in three. All had significant help from narrowing discounts. However, 3i (LSE: III) has lost 25% and HgCapital Trust (LSE: HGT) almost 15%, as their discounts have headed in the wrong direction.

What is going on? The answer is that 3i and HGT are special cases. 3i traded on a large premium thanks to the phenomenal performance of discount retailer Action, which had come to account for over three quarters of its NAV. When Action's growth appeared to falter, that led to a slump in 3i's share price. The £28 billion trust now trades on a 7% discount, up from 30% a few months ago.

3i's update at its annual general meeting in June showed that pessimism about Action had been overdone. Performance in the rest of the portfolio is steady, but accounts for less than a quarter of the total. So despite 3i's shares being much better value than they were a year ago, they are still very much a bet on one company.

HGT specialises in the software sector and so it has suffered from fear that its holdings will be disrupted by AI. This fear may prove exaggerated, but has led to a justifiable fall in the share price even though underlying performance has been good. In its June update, it reported growth in revenue and cash generation of 16% and 19%, respectively, as well as £134 million of realisation proceeds in the first half at an average uplift to carrying value of 31%.

However, it has continued to reduce valuations and its portfolio is now valued at a weighted average multiple of 23 times cash generation. This still looks rich, especially as the portfolio carries plenty of debt, but is more than offset by the shares trading at a 23% discount. The shares have recovered from their May low, but the rally should go further.

The price of Oakley Capital (LSE: OCI) has also recovered, but it still sits on a discount of 33%, despite reporting a gain of 6% in NAV in the first half. Literacy Capital (LSE: BOOK) was a sector darling until two years ago, since when its shares have slid 40% to a 37% discount. The NAV has fallen 7% over the last year and is up just 3% over three, but an upturn is surely imminent. Both shares look a bargain.

Time to boost demand for private equity funds

Meanwhile, the funds of funds such as HarbourVest, Pantheon, Patria, ICG Enterprise (LSE: ICGT) and CT Private Equity (LSE: CTPE) – which invest in the funds of other managers or co-invest in companies alongside them – all trade on discounts of 25%-30%. Their boards continue to be obsessed with share buybacks to reduce the discount, but they need to focus more on increasing the demand for their shares than reducing the supply.

Investors are hungry to see evidence of hidden gems in private equity fund portfolios that can grow much larger over time. Action was once just a modest holding for 3i. Boards need to move onto the front foot in extolling their holdings. Yet investors shouldn't wait for them to do so, or they will end up paying much higher prices.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

When geopolitical shocks occur, like the conflict in Iran that has shaken markets since late February, knowing where to put your money to protect your wealth is key.

The Association of Investment Companies (AIC), an industry body representing the UK’s investment trusts, has identified the closed-ended funds that have shown the greatest resilience during the conflict’s duration.

Technology-focused investment trusts have led the way, with the continued demand for artificial intelligence (AI) stocks and funds lifting the sector in spite of global turbulence.

“Investment trusts in the technology sector have continued to power ahead as the AI investment boom goes on,” said Annabel Brodie-Smith, director of the AIC. “And the growth capital sector has thrived due to its big holdings in fast-growing private companies and potential IPOs such as Anthropic, ByteDance and Revolut.”

So which investment trust sectors proved the most resilient – and which ones have delivered the greatest returns for shareholders over the course of the conflict?

The investment trust sectors that have been most resilient

It wasn’t all about tech and growth sectors. Some of the other top-performing investment trusts since the start of the Iran conflict have come from less obvious sectors – particularly renewable energy.

^{Source: theaic.co.uk / Morningstar. Share price total return in % from 02/03/2026 to 31/08/2026. Excludes VCTs. See AIC sector definitions.}

“Shares across the [renewable energy infrastructure] sector have bounced as investors have warmed to renewable energy during a war that has exposed the weaknesses of our oil and gas supply chains,” said the AIC’s Brodie-Smith.

Commenting on the outperformance of the renewable energy infrastructure sector, Charlie Wright, co-lead investment manager of Foresight Environmental Infrastructure (LON:FGEN), said “Iran conflict has perhaps prompted investors to reassess the strategic value of renewables and environmental infrastructure, reminding investors that an overreliance on volatile imported fuels is not a wise position to take.”

Which investment trust sectors have outperformed since the start of the Iran war?

Foresight Environmental Infrastructure was one of two renewable energy infrastructure investment trusts to make the top-five in terms of share price total return since the start of the Iran conflict.

Growth capital trust Molten Ventures (LON:GROW), which holds stakes in Revolut and Finnish space economy start-up ICEYE, took the top spot, while the Biotech Growth Trust (LON:BIOG) took second and Allianz Technology Trust (LON:ATT) came third.

^{Source: theaic.co.uk / Morningstar. Share price total return in % from 02/03/2026 to 31/08/2026. Excludes VCTs and trusts in liquidation.}

Stephen Packwood, co-manager of Greencoat UK Wind (LON:UKW) said “investor interest in renewables has picked up since the start of the war given security of supply and cost of energy concerns” but that the trust’s “strong performance in terms of power and net cash generation” had been the main driver behind its outperformance, covering its dividend payout in the first six months of 2026 and providing further capital to grow the business.

“Renewables, in particular wind, are well placed to take advantage of the forecasted increase in electricity demand over the coming years,” he added.

Energy Performance Certificates (EPCs) are not only a legal requirement, but increasingly scrutinised by buyers considering purchasing a home.

Data from property portal Rightmove reveals buyer demand for homes with an EPC rating of A was up by 22% in July this year compared to July 2025.

Colleen Babcock, property expert at Rightmove, said: “A home's energy efficiency can influence buyer demand, how quickly it sells, and ultimately the price a buyer is willing to pay.

“We’re seeing stronger price performance among more energy-efficient homes, while properties with lower EPC ratings are seeing smaller price growth overall.”

EPCs were rolled out by the government from 2007 and provide a rating based on the energy efficiency of a property.

Homes are ranked from A (most efficient) to G (least efficient). The certificate also offers recommendations on how a home could be made more energy-efficient and the savings to be made implementing them.

For example, yours might tell you to add draught proofing around your property, or to install solar panels to lower your electricity bill.

Why do you need an Energy Performance Certificate?

EPCs are a legal requirement if you’re selling, renting or building a property.

You must order an EPC for potential buyers or tenants before putting a property on the market to sell or rent.

In Scotland, you must also display the EPC somewhere in the property, like next to the boiler. This rule doesn’t apply to homes in England, Wales or Northern Ireland.

EPCs are valid for 10 years so it’s worth checking if yours is coming up for renewal.

How do you get an Energy Performance Certificate?

You can check if your property has a valid EPC via gov.uk, by entering your postcode, street name and town, or EPC number.

The digital version of an EPC will tell you when it is due to expire, as well as the potential score you could achieve by making energy improvements.

The average energy rating in England and Wales is D (score of 60).

If your property and digital EPC does not appear after taking these steps, or your EPC has expired, you’ll need to pay for a new one from an accredited assessor. You can find one via gov.uk.

The cost of the assessment varies depending on the assessor and the size of your property. According to trade platform Checkatrade, you’ll typically pay £65 to £120.

After it has been done, the assessor should give you a digital copy of your certificate.

Can you get free or discounted EPCs?

You should check if you can get a free or discounted EPC through your bank, building society or energy firm.

• Skipton Building Society customers signed up to its membership scheme can get free EPCs.
• Lloyds Bank offers customers cashback and free EPCs if they make energy-saving home improvements like installing heat pumps, insulation and solar panels.
• Santander customers with a Santander mortgage or personal current account can get an EPC for £75.
• Buy-to-let lender Foundation offers free EPCs to customers buying qualifying mortgages.
• OVO Energy customers can get a Home Health Report carried out on their property, which includes an EPC, for £25.

How Energy Performance Certificate rules are changing

The government is set to launch a new framework meaning EPCs will have four cost metrics instead of one: energy cost, fabric performance, heating system and smart readiness.

The reforms were initially due to launch in October 2026, but have been delayed. They are currently set to be rolled out in the second half of 2027.

Separately, landlords must ensure all private rental properties have an EPC rating of C or above, from E currently, by 2030 under the Minimum Energy Efficiency Standard (MEES).

However, they will have to ensure they meet the C rating under the new framework being rolled out from 2027.

Landlords will have to meet a C standard in the fabric performance metric. They can meet this by, for example, installing loft insulation, cavity wall insulation or double glazing.

They will then have to meet the C standard in either the heating systems or smart readiness metric. They can meet the heating systems metric by installing a heat pump or low-carbon heat network and the smart readiness metric by having solar panels or smart electric vehicle (EV) charge point.

It will be at the landlord’s discretion as to whether they choose to meet the heating systems or smart readiness metric.

When do you not need an Energy Performance Certificate?

You don’t need an EPC for any of the following:

• temporary buildings that will be used for less than two years;
• stand-alone buildings with total useful floor space of less than 50 square metres;
• industrial sites and workshops;
• buildings that are due to be demolished;
• holiday accommodation that’s rented out for less than four months a year;
• residential buildings intended to be used less than four months a year;
• places of worship.

Average UK house prices fell 0.4% in the year to August 2026, with prices down 0.2% over the previous month, according to Lloyds Bank.

The average UK property price dropped from £299,569 a year ago to £298,468, according to Lloyds’ latest house price index (HPI).

Prices fell during the month of August from an average of £299,153 in July.

It is the first time annual house price growth has trended negatively since November 2023, according to Lloyds’ data, and comes amid rising mortgage rates and lack of demand in the market.

Mortgage rates have ticked up in recent months as lenders have passed on higher wholesale costs to consumers due to the conflict in the Middle East.

The average two-year fixed-rate deal is 5.63% as of 7 September, up from 4.83% on 27 February, according to data firm Moneyfacts, the day before the US first launched airstrikes on Iran.

Andrew Assam, mortgages director at Lloyds, said the housing market was being stifled by these higher mortgage costs and sellers holding out for higher offers.

“The housing market has faced a more difficult backdrop in recent months, with the impact of global events on inflation and borrowing costs creating greater economic uncertainty,” said Assam.

“What we're not seeing is a rush of homeowners cutting prices. But more are choosing to sit tight, with sellers reluctant to accept offers they feel are too low, while some buyers are waiting to see how conditions develop. As a result, fewer homes are changing hands.”

North-South divide remains

There continues to be a strong regional divide when it comes to how well house prices are performing, according to Lloyds.

House prices in Northern Ireland were up 6.9% in the year to August, with the average property price now sitting at £231,245.

Scotland also continues to see strong growth, with prices rising 3.5% to an average of £223,437. Property values in Wales rose by 0.6% in the year to August to £230,282.

The North East and North West regions of England also saw positive movement, recording respective annual rises of 2.7% (£184,370) and 2.0% (£248,675).

In contrast, the story is much less positive across southern England and London.

The average house price in the South East fell by 1.6% in the year to August to £381,729, followed by Greater London where the average property value dropped by 1.5% to £534,177 over the same time period.

The South West and Eastern England both recorded annual house price declines of 1.2%, with average house prices now sitting at £298,807 and £331,410, respectively.

Jonathan Hopper, chief executive officer of search agent Garrington Property Finders, said a glut of supply in London and the South East of England was “attracting too few serious buyers” which was dragging prices down.

Hopper added: “High property values in these areas mean that many buyers need a large mortgage in order to afford the home they want, and the jump in interest rates over recent months has squeezed the amount they can afford.

“This has made buyers highly price-sensitive. As a result many are asking for, and getting, reductions on the prices of properties that have been on the market for a while.”

In contrast, the market was more “free-flowing” in northern England and Scotland, Hopper said, “with prices there still ticking up amid more balanced supply and demand”.

What could come next for house prices?

Activity in the housing market tends to slow in the summer and tick back up in the autumn, increasing demand and sellers’ opportunity to drive a higher asking price.

Tom Bill, head of UK residential research at estate agent Knight Frank, said that whether or not that trend played out this year will depend on any pre-Budget speculation and how the conflict in the Middle East, and any possible inflationary impact, unfolds.

Sarah Coles, head of personal finance at investment platform AJ Bell, added: “If the market grinds to a halt and prices remain depressed, it will make life even tougher.

“It’s difficult to muster enthusiasm for a purchase when you’re faced with having to pay higher monthly mortgage costs for a house that could lose value. It means more buyers are likely to sit tight.

“At that point there’s a decent chance that the market could suffer even more. We could see more widespread falls, as sellers are forced to cut prices. Alternatively, we could see the property market stall entirely, as nobody is prepared to blink.”

Bonds are central to the global financial system, and when their yields rise it can have a significant impact on your finances.

Bond yields – the amount that bonds pay in interest as a percentage of their price – are reaching all-time highs.

In August, yields on 30-year US government bonds (Treasuries) rose to over 5.3% , the highest level since June 2007. The yield on 10-year UK government bonds (gilts) rose above 5.29% on 2 September, the highest level for 19 years.

While higher yields might sound l positive, they actually reflect falling bond prices and a lack of confidence in the bond’s issuer’s ability to meet payment obligations.

In the case of gilts, when yields rise, the market price of existing gilts fall, making them less attractive for investors. Rising bond yields will also make any debt you hold more expensive, and could lead to tax hikes.

That said, from a macroeconomic standpoint, it could be argued that higher bond yields are necessary.

“One argument is that the rise in bond yields is not bad news, but good news, because it is a logical result of healthy economic growth rates,” said Russ Mould, investment director at investment platform AJ Bell. “It may also represent a return to normality after the crazy days of the 2010s and early 2020s, when headline interest rates and benchmark bond yields were near zero. That implied a cost of money, and time, of almost zero, which made little real sense.”

Why are bond yields rising

The current bond sell-off is being driven by several factors: in part including the threat of higher inflation due to the ongoing Middle East conflict, as well as the increased likelihood of central banks hiking interest rates in order to combat this inflation.

“Markets are now pricing in three hikes from the Bank of England over the next year,” said Matthew Amis, investment director, rates management at Aberdeen Investments. “Gilt yields look elevated here but until oil and gas start freely moving in the Straits of Hormuz, gilt yields are going to struggle.”

At the same time, bond markets are spooked by escalating levels of government debt. US government debt recently passed $40 trillion; in 2025, US government debt was already over 123% of the country’s GDP.

Oliver Faizallah, head of fixed income research at wealth manager Raymond James, attributes the bond yield spike specifically to US Federal Reserve (Fed) chair Kevin Warsh’s recent comments at the central bank’s Jackson Hole Economic Symposium on 28 August.

“We received no new information in the form of new macroeconomic data points, however a firmly hawkish tone from Warsh was enough to move markets,” said Faizallah. Warsh pointed to the strength of the US economy as well as his commitment to bringing inflation below the Fed’s 2% target.

“This resulted in markets pricing in more than two hikes by the Fed over the next 12 months,” said Faizallah.

How are bond prices, inflation and interest rates linked?

Bonds are sensitive to inflation. The amount that a bond pays to its holder is fixed in nominal terms (which is why bonds are referred to as ‘fixed income’), so if inflation rises, the real value of the bond to its holder falls. When bond prices fall, yields rise.

Bonds are also sensitive to interest rates – the rate of interest that central banks, like the Bank of England, pay to banks and other financial institutions that deposit money with them. Higher rates typically mean lower bond prices and higher yields, particularly on short-dated bonds, and these are the ones that have the biggest impact on mortgage and cash savings rates.

When anyone borrows money – be it the government or a couple buying a property – they have to offer the lender a better return than they would get by depositing their money at the central bank. So interest rates directly impact bond prices; when they rise, the cost of borrowing rises for everyone – governments, businesses and individuals.

What higher bond yields mean for your personal finances

Higher borrowing costs will have impacts across your finances.

“Credit card, mortgage and auto loan interest rates will rise if bond yields rise, as the lenders seek to preserve loan book margins and manage their risk,” said AJ Bell’s Mould.

Worryingly, higher bond yields could also lead, indirectly, to higher taxes. High gilt yields mean that the UK government is paying more interest on its debt. That will limit what chancellor John Healey can do when he announces the Autumn Budget in October.

The government’s fiscal rules prevent it from borrowing money to pay for day-to-day spending, and require debt to be falling as a share of the economy by 2030; any increase in current borrowing costs will have to be made up for with higher tax take.

On the other hand, higher interest rates would mean that you earned more money as interest on savings and cash.

How do higher bond yields impact the stock market?

Higher bond yields can also have a large impact on the stock market.

When professional (and some more sophisticated amateur) investors estimate the present value of an investment, they will do so by comparing the future returns they expect from it to current bond yields (in other words, the alternative ‘safe’ investment they could make instead). This is known as a discounted cash flow model.

The higher bond (and especially gilt) yields rise, the less appealing, in relative terms, a stock whose price is based on years worth of future returns becomes. Why take the risk on a company which could fail if you can make good returns with less risk in the bond market?

Higher bond yields could therefore mean “lower theoretical equity valuations, especially for companies whose strongest years of profit and cash generation may be some time in the future, such as technology and biotechnology companies”, said Mould.

“For now, higher bond yields are not unduly inconveniencing the FTSE 100, which still trades close to all-time highs, within touching distance of the 11,000 mark and up by more than 100% from the Covid-19 lows of March 2020,” Mould continued. “But in the end, weight stops trains and racehorses and higher returns on cash and fixed-income securities slow down stock markets – it is a matter of degree.”

Mould added that if the Bank of England hikes interest rates or if bond yields rise further, the UK’s stock market could start to struggle. “In a worst case: earnings growth could take a hit if higher borrowing costs cool consumer spending and corporate investment; takeovers could dry up if the cost of any debt used to fund them means such deals are no longer attractive; and higher yields on bonds make the yield on equities look less appealing.”

Should you invest in bonds?

Bond prices are falling; the returns you’re making on them (the yield) is rising, so is this a good time to buy bonds?

The issue is always one of risk. With corporate bonds, the risk is that the company you’re buying the bond from might default.

Government bonds in a developed economy like the UK would almost certainly never default on its debt. It is more likely to print money – thereby devaluing the currency – in order to meet its obligations. That means the main risk with government bonds is inflation.

Raymond James’s Faizallah believes that, while the recent bond sell-off isn’t unwarranted, it means the risks to bonds are now priced in.

“As it stands, bond yields are priced for higher and prolonged second round inflation, consequent central bank hikes, and further government spending driven by an increase in bond sales,” he said. “With the bad news in the price, there is a limitation to how much further bond yields can keep climbing.”

By the time you reach your 70s, you may well already be retired, or at least thinking about it carefully. But does hitting your 70s mean you need to change your investing strategy or stop investing altogether?

While it is never too late, there are some important considerations to take into account when managing your investments in your 70s.

“While your working life may be coming to an end, your investing runway still has decades left to run, so don't ever feel like you've been aged out of investing,” said Darius McDermott, managing director at broker Chelsea Financial Services. “When you're relying on your portfolio for income, capital preservation and diversification have never mattered more.”

Adjusting your investment strategy to potentially reduce the risk can be a good idea.

Younger investors have decades for their investments to recover from stock market shocks that causes their portfolio to fall over the short term. But, If you’re in your 70s, you may not have that luxury: a steep cut to your portfolio value could seriously hamper your retirement plans.

So managing your risk is one of the most important considerations for investing in your 70s.

There are various ways you can limit the risks you’re taking without having to sacrifice potential capital growth.

Investing in your 70s: equities or bonds?

A key decision for any investor to make, regardless of age, is how much should they allocate to equities (stocks and shares) or fixed income (bonds).

Because bonds are often considered safer than equities, older investors tend to hold a larger proportion of their portfolio in the asset class. Some people subtract their age from 100 and allocate the resulting percentage of their portfolio to risk assets, such as equities, and the rest to safer assets like bonds.

So, for example, if you are 75, you might put 75% of your assets into bonds.

This still means that a quarter of your portfolio is exposed to the potential rewards of stock market gains, but the majority of it is reasonably protected in the event of a stock market crash.

This strategy isn’t foolproof though as bonds are not entirely risk-free. Bond markets and equity markets have also been relatively closely-correlated in recent years, meaning that both could crash at once.

So rather than allocating that 75% exclusively to bonds, it might make sense to consider it as a bucket to allocate to less risky assets in a broad sense. This could include commodities, certain defensive stocks, wealth preservation funds or even cash. Some top saving accounts pay as much as 5%. Alternatively, money market funds are a popular way to invest as they offer a low risk option – similar to cash, but the return can potentially be higher.

However, the impact of inflation means that playing it too safe can be a bad idea. “As inflation stays elevated, the cost of keeping your hard-earned savings in cash only grows, and while interest rates look attractive today, it would be unwise to bet your entire retirement income on them staying that way,” said Chelsea Financial Services’s McDermott.

Should you invest in defensive stocks in your 70s?

You don’t necessarily need to abandon stocks entirely in your 70s, but it pays to consider exactly what kinds of stocks and shares you’re buying.

For the most part, you’ll likely want to concentrate either on defensive sectors, value stocks, or income stocks (there is some overlap between all three of these).

Defensive sectors

Defensive sectors are those which tend to perform about as well during an economic downturn as during growth periods. Consumer staples, healthcare and utilities are three good examples: people don’t spend significantly less on shampoo, medicine or their water bill when the economy is doing badly, compared to when it is doing well, so stocks in these sectors tend to hold up well during a downturn.

Infrastructure stocks can also play a defensive role in portfolios as infrastructure companies tend to have fairly predictable income streams which can rise in line with inflation.

“A good satellite option is an infrastructure fund,” said McDermott. “First Sentier Global Listed Infrastructure rounds things out with inflation-linked income from real assets like toll roads and utilities, diversifying away from traditional bonds and dividends.”

Income stocks

If you’re approaching or are already in retirement, the income you generate from your investments is key, as this could well form the bulk of your spending money.

Income isn’t just about funding your retirement; it can form an integral part of growing your portfolio’s value.

James Lowen, co-portfolio manager of J O Hambro UK Equity Income, makes the case that income stocks could be preferable to bonds, because of the potential for dividend growth.

“In fixed income coupons [the amount that a bond pays its holder in interest] are flat; they don’t grow,” he said. In the equity market, on the other hand, dividends do tend to grow – and this counteracts the impact of inflation eroding returns from fixed income investments.

“When choosing between equities and fixed income, [it’s important] to understand one grows, one is flat in nominal terms,” said Lowen.

Value stocks

Whatever kind of stocks you’re buying, it’s important to pay attention to the price if you’re investing in your 70s (and, arguably, at any age).

“When you buy a stock… your starting valuation has a big determinant of what you ultimately make,” said Lowen.

Buying stocks that are trading at high multiples compared to their fundamentals can leave you exposed to higher losses if market confidence turns.

On the other hand, buying stocks at lower valuations can offer some protection against downside losses, and also potentially offers greater room for gains.

“If you pay a full price, where’s your upside?” says Lowen. Buying value stocks "protects your downside and creates your upside optionality”.

Can commodities protect your wealth in your 70s?

Commodities can offer some diversification from equities, which can protect your investments in your 70s. While bonds can become correlated with equities, this is less true of certain commodities; the climate is often a bigger driver of agricultural commodity prices than the business cycle, for example.

On the whole, though, “commodities are cyclical and volatile, tracking economic growth closely”, said McDermott.

Gold, for example, has become more correlated with equities this year, since gold prices and the stock market have both become especially sensitive to interest rate expectations.

“Higher real yields also make gold less attractive, especially for anyone relying on portfolio income, since gold pays none,” said McDermott.

Meanwhile, industrial metals like silver and copper are closely linked to the business cycle as both metals have substantial industrial applications, so demand tends to rise when economic activity is higher.

Which funds could make good investments in your 70s?

“When you’re choosing funds, you’ve got to understand what their track record is on income growth,” said J O Hambro’s Lowen. His fund invests in UK equities with the potential to grow income over the long term; the fund is forecast to yield 4.15% in 2026. It has achieved a 9% compound annual dividend growth rate over the 21 years since its inception, meaning it would have yielded 29% in 2025 based on the initial unit price.

You could also select City of London Investment Trust (LON:CTY) which has raised its dividend every year for 59 consecutive years – the longest record of annual dividend increases for any investment trust.

McDermott highlighted Capital Gearing Trust (LON:CGT) as an investment trust heavily focused on capital preservation, which has delivered a positive return in 42 of the past 44 years while aiming never to lose money.

“Absolute return funds are another option worth considering, using both long and short positions across companies to smooth returns and cushion against market falls,” said McDermott. “Here we like Janus Henderson Absolute Return and SVS RM Defensive Capital.”

Multi-asset funds can also offer exposure across several asset classes in a single holding: McDermott singles out Orbis Global Cautious and Jupiter Merlin Income Portfolio as lower-volatility options.

And to add bonds – which McDermott calls “the traditional ballast of any portfolio” – McDermott recommends TwentyFour Dynamic Bond, or Artemis Global High Yield Bond as a higher-yielding option.

Private landlords are increasingly looking to leave the rental market, including investors rethinking the buy-to-let property part of their later life income strategy. Offloading a buy-to-let portfolio in retirement may be the right decision, but experts have said it takes some careful planning to do right.

A total of 2.86 million unincorporated landlords declared income from renting property in 2023 to 2024, according to government figures, but many could be considering putting property on the market.

Around 40% of landlords in a recent survey by the website Property118 said they were intending to sell one or more of their properties in the next three years, with 27% of the 2,096 landlords asked planning to exit completely.

Why are landlords selling up?

Many of today’s retiring landlords entered the market in a very different regulatory environment and built portfolios during what was a golden era for private landlords. The landscape today looks very different.

“Higher taxes, mortgage interest restrictions, increased regulation, Making Tax Digital requirements and evolving tenant protections, including the gradual removal of Section 21 powers, have significantly increased both the cost and complexity of being a landlord,” said Isabella Galliers-Pratt, senior investment director at Rathbones.

The balance has shifted away from smaller private landlords towards larger, professional operators that are better placed to absorb these costs.

“Property can still provide a valuable source of regular income and a degree of inflation protection over the long term,” said Galliers-Pratt.

“However, landlords approaching retirement should assess whether those benefits adequately compensate them for the ongoing administrative burden, maintenance costs, regulatory obligations and tenant management responsibilities.”

Should I sell my buy-to-let portfolio?

For retirees, the key question is whether property remains the most efficient way of generating income in retirement.

“Many investors are surprised to find a diversified investment portfolio can offer greater liquidity and flexibility, while also providing comparable, and in some cases higher, levels of net income,” said Galliers-Pratt.

For many retirees, the decision to sell is more about simplifying their finances and reducing the demands on their time.

Matthew Beck, chartered financial planner at Smith & Pinching, said: “The hassle and cost of being a landlord is increasing, and in many areas yields are falling. Once you strip out tax, costs and the time it takes to run a portfolio properly, the actual returns many landlords get are a lot tighter than they look on paper.”

When helping clients in this position, he always starts with the same exercise: working out their real yield after tax, fees and maintenance, and comparing that figure to what the same capital could realistically do elsewhere.

“The answer is often an eye-opener,” said Beck. “This isn't a case for selling everything overnight, but it's a useful starting point in plotting a course that’s right for them.”

How to sell a buy-to-let property portfolio in retirement

If you’re a landlord who’s already weighing up an exit from buy-to-lets, the number of properties you own matters.

Selling an entire portfolio in one go to another investor can offer speed and ease, but as it involves selling to someone who's looking for a deal, the price you get is unlikely to be full market value.

Likewise selling a property with tenants in situ narrows your buyer pool to other buy-to-let investors, and this can make it harder to achieve a top price.

Selling a vacant property increases the pool of potential buyers and this could help you get a better price, said Beck, “but you need to weigh that against the gap in rental income you’ll have while it's empty”.

The supply of homes for sale outweighs buyer demand in some regions at present, so be prepared for it to take several months to sell.

Tax is the other thing to think about, and you should get proper advice before you decide to sell, not after.

Capital gains tax on residential property is charged at 18% within the basic rate band and 24% above it, and everyone gets a £3,000 annual exempt amount. Married couples and civil partners who own property jointly can combine this amount, meaning the first £6,000 would be CGT-free.

Any gain has to be reported and paid within 60 days of completion, which catches people out if they haven't planned for it.

Chartered financial planner Beck gave the example of one of his clients – a couple in their mid-70s with four buy-to-let properties worth a combined £1 million. Their portfolio brings in roughly £45,000 a year in gross rent.

“On paper that sounds healthy, but it's actually less than they need to enjoy this stage of their retirement,” he said. “They've told me they feel limited by having to live on what the rent brings in each month, and are ready to sell up.”

“Our aim is to bring down their tax burden and give them more money to spend in the years they actually want to spend it, while keeping the rest invested sensibly, rather than sitting idle,” said Beck.

The other thing landlords should factor in now is timing. In April 2027, rental income tax rates will rise by two percentage points across the board, which will squeeze the returns you make on BTL even further. “That's not a reason to panic sell, but it is a reason to re-run the numbers to see how it will affect you,” Beck said.

“My advice to any landlord is: don't rush it, get proper tax advice before you do anything, and think as hard about what the money is for once it's freed up as you do about the sale itself."

Selling a buy-to-let portfolio checklist

Saif Derzi, property trading expert at Landlord Resource, said there are a few key things for landlords to consider before selling up.

1. In England, the tenant position is particularly important in 2026. Since 1 May, landlords have been unable to use Section 21 to seek possession of their property. If a landlord wants to sell and needs possession, they can use Ground 1A, but they only do this after the tenant has lived in the property for 12 months and the landlord has given them four months’ notice.
2. Selling a property portfolio should be based on whether the property is still delivering after mortgage costs, maintenance, insurance, management, tax, and the landlord's own time to justify the work and concentration of risk involved.
3. For someone entering retirement, compare the buy-to-let portfolio's net income with the income they could potentially generate from the net capital released by selling up, for example, if the money were invested instead.
4. Landlords won't necessarily need to sell everything. Disposing of the least profitable, most highly leveraged, or most management-intensive properties can be a way of releasing capital while retaining some rental income.
5. Look at the whole cost and process of selling, rather than just the asking price. Get a realistic valuation and check the mortgage balance, any early repayment charges, and the likely selling costs.

Investors pumped £278 million into funds in July, but sold off billions of pounds of equities amid domestic political uncertainty and global volatility.

While some investors were spooked, fund flows narrowly remained positive according to the latest data from the Investment Association, an industry body representing the UK’s investment managers.

Although on balance investors were confident in July, with more money invested than cashed out, the month’s figures are a sharp drop from the £3.6 billion inflow recorded in June.

In particular, investors continued to sell off their equities in July, with the asset class having outflows of £2.1 billion amid the continuing war between the US and Iran.

The UK saw the largest fund outflows in July as retail investors took a collective £1.6 billion out of British equities, the highest figure since January 2025. Overall net outflows from the UK were £1.3 billion across all asset classes.

This was likely a result of political uncertainty at home as Andy Burnham ousted Keir Starmer as prime minister, leading investors to take a more cautious stance as they waited to see the new premier’s plans for the country.

While equities fell out of vogue in July, more retail investors turned to fixed income amid the global and domestic uncertainty, with net flows in the month reaching £863 million, the fourth consecutive month of inflows for the asset class.

Miranda Seath, director of market insight & fund sectors at the Investment Association, said: “As domestic and geopolitical uncertainty grows, July saw modest net retail sales of £278 million and a six-month low for gross sales at £30.1 billion, a sharp decline to the inflows experienced in H1.

“The composition of flows points to more cautious positioning, with investors continuing to favour fixed income and mixed asset funds while stepping back from equities.

“While July’s uncertainty has led to muted flows, this month’s data suggests that many investors are not withdrawing from markets altogether, but are remaining selective and continuing to seek diversified, lower-cost exposure alongside more defensive allocations.”

What did Brits invest in in July?

The asset class with the largest inflows in July was fixed income, with £863 million placed in it.

Government bonds were the most popular fixed income investment (£333 million), followed by strategic bonds (£319 million), mixed bonds (£181 million), and specialist bonds (£122 million).

Mixed asset investments had the second-largest inflows of £733 million, followed by miscellaneous other investments (£589 million), and money markets (£206 million).

On the other hand, property saw minor outflows of £0.05 million, while equities saw the highest outflows of £2.1 billion.

While British retail investors sold off investments in their home country, they kept investing in America.

North America funds had the largest retail inflows during July, as Brits poured £192 million into them. This was followed by global funds (£50 million), and Europe funds (£23 million).

UK funds saw the largest outflows, as a massive £1.6 billion was taken out of British funds. Seath suggested the outflows were a result of the political uncertainty in Britain.

“Investors will be looking ahead to the new Government’s first Autumn Budget and the forthcoming 10-year plan for Britain in order to inform investment decisions based on the direction of economic, tax and investment policy, particularly in light of renewed inflationary pressure further tightening the UK’s fiscal headroom.”

Overall Asia funds had the second-largest outflows of £97 million, followed by Japan funds with outflows of £81 million.

Will net inflows turn to net outflows?

While investor sentiment has been buoyant so far this year, with net flows not turning negative for all of 2026 despite geopolitical headwinds, how long will the optimism last?

Not for long, seems to be the answer as investor confidence fell sharply in August, according to Boring Money’s index.

The index fell 12% from 52 to 46 in August as investors became increasingly pessimistic about both the UK and global economy after an optimistic June and July.

Meanwhile, 29% of investors say they are planning to move more investments into cash over the next six months, according to the research, indicating we could see more money taken out of the stock market in the remainder of 2026.

Holly Mackay, CEO of Boring Money, said: “June and July were positive months as investors reacted well to the memo of understanding ending the Iran conflict and closer to home, Burnham enjoyed a brief honeymoon period. However August’s data show a less positive mindset as investors exhibit lower confidence in both local and global economies and report plans to move more to cash and to invest less.

“Continued geopolitical turmoil, higher energy bills, early thoughts on the upcoming October Budget, and assumed tax hikes coupled with looming higher interest rates are weighing on investors who are a lot more bearish than they were in the summer.”

Buyers are returning to the UK housing market, but with a glut of stock available sellers will need to do all they can to shift their homes.

In its latest house price index, property portal Zoopla said searches on its website in July 2026 were 7% higher than July last year.

However, supply is outstripping demand. Zoopla said there were 5% more homes for sale on its portal in July 2026 compared to the same month in 2025.

Separately, property website Rightmove said the supply of homes on the market in July 2026 was close to a 12-year high.

Some estate agents believe we’re now firmly in a “buyer’s market” – defined as a period of high supply versus lower demand.

Why are we in a buyer’s market?

Tom Bill, head of UK residential research at estate agent Knight Frank, believes “uncertainty” is one of the biggest reasons we're in a buyer’s market.

He said fluctuating mortgage rates caused by the Iran conflict, speculation in the run up to last year’s Autumn Budget and fears over what could be announced in the upcoming Budget have dented demand and caused transactions to slow.

According to HMRC, there were 96,710 UK residential transactions in July 2026, 1% lower than July 2025 and 2% lower than June 2026.

“Things have been a bit stop-start over the last 12 months…and it’s causing buyers to hesitate and to think twice,” Bill said.

“There’s less speculation around this year than there was last year, but people are expecting more taxes on wealth and assets to come in the [2026] Budget because the government has a fairly limited room for manoeuvre.”

Meanwhile, a glut of flats are being put on the market.

Polly Ogden Duffy, managing director of estate agents John D Wood, said some of these flats were being sold by landlords leaving the buy-to-let market, in part, due to the Renters’ Rights Act coming into effect in May 2026 and an increasing tax burden.

Some 93,000 landlords exited the buy-to-let sector in 2025, with another 110,000 forecast to leave in 2026, according to lender Black and White Bridging.

“There are so many reasons today for landlords to not enter the buy-to-let market than perhaps five years ago,” Ogden Duffy said.

She also said homebuyers keen to swerve paying stamp duty twice may be sidestepping smaller apartments, which could be increasing the supply of flats in the market.

“[Buyers are] trying to avoid buying a one-bedroom flat and perhaps buying a bigger flat or a small house as their first purchase.”

High service charges and stagnant flat price growth in recent years were giving buyers extra reasons not to buy flats, Ogden Duffy said.

What could Andy Burnham do to help sellers?

Prime minister Andy Burnham ruled out scrapping stamp duty back in July, but experts say this would be one of the best ways to incentivise homebuyers and increase demand.

David Hollingworth, associate director at the broker L&C Mortgages, said: “Although we are in a more stable period [with mortgage rates]...stamp duty is a big cost that people will see as money to nothing, and it’s just another barrier to whether they should move.”

Scrapping stamp duty could help unlock some of the £5.5 trillion worth of UK housing wealth and galvanise the market, according to wealth manager Rathbones.

Their research suggests ditching the tax would lead to a further 300,000 housing transactions per year.

Ogden Duffy said even if the government didn’t want to scrap stamp duty completely, increasing the thresholds at which it is paid would stimulate the market somewhat.

Others have called for further solutions. Last month, Jason Honeyman, chief executive of property developer Bellway, said the government should introduce a deposit support scheme for first-time buyers to stimulate demand.

What can homeowners do to sell their homes?

Pricing your property accurately is one of the most important things you can do as a seller in the current market, Ogden Duffy said.

“If you are not pricing your property below your competition, you have to accept that you may not sell,” she added.

Recent research by Zoopla found 44% of UK homeowners listing properties for sale in the past three years didn’t sell them, with 34% of this group admitting they had priced their home too high.

Ogden Duffy said if you can’t afford to take the financial hit of a lower asking price, you could rent your property out – with so many landlords leaving the market, rents are being driven up, which offers an opportunity.

Average UK monthly private rent increased by 3.7% to £1,393 in the 12 months to July 2026, according to the ONS.

What if you don’t want to be a landlord or drop your asking price?

If you don’t want to drastically reduce your asking price and aren’t keen on renting the property out, there are other steps you can take to boost your home’s chance of selling.

Ogden Duffy said: “First impressions count, so in this day and age I wouldn’t be using an estate agent unless they had a professional photographer…a really good photographer is going to present your property in the best possible light, and [they] aren’t just taking photos.

“They can advise you to clear surfaces, help you reposition furniture [and] suggest times of day that would be better for light.”

Ogden Duffy also said listing your property on as many property portals as possible will increase your exposure, as will putting up a for sale board outside your home.

She recommended removing any “wildly eccentric” details from your home and trying to avoid being a seller in a chain of more than three people, which will increase the likelihood of delays that could lead to the chain collapsing.

Hollingworth said speaking to multiple estate agents for valuations can be useful when deciding what price to list your home at. For example, you could take all the valuations and work out what the average is.

He also said speaking to multiple agents can allow you to choose the one between all of them that is most enthusiastic about selling your home and will push for the best possible price.

SpaceX’s initial public offering (IPO) was a landmark moment for many investors, opening up a new galaxy of opportunities.

Its historic June debut saw the space exploration company valued at $1.77 trillion at its IPO and its share price surging by 50% in the first three days of trading. .

SpaceX’s (NASDAQ:SPCX) share price has fallen back since, but the appetite for space investing is only ramping up, with investors having more ways to access the sector than ever before.

Opportunities to invest in space are being fuelled by the ongoing artificial intelligence (AI) boom.

“Old space put humans on the Moon. New space is building the commercial infrastructure of the global economy,” said Mark Boggett, CEO of space tech investment firm Seraphim Space. “The convergence of AI and space tech, together with rising demand for connectivity, defence and sovereign capability, is creating one of the most compelling investment opportunities of the coming decade.”

How SpaceX and Nvidia are joining space and AI

It’s tempting to think of artificial intelligence (AI) and space as two separate themes, but they are increasingly closely linked.

SpaceX, for example, is largely an AI company since it merged with xAI, Elon Musk’s AI company and maker of the Grok LLM suite, earlier this year. SpaceX identified a $28.5 trillion total addressable market in its IPO prospectus, of which $26.5 trillion was attributed to AI – compared to $1.6 trillion for satellite connectivity and $370 billion for space launch services, which have historically been the pillars of SpaceX’s business.

One of the most visible crossovers between the space and AI themes is the concept of the orbital data centre – essentially, a data centre in space. These don’t exist yet, but they may not be far away: Starcloud, a start-up dedicated to making orbital data centres a reality, raised $250 million at a $2.3 billion valuation in August.

Among the list of investors in Starcloud’s latest investment round are tech hardware giants Nvidia and Cisco.

“Orbital data centres have gone from science fair to a funded race in a matter of months, with Nvidia neatly hedging both sides by backing Starcloud and SpaceX's rival Starmind,” said James Lockyer, research analyst at investment bank Peel Hunt said.

Nvidia especially is increasingly central to the space industry’s designs. Colette Kress, the company’s chief financial officer, confirmed at Nvidia’s Q2 earnings call that SpaceX is among a number of leading partners that the firm’s latest generation of chip, Vera CPU, is being shipped to.

Nvidia also holds a stake in SpaceX via an earlier investment into xAI.

“The chip cycle and the space cycle are fusing,” said Lockyer. “Nvidia funding, supplying, and holding equity in SpaceX ties the single most valuable name in AI to the most valuable name in space, and for investors it makes SpaceX a compute story as much as a launch one.”

How to invest in the new space economy

As the space industry develops, investors have greater access than ever before. While SpaceX is the largest company in the space sector and is readily available to buy since its IPO, other stocks such as Rocket Lab (NASDAQ:RKLB) and AST SpaceMobile (NASDAQ:ASTS) offer space exposure too.

Companies like these can be accessed through thematic exchange-traded funds (ETF), such as the WisdomTree Space Economy UCITS ETF (LON:WSPG) or the Seraphim New Space UCITS ETF (LON:SERA), which launched on 2 September.

Seraphim New Space UCITS ETF is based on the Seraphim New Space Index, which identifies and weights companies across various components of the space investment ecosystem. Its representative holdings include SpaceX, as well as companies like space infrastructure company Intuitive Machines (NASDAQ:LUNR) or BlackSky (NYSE:BKSY) which offers “space-based intelligence” by using AI and machine learning to instantly analyse imagery captured from satellites.

The ETF also holds a position in Seraphim Space Investment Trust (LON:SSIT), which gained 56% in 2026 through to 28 August. Unlike the ETF, which will mostly hold publicly-listed companies, Seraphim’s investment trust mostly holds private companies related to the space economy.

The story of Japan has long been deflation. For the last 20 years or so, the country had been plagued by it, leaving its economy stunted. But the tide has finally turned.

The initial catalyst was the increase in import costs in 2022 that pushed Japanese firms to raise prices, says Masaki Taketsume, manager of the Schroder Japan Trust, on the MoneyWeek Talks podcast.

This led to a virtuous circle – increased earnings growth fed into higher wage growth. Higher wages fuelled consumption, leading to further earnings growth.

While this cycle may have helped end the deflation crisis, much of the groundwork was laid years before under the premiership of prime minister Shinzo Abe, who regained office in 2012 after a stint in 2006-2007.

To help pull Japan out of its rut, Abe employed the “three arrows” strategy. Taketsume says the strategy was used to tackle a shortage of demand in the economy, which was causing deflation and high levels of unemployment.

“The three arrows were a broad range of physical stimulus and accommodative monetary policy. The combination helped the Japanese economy to improve, narrowing the gap between supply and demand.

“The last arrow was deregulation, including corporate governance reform with a unanimous effort led by the Japanese government and regulatory agencies like the Tokyo stock exchange and investors like us.

“All the interested parties were supporting the Japanese corporation to rebuild their business portfolio and review their balance sheet to sustainably improve their return on equity. That effort has been evolving quite well”

How Abenomics gave Japan Inc. a jolt

Over the past few years, Abe’s corporate governance reforms have helped Japanese firms overcome a well-earned reputation of being uninterested in what their shareholders thought.

Taketsume says the reforms prompted Japanese companies to release excess cash from their balance sheets, initiate share buybacks, or increase their dividends to be more responsive to shareholders.

Now firms are being pushed further to undertake a comprehensive review of their business portfolio or make growth investments to realise a sustainable improvement in return on equity, a key gauge of profitability

“So in that sense, corporate governance reform is a structural positive tailwind for the Japanese equity market.”

Another aspect of the ‘Abenomics’ reforms was the cracking down on cross-shareholding, which had been rife among Japanese firms, but is now unwinding, according to Taketsume.

“Toyota Group used to have a reputation of having a very strong tie between Toyota and the supplier, but nowadays most of the Toyota group [has dissolved] their cross-shareholding. That’s one good piece of anecdotal evidence that the cross-shareholding has gone.”

The reforms are leading to stronger returns on equity.

Taketsume said: “If we move back to before the Abenomics era, average return on equity for the Japanese corporation was something like 4% or 5%, but now, thanks to the corporate governance reform, the Japanese company is getting closer to 9% or 10%”

While this transformation is strong – doubling in just over a decade – it still lags behind the European or US markets.

“Corporate governance reform is an ongoing effort, so that suggests we may see further upside in the return on equity for the Japanese company and move closer to that of the US or Europe,” said Taketsume.

For more on the Japanese stock market, the political context of Japan’s reforms, and more, watch the full episode of MoneyWeek Talks with Masaki Taketsume on YouTube, or listen to it wherever you get your podcasts.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick, Andrew Van Sickle and Cris Sholto Heaton are joined by influential guests – from CEOs and entrepreneurs to economists and fund managers – to share their top tips on managing money, investing wisely and building wealth.

Subscribe to the MoneyWeek Talks podcast and get ready to make it, keep it and spend it with confidence. You can also watch the episodes on our YouTube channel.

Law Debenture (LSE:LWDB) is a unique investment trust. It is part equity income portfolio and part professional services company, all in one high-performing £1.7 billion wrapper.

It has been a stalwart of the MoneyWeek Investment Trust portfolio since September 2015, with the second-best performance of all the trusts selected. Over the past ten years the shares have produced a total return of 263%, versus 130% for the FTSE All-Share index. It has also outperformed its benchmark by a wide margin over one, three and five years.

This performance is by far and away the best of any trust in the UK equity income sector. The secret of its success is down to the independent professional services (IPS) business.

The success of Law Debenture’s IPS

The IPS business provides a selection of relatively mundane, but essential services focused around three groups: pension services, which provides pension trust services across the UK; corporate trust, a provider of trust and escrow services for transactions such as bonds and mergers and acquisitions (M&A); and corporate services, which provides company secretarial and entity management services.

Inflation-linked organic growth has been complemented by acquisitions – most recently the purchase of company secretarial unit Konexo in 2024 – have all helped IPS grow both top and bottom lines.

These businesses grew net revenue by 6% in the first half of 2026 – the ninth consecutive year of mid-to high-single-digit growth.

These businesses are relatively specialist, so they are difficult for customers to do in-house. They are also low-margin and only profitable at scale, giving incumbent providers a significant edge.

There are only a handful of peers: the four public comparables include London-listed JTC, which is in the process of going private.

Dividend support

IPS accounts for only 15% of Law Debenture's net asset value (NAV), but over the years, its profits have helped support around a third of the trust's dividend distributions to investors.

That gives James Henderson and Laura Foll, the managers of its equity portfolio, a huge advantage for their strategy.

While other UK equity income trusts need to prioritise owning dividend-paying shares to support their distributions, they can take a more flexible approach.

For example, in February 2020, Law Debenture built a position in Rolls-Royce, which then had to suspend its dividend during the pandemic. Other income trusts might have been forced to sell, but Henderson and Foll held on. The position has since generated a return of more than 1,100%.

Other examples include Marks & Spencer and Babcock. Both of these have been held for capital gains, despite their poor dividend credentials.

A strong first half

The portfolio – which accounts for 85% of NAV – is built around growth, income and value. There is also a higher percentage of smaller and medium-sized companies than you might usually find in a UK equity income trust, which reflects the solid foundation provided by IPS.

For example, in the first half, positive contributors in the investment portfolio included companies viewed as beneficiaries of AI, such as Ceres Power and Infineon Technologies. Henderson and Foll also added positions in LSEG and Relx, two previous winners that had sold off due to concerns about the threat of AI.

Strong performers during the period included Beazley, Senior, International Personal Finance, Schroders and Tate & Lyle – all of which received takeover offers, which is “further evidence of the valuation opportunity available in UK equities”, say the managers.

The trust's own shares have also been trading well. For the six months to the end of June, they produced a total return of 16.2%, as they moved from a 2.5% discount to a 1.7% premium on top of the underlying NAV return.

The quarterly dividend was increased by 6% to 8.875p. Based on the company's current target for the year, the shares currently yield around 2.9%.

Henderson is set to retire in June next year, with Foll taking over the portfolio as lead manager. Given her ten years' experience at Law Debenture – as well as 12 on the Global Equity Income team at Janus Henderson – it should be business as usual when she assumes sole command.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Does a fresh lick of paint in the kitchen increase the value of the house? Or a heated towel rail in the bathroom? Or an attractive water feature at the back of the garden?

We learned this week that the government is planning to appoint teams of inspectors to visit people's homes, and decide whether the owner has to pay the new “mansion tax”.

An extra levy will be imposed on homes worth more than £2 million, on a sliding scale going up to beyond £5 million.

It is meant to come into force in April 2028, but it is already proving a lot trickier than ministers seem to have realised.

Earlier this year, HMRC said it was hiring hundreds of inspectors to help with the valuation of everyone's home.

They will all have powers to enter a property to assess what it might be worth.

We can see what the authorities are getting at. If you simply rely on previous sale prices, it takes no account of how a house might have been improved, and lots of homes may well slip through the net.

There is a catch, however. It illustrates that while a mansion tax might appeal to the class warriors on the Labour backbenches, it is going to be very difficult to implement in practice.

There are three big problems. Firstly, going through a large house and trying to figure out how much each “improvement” or “feature” has added to its value is a huge task, and one that will take several years, at a minimum, of training before the “value police” are ready to start work.

It is a huge undertaking, from a state machine that can't build a new railway, or reservoir, or any extra houses. It is hard to believe it is all actually going to happen, and even if it does there will be years of delays as there is with every other government project.

A mansion tax could create a legal quagmire

Next, many of the valuations, quite rightly, will be taken to court.

The Office for Budget Responsibility (OBR) gave us a glimpse into the legal train wreck heading towards us earlier this year with a forecast that 20% of valuations would be challenged in court and that 40% of the legal cases would be successful.

The courts are going to be clogged up for years deciding how much individual homes are worth, creating huge backlogs and crowding out time that should be spent on far more serious issues.

Even worse, the top end of the British housing market is now in freefall, in part because of the looming mansion tax.

In Westminster, prices are down by 25%; in Kensington and Chelsea, 15%. Those falls are starting to ripple out into other boroughs and into the leafy commuter suburbs as well.

With those kinds of price declines, homes are going to drop below the £2 million threshold in huge numbers. The inspectors will have to change valuations constantly, and some owners are going to be heading back to court every year to try and get the tax removed.

Finally, the tax will only raise tiny sums anyway. The OBR has already downgraded its forecasts for the amount of revenue it will raise from £400 million in its first year, rising to £435 million by 2030-2031.

But it also warned that revenue would fall by £370 million before April 2028 because of reduced stamp duty, capital gains tax and inheritance tax receipts as households sold or downsized.

In other words, once all the costs are taken into account, the mansion tax may not end up raising any money at all.

All those expensive inspectors, with generous holiday allowances and gold-plated public-sector pensions that will stay on the government's books forever, will have been employed for absolutely nothing.

Those are just the practical details. The government still needs to deal with the moral issues.

What will it do about elderly homeowners, for example, who might not be able to sell a big house, but also can't afford to pay the extra tax on it?

Will it be able to face down the inevitable political backlash?

And given that the top 10% of earners already pay 60% of all the income tax collected in Britain, how can it justify yet more taxes on people who are already paying for most of what the state does?

And if the tax does cost more to implement than it raises in revenues, as it almost certainly will, how can it justify the drain on public finances at a time when the deficit is already soaring out of control?

The tax has not come into force yet. But it is already turning into a disaster.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Targa Resources owns and operates natural gas pipelines, gas plants, liquefied petroleum gas (LPG) export facilities and crude oil terminals across the US. In mid-August, its shares rose 10% after it announced a 20-year midstream deal with ExxonMobil to build and operate a portfolio of energy infrastructure assets for the oil and gas giant.

Targa's deal is the latest in a series of multibillion-dollar projects recently commissioned by oil giants and governments to help move oil and gas around the world.

Targa Resources (NYSE:TRGP) is a midstream energy group, playing a vital role in the energy sector. These businesses link upstream companies, which drill and extract the raw product, and downstream businesses, which refine and sell it to consumers.

Most oil and gas majors manage this part of the process themselves, but in markets such as the US, where thousands of smaller producers in oil fields need to connect to major refining and storage hubs, midstream firms are a vital part of the chain.

Growth in the pipeline market

The $65 billion Targa is just one such company in the industry. The firm was founded in 2003 and has grown steadily through organic growth and acquisitions. In 2004, it purchased midstream natural-gas operations from oil major ConocoPhillips and in 2005, it acquired an asset from energy supply business Dynegy. In 2007, the company listed as Targa Resources Partners LP, using the money from the initial public offering (IPO) to seal more deals.

Over the following two decades, Targa secured 20 further agreements, encompassing joint ventures, partnerships, asset sales and stake sales in key infrastructure assets.

Today, the group owns and operates assets across New Mexico, Oklahoma, Texas and Louisiana. It is active in the key oil-production regions of the Permian, the Bakken Three Forks Shale, Eagle Ford Shale and Fort Worth Basin.

The Permian has become one of the most important oil-producing regions in ExxonMobil's portfolio. When the group sealed the $60 billion deal to buy Pioneer Natural Resources in May 2024, it doubled its footprint in the region and laid out plans to drive production to two million oil-equivalent barrels per day (boepd) by 2030, up from the 612,000 barrels Exxon produced from the region in 2023.

Production hit a record boepd in the second quarter and is now close to 1.8 million as the group continues to grow at a breathtaking pace.

Exxon's total Permian production consists of between 70% and 75% liquid hydrocarbons (crude oil and natural gas liquids) and 25%-30% natural gas. This needs somewhere to go, and that's where the deal with Targa comes into play.

Exxon has agreed to so-called natural gas liquids (NGL) dedications with Targa, whereby it is legally committed to using the company's midstream assets for transport, processing, or fractionation (a physical and chemical separation process) of NGL production from its key fields in the Permian region.

Following these commitments, Targa has announced three new natural-gas processing plants in the Permian Delaware: Wrangler, Ranger, and Ranger II, with a combined capacity of approximately 825 million cubic feet per day.

The plants are expected to be operational in the first half of 2028, with scope for up to five additional processing plants. It also announced plans to build a new, approximately 70-mile, natural-gas pipeline called Bull Run II, supported by take-or-pay commitments (whereby producers buy a fixed amount of capacity and pay whether they use it or not).

To meet these commitments, Targa has upgraded its expected capital spending for the year from $4.5 billion to $5 billion. The business spent $2.1 billion on growth and maintenance capital in the first half of 2026, up 23% from the same period in 2025.

A new gold rush

Despite substantial efforts by policymakers over the past two decades to wean the world off its addiction to hydrocarbons, there has been no let-up in the relentless march of the oil and gas industry.

Pipelines and midstream assets are an often overlooked part of this market, but the conflict in the Middle East has highlighted their importance to the global economy.

With the Strait of Hormuz closed to shipping, pipelines across the Middle East have become critically important for the region's oil and gas producers.

In the past two months, the United Arab Emirates has announced plans to open a new pipeline alongside its existing Habshan-Fujairah pipeline, doubling its capacity.

Meanwhile, America, Iraq and Qatar have also announced plans to upgrade a pipeline from Iraq to Syria, and Chevron is in talks to build a series of them from Iraq to Syria and Turkey.

According to The Economist, citing information from Global Energy Monitor, an oil data and research firm, 12,300 kilometres of pipelines are currently under construction worldwide, with an additional 20,100 kilometres proposed.

Taken together, these additions represent nearly a 10% increase over the 350,000 kilometres of pipelines currently in operation worldwide.

The most cost-effective way to get oil and gas from production fields (usually located inland or in deep water) to refineries and key export markets is by tanker.

Transporting each barrel of oil on the world's largest seagoing tankers can cost as little as a few dollars a barrel. But when it is impossible to use tankers to transport them, producers have no choice but to turn to other methods such as rail, road or pipelines.

A large-diameter pipeline that can carry around one millions barrels of oil per day costs, on average, about $5 million per kilometre, or $5 billion for a 1,000 kilometre pipeline.

That's assuming the pipeline is laid over relatively flat terrain. If mountains, rivers and lakes get in the way, costs can rise significantly.

The significant upfront capital cost is why midstream companies and pipeline owners turn to take-or-pay agreements.

Under these agreements, customers purchase a minimum amount of transport capacity on the pipeline and pay a fee for this capacity, often indexed to the price of oil over an extended period (frequently a decade or more).

The company has to pay to use this capacity whether or not it has oil to transport. This dramatically reduces the risk inherent in the project for the pipeline-operating company and its lenders.

Pipelines require a lot of capital to start, but the long-term economics are hard to argue with.

Data compiled by The Economist shows that the cost of transporting oil via a pipeline is, on average, around $5 per barrel. The cost rises to $18 per barrel when oil is transported via road or rail.

At the height of the US-Iran conflict earlier this year, some reports emerged of companies in central Africa paying as much as $200 a barrel, with $50 of that covering transport costs alone.

No wonder, then, that there is heavy investment in expanding pipeline networks to cut costs and improve reliability. In East Africa, for example, a 1,500 kilometre pipeline is under construction to transport oil from Uganda to the Tanzanian coast.

Argentina is building a 440 kilometre pipeline to connect its key oil fields in the centre of the country to the Atlantic.

There is a growing opportunity for investors. Because returns from pipelines are relatively stable and predictable, thanks to pre-agreed take-or-pay contracts, private infrastructure funds have flooded into the market.

According to McKenzie, a consultancy, assets under management across private infrastructure funds have rocketed to $1.6 trillion in recent years.

This year, global investment group KKR finished raising money for its largest-ever infrastructure fund with a total value of $19 billion. It's almost certain a large chunk of this will go to pipeline projects. Blackstone and Brookfield are also getting in on the action. KKR, Blackstone and Brookfield have signed a $16 billion deal with Kuwait's oil company for a stake in the country's pipeline network.

Don't be tempted by partnerships

The midstream sector is particularly strong in the United States thanks to a quirk of US tax law.

Midstream firms can be structured as master limited partnerships (MLPs), which are pass-through entities much like real-estate investment trusts (REITs).

MLPs pay no taxes, so they can distribute much more of their cash flow to investors. Investors then pay tax on these distributions. Over the past decade, many former MLPs have transitioned to C-corporations (a standard limited company) following a change introduced by the 2017 Tax Cuts and Jobs Act.

The changes have opened these companies to a wider range of investors, but yields have fallen because dividends are now paid out after corporate tax; in the partnership model the tax liability falls on the investor.

As a rough guide, the Alerian MLP ETF currently yields 7.4% on a trailing 12-month basis, while the Alerian Midstream Energy Dividend UCITS ETF, which has strict limits on MLP exposure, yields just 3.6%.

The Alerian Midstream Energy Dividend UCITS ETF has enforced limits on exposure to MLPs owing to K-1 tax constraints – the reason why these MLPs are unsuitable for all but the most sophisticated investors. A Schedule K-1 Federal Tax Form is issued by US partnerships to report a partner's share of its income, losses, capital gains and dividends.

In short, they are a nightmare for non-US investors. Even smaller domestic US investors generally avoid partnerships to avoid the added administration these tax requirements create. Very sophisticated investors who want exposure to these businesses may use total return swaps or other synthetic instruments instead, rather than becoming entangled in the web of compliance. Don't be tempted by a high yield on a US midstream MLP.

Fortunately, plenty of other options exist for investors to play this theme. Kinder Morgan (NYSE: KMI), the largest natural gas-pipeline operator in the United States (and a former division of Enron) consolidated its various MLPs into a single traditional C-corporation in 2014 in order to lower its cost of capital and appeal to a broader range of local and international investors. Many of the company's peers have since followed suit.

A tailwind from AI

Kinder Morgan reported record net income of $867 million in the second quarter, up 21% from the same period last year.

Around $660 million of new projects coming on stream helped boost the company's top and bottom lines, including Tennessee Gas Pipeline's (TGP) Cumberland Project, designed to serve a new gas-fired power plant in Tennessee.

The company said it had a construction backlog of $9.7 billion at the end of the quarter, with an additional $400 million of projects not included in the official backlog, but sanctioned to proceed.

Natural-gas projects made up 92% of the backlog, and 60% of those projects are designed to support local power generation and distribution. The company believes it will outperform expectations by 5% for the year, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $9 billion and a 12% rise in adjusted earnings per share.

Kinder Morgan, like other US midstream companies, is benefiting from increasing demand for power across the US driven by the AI boom. According to Goldman Sachs Research, domestic power demand from data centres is projected to more than double from 31 gigawatts (GW) to 66 GW by 2027, consuming over 8.5% of total US peak summer electricity.

To keep up, companies are commissioning new natural-gas power plants, which can be brought online in a few years and located next to data centres; pipelines are needed to connect these facilities to production zones.

Kinder Morgan may be the largest natural-gas pipeline operator in the sector, but peer Enbridge (Toronto: ENB) is worth nearly twice as much.

It plans to spend between C$10 billion (£5.3 billion) and C$11 billion this year, with half of that already spent in the first six months. It is constructing the $4 billion Sunrise expansion of its British Columbia pipeline (adding 140 kilometres of new pipeline in addition to upgrading the capacity of the existing pipeline) and spending $1 billion relocating a pipeline in Wisconsin.

Williams Companies (NYSE: WMB), the second-largest pipeline group after Enbridge in market value, has raised its spending guidance for the acquisition of Momentum Midstream. It is now projecting spending between $7.3 billion and $7.9 billion in 2026.

Enterprise Product Partners is spending around half as much, with capital spending earmarked at between $2.9 billion and $3.4 billion, net of asset sale proceeds.

Key projects include two new gas-processing plants in the Permian Basin, illustrating the growing importance of natural-gas processing and transportation.

Enterprise Product Partners is the fastest-growing of the large midstream companies, but it is also still structured as a partnership. It reported a 19% increase in adjusted cash flow from operations in the first half to $2.5 billion, as well as a 28% increase in net income, thanks primarily international demand for US natural-gas liquids and crude oil.

Energy Transfer also set several all-time record volumes, notably in natural-gas liquids transportation volumes, which increased 13%, and exports, which increased 25%. Distributable cash flow rose 32% to $2.6 billion. Enbridge, Williams and Kingdom Morgan are all trading at roughly the same valuation, with a price/ earnings ratio (p/e) in the low 20s and a yield between 3% and 5.5%.

The Alerian Midstream Energy Dividend UCITS ETF (LSE: MMLP) offers exposure to all three companies, plus 16 others, with Kinder Morgan, Williams, Enbridge and Targa comprising around 40% of the fund. Investors also get synthetic exposure to the Alerian MLP index.

The picks-and-shovels plays

Infrastructure provides a steady, predictable return. But if you want something offering a bit more excitement, consider the companies providing the picks and shovels to help build future pipelines. Companies worthy of research include Caterpillar (NYSE: CAT), Tenaris (NYSE: TS), MasTec (NYSE: MTZ) and Primoris Services Corporation (NYSE: PRIM). Caterpillar is a broad-based play on the health of the US economy. The company reported record revenue of $20.5 billion in the second quarter, up 24% year on year – the first time Caterpillar has reported more than $20 billion of revenue in a single quarter.

Meanwhile, the company's order backlog hit a record of $72.1 billion, that's not just related to its diggers. While Caterpillar is widely associated with earth-moving and construction equipment, it also operates the SPM oil and gas brand and manufactures equipment for gas power plants. This energy and transportation division increased sales by 17% year on year. While the stock has dipped recently, it is still trading at 25 times projected 2027 earnings.

Tenaris is one of the more interesting companies in the area. It supplies tubular steel used to make pipelines worldwide. Sales fell 4% in the second quarter, mainly because shipments to customers in the Middle East were postponed owing to the conflict.

Lower deliveries to Kuwait and Iraq were, however, offset by higher sales to Venezuela and Argentina, along with the start of delivery of offshore line pipes to the Sakarya Black Sea development in Europe.

The company reported a $3.6 billion net cash position at the end of June, compared with a $19bn market capitalisation. The stock is on a forward p/e of 13.9.

MasTec and Primoris are two of the largest engineering construction contractors in North America. The latter is more focused on utilities, while the former has a big pipeline and energy business. Still, both recently reported record second-quarter sales and record order backlogs.

MasTec reported a record 18-month backlog of $21.4 billion; of this total, $1.8 billion was allocated to its pipeline segment, while Primoris achieved a record total backlog of $13.9 billion (comprising $7.7 billion in the utilities segment and $6.2 billion in energy).

MasTec recently acquired The Superior Group to expand its services into datacentre infrastructure and trades at the higher valuation of the two (21 times 2027 earnings versus 14 for Primoris). That's because Primoris reported a loss for the second quarter, despite record sales. The losses stemmed from cost overruns on six renewable-energy projects. All of these will be complete by the end of the year, which should draw a line under the situation.

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The Old Mill, Linztford, Rowlands Gill, County Durham

A Grade II-listed former paper mill on the banks of the River Derwent. It has exposed stonework, wood floors, a wood-burning stove and a large kitchen with an Aga. 3 bedrooms, 2 bathrooms, reception, double garage, studio, riverside terrace, gardens, 0.34 acre.

Price: £700,000 Finest Properties 0330-111 2266

The Stack, Trelyon, Truro, Cornwall

A five-storey, Grade II-listed former engine house dating from the 1800s overlooking a valley. It has granite walls with arched doorways and a wood-burning stove. 3 bedrooms, 2 bathrooms, dining kitchen, reception, terrace, workshop, studio, gardens, 0.6 acres.

Price: £895,000 Rohrs & Rowe 01872-306360

Lakeland Cottage, Spark Bridge, The Lake District

This converted 1850s bobbin mill was originally one of the oldest continuously operating industrial sites in the country. The gardens include a pond and a bridge over the river that leads to a pavilion. 4 bedrooms, 3 bathrooms, 3 receptions, study, orangery, dining kitchen, balconies, garages, gym, greenhouse, outbuildings, workshop, private riverside jetty, grounds.

Price: £1.995 million Fine & Country 01539-733500

Rhydlewis, Llandysul, Ceredigion

A mid 17th-century mill in west Wales that was rebuilt in 1811. The former mill has solid stone walls and a full-height living area with a vaulted ceiling with exposed wooden rafters, timber panelling, a Danish wood-burning stove and large glass doors that open onto a substantial balcony that overlooks the garden. 2 bedrooms, bathroom, open-plan kitchen/living area, mezzanine, parking, gardens, grounds.

Price: £350,000 Savills 0292036-8915

The Old Foundry, Panxworth, Norfolk

A former iron foundry and smithy dating from 1869 on the edge of a village. It has double-height ceilings with a mezzanine, exposed beams and a large fitted kitchen. 4 bedrooms, 3 bathrooms, reception, study, office, roof terrace, gardens.

Price: £550,000 Sowerbys 01603-761441

Royal Mint Street, London E1

A penthouse apartment in a converted Victorian factory originally constructed in 1890 for the tobacco manufacturers Thomas Bear & Sons. It has a dual-aspect kitchen and reception with double-height vaulted ceilings, exposed brickwork, the original cast-iron columns, timber floors and Crittal windows. 3 bedrooms, 2 bathrooms, office/bedroom 4, open-plan kitchen/dining room, share of freehold.

Price: £2.25 million Knight Frank 0203-597 7687

The Old Fire Station, Worcester

A top-floor apartment in the award-winning Old Fire Station development in the centre of Worcester. The flat has an open-plan interior with wood floors and modern fittings. It comes with its own private balcony that commands views over Worcester Cathedral and also has access to a communal roof garden. 2 bedrooms, bathroom, open-plan kitchen/ living area, parking.

Price: £260,000 Allan Morris 01905-612266

The Wheelhouse, Canterbury, Kent

A Grade II-listed former industrial building dating from the 18th century just outside the city walls in the Nunnery Fields conservation area. It has a 32ft vaulted drawing room with a log-burning stove and a 36ft sitting room with a vaulted ceiling, exposed timber beams and a Juliet balcony. 6 bedrooms, 3 bathrooms, 4 receptions, study, conservatory, breakfast kitchen, greenhouse, garage, courtyard garden.

Price: £900,000 Strutt & Parker 01227-473700

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CVS Group (LSE:CVSG) is an example of how temporary uncertainty can create attractive investment opportunities.

For the past three years, the UK's largest listed veterinary services group has traded under the shadow of the Competition and Markets Authority's (CMA) investigation into the sector.

Investors feared the regulator would impose remedies severe enough to undermine the industry's profitability, pushing the shares down to 13 times earnings – a ten-year low.

Yet during that period, the business continued to compound earnings at an attractive rate. Revenue and profits kept growing, the firm expanded internationally and management kept investing in the business.

With the CMA's process now largely complete, investors have a chance to judge CVS Group on its operating performance rather than regulatory uncertainty.

Since listing in 2007, CVS Group has delivered uninterrupted revenue and Ebitda growth, a record few UK-listed companies can match, and one that helps explain why the shares historically commanded a premium valuation.

Few industries offer the resilience of veterinary care. People may postpone replacing a car or renovating the kitchen when finances come under pressure, but pet owners are unlikely to delay treatment for a sick pet. Demand therefore tends to remain resilient through economic downturns.

The industry's long-term outlook also remains favourable. Advances in veterinary medicine mean treatments once confined to specialist centres – including MRI scans, orthopaedic surgery and oncology – are becoming increasingly commonplace.

Add the millions of puppies and kittens acquired during Covid now reaching the age where healthcare spending accelerates, average spending per pet looks set to continue rising.

CVS Group has spent more than two decades building a business designed to benefit from those trends.

What started as a consolidator of independent veterinary practices has evolved into an integrated healthcare network spanning 500 sites, including general veterinary practices, specialist referral hospitals, diagnostic laboratories and an online pharmacy.

That integrated model creates meaningful competitive advantages. A routine consultation can lead to specialist diagnostics, orthopaedic surgery or oncology treatment without the patient leaving the CVS Group network.

Rather than referring work elsewhere, the company retains a greater share of each pet's lifetime healthcare spending while improving utilisation of its specialist facilities. It also makes the network more attractive to both clients and clinicians, reinforcing the advantages that scale already provides.

How CVS Group is cementing loyalty

Roughly 500,000 owners pay monthly subscriptions via The Healthy Pet Club, covering vaccinations, parasite treatments and routine health checks.

The subscriptions provide recurring revenue, and encourage owners to visit their vet more regularly – increasing customer loyalty while creating opportunities for higher-value diagnostics and treatment.

CVS Group has also invested heavily in recruitment, training and retaining veterinary professionals.

While labour shortages affect much of the sector, the firm's scale enables it to offer clearer career progression and more opportunities for clinical specialisation than independent practices can provide.

That should help support future growth and reinforce its competitive position.

The story does not end in the UK. Australia today resembles the UK veterinary market of 15 years ago – fragmented, independently owned and offering considerable scope for consolidation.

In three years, CVS Group has acquired 57 practices generating £80 million of annual sales, with the same disciplined acquisition strategy that proved successful in the UK.

Since the CMA announced its investigation, the company's valuation has steadily fallen even as the underlying business has continued to grow.

Australia has emerged as a meaningful contributor to earnings, the group has strengthened its market position and sales have continued to rise.

Management used the period to strengthen the business and diversify future sources of growth. CVS appears stronger today than when the regulatory review began, yet the share price continues to reflect much of the uncertainty.

That valuation gap is difficult to justify. Businesses capable of generating resilient cash flows, delivering consistent double-digit earnings growth and reinvesting capital over long periods rarely trade on just 13 times earnings. For much of the past decade, investors were prepared to value CVS Group at more than 20 times.

That premium was not simply a reflection of optimism. CVS Group combined resilient end-market demand with dependable double-digit growth, strong cash generation and repeated opportunities to reinvest capital at attractive returns.

Those characteristics remain largely intact today. If anything, the Australian expansion has broadened the opportunity to deploy capital at attractive returns.

Wage inflation remains a challenge across the veterinary profession and continued investment in clinicians may weigh on margins in the near term. Australia must still demonstrate that it can replicate the success of the UK business over a longer period. A rerating may therefore take time.

However, those risks appear broadly reflected in the current valuation. The CMA investigation depressed CVS's valuation for much of the past three years. It did not stop the business from growing.

If the market begins to focus on the latter rather than the former, today's valuation may prove an attractive entry point.

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Average asking prices for homes in Glasgow and Manchester’s commuter hubs have soared in the past year, new research shows.

Property portal Rightmove analysed asking price growth in commuter towns linked to six of Britain's largest cities: London, Manchester, Birmingham, Bristol, Glasgow and Cardiff.

Of the cities analysed, the strongest asking price growth is concentrated in commuter locations by Glasgow and Manchester, with 10 of the top 15 fastest-growing hotspots located here.

Asking prices are rising fastest in more affordable commuter areas, Rightmove said, but falling in some higher-priced locations.

Colleen Babcock, property expert at Rightmove said the research shows two very different stories playing out in the UK’s commuter markets.

“In the more affordable locations around Glasgow and Manchester, asking prices are rising strongly as buyers look for value within reach of major cities,” she said.

“Meanwhile, some of the more expensive commuter hotspots are seeing prices ease, which could create opportunities for buyers who may previously have been priced out.

“For anyone considering a move, it's a reminder that looking a little further beyond the main city locations can often open up more options and better value for money."

Glasgow and the North dominate list of commuter hotspots with the fastest rising asking prices

Asking prices for homes in Falkirk, a commuter town of Glasgow, had the highest annual change among the cities listed, with growth of 13.5%.

The average asking price for home in the town is now £183,596, just lower than the average asking price in Scotland of £199,888, according to Rightmove in August.

Clark Gillespie, director at Forth and Clyde Property, an estate agent in Falkirk, said the city is “an attractive choice for buyers because it offers a combination of affordability, strong transport links and excellent family amenities”.

The town has good transport connections to nearby hubs like Edinburgh and Stirling too, meaning “it's a practical option for commuters who want to stay connected to major cities while getting more for their money”.

Beyond Falkirk, towns near Glasgow dominate the list of commuter hotspots with the fastest-growing asking prices, with six locations earning a place in the top 15.

Several of Manchester’s commuter towns have also seen strong asking prices growth, with four ranking in the top 15.

Asking prices for homes in Rochdale have grown by 8.7% in the past year, the second-fastest of those analysed, bringing the average to £238,115. The suburb has asking prices lower than the average for the North West, which stood at £273,421 according to Rightmove in August.

Other notable Manchester commuter towns with fast-growing asking prices are St Helens (7.8%), Wigan (6.2%), and Stalybridge (5.6%).

Source: Rightmove, 24 August

London’s commuter hubs dominate list of asking price falls

Average asking prices in many towns serving London have fallen, representing 11 of the bottom 15 commuter towns.

Haywards Heath in West Sussex, a commuter town for the capital, has seen the biggest price fall of 4.8% since last year, Rightmove’s analysis found. Here, the average asking price is now £461,066, just below the average of £469,604 in the South East of England.

Meanwhile, asking prices in Maidenhead, Berkshire have fallen by 3.9% in the past year, bringing them to £571,686.

London does have one commuter town that bucks this trend. Broxbourne in Hertfordshire had the third-strongest asking price growth at 8.1%.

Some of Bristol’s commuter hubs have also seen asking prices fall. Asking prices for homes in Bath fell by 3.8% in the past year, while those in Yate, a suburb of the city, fell by 2.3%.

Source: Rightmove, 24 August

During Covid, Halfords (LSE:HFD), briefly benefited from the expectation that everyone would become a cyclist. Many people were making changes to their lives, such as adopting a pet, buying an exercise machine, or taking up a new hobby.

Shares in the firms that served these sectors surged, but once the lockdowns ended, many of these interests dwindled, causing the shares to fall back.

Even today, Halfords’ share price is still down 50% from its record peak in May 2021. But recently it has started to take off again and this time the increase could prove sustainable.

Halfords makes its money from selling accessories and providing repair services for bicycles and cars; it accounts for about half of all bicycles sold in the UK. It operates 370 stores, 496 garages, 21 mobile hubs and 92 commercial depots in the UK and Ireland.

Although overall sales have grown at a solid rate, increasing by around 40% since 2021, this conceals the fact that profitability has been far less consistent, due to higher costs and the overstocking of bicycles.

Normalised earnings per share are now less than half the level reached in 2021.

Halfords brings in a new broom

The good news is that Halfords' problems led to the appointment of new CEO Henry Birch last year. Birch has come up with a turnaround strategy based on three ideas.

In the short term, Halfords has worked hard to boost margins by keeping costs under control. It has also taken steps to improve its digital platform, making it easier for its customers to book services and sign up for regular plans.

However, the most interesting part of the new strategy is that Birch has been trying to shift Halfords' business more towards cars, which now comprise around 80% of sales.

He wants Halfords to focus on car repair and maintenance. One reason for this is that this part of the company has more growth potential than the stores owing to the greater opportunities for upselling (offering customers more and pricier products and services).

Another big advantage is that it is much harder for drivers to delay essential repairs than the purchase of accessories, making the division more resilient to the economic cycle.

Already this strategy seems to be paying off, with last year's pre-tax loss becoming a comfortable profit in the year to April 2026. Like-for-like sales (those from existing business units) are also growing at a healthy rate, while gross margins have improved too; Halfords recently upgraded its profit guidance for the next year.

Despite all this, the stock's valuation remains cheap at 12 times 2028 earnings and barely the value of the company's net assets.

The shares also offer a very solid dividend yield of 4.4%. Furthermore, they have soared 75% since 1 May, and they trade above both their 50-day and 200-day moving averages.

Go long at the current price of 232p at £15 per 1p. Put the stop-loss at 167p, which gives you a stop loss of £975.

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“What should I do if there's a AI crash?” a friend asked me recently. It is a very sensible question – we don't know there will be an AI crash, but having a clear plan to follow when you start to worry is better than waiting and panicking.

However, it's also a very difficult question, because the AI theme is such a huge part of the market: tech is over 35% of the MSCI World index (once you allow for firms such as Amazon and Alphabet assigned to non-tech sectors), while the trillions of AI capital expenditure is also buoying other sectors.

My first suggestion is to look at what wealth preservation trusts such as Capital Gearing (LSE: CGT), Personal Assets Trusts (LSE:PNL)and Ruffer Investment Company (LSE: RICA) hold.

These have diversified portfolios intended to cushion a market downturn, while still achieving growth. You could put some of your portfolio directly into these trusts, or you could look at how they allocate to cash, bonds, gold and other assets such as infrastructure as a template.

Even if you are a growth investor who is comfortable with high volatility to earn higher long-term returns, portfolios like these give you ideas for temporarily reducing risk that may be better than holding cash.

If you prefer open-ended funds, Orbis Global Balanced stands out for an active approach with more of a bottom-up value philosophy than most multi-asset funds.

Hedge against an AI crash with value stocks

If you want to stay entirely in stocks yet still dial down risk, you need to consider what kind of stocks are not caught up in the AI boom and may sell off less or rebound more quickly.

Think about this top down – by region (eg, UK and Europe) or sector (eg, pharmaceuticals and financials). Or you could look for value-focused stockpickers who favour other sectors.

That said, keep in mind that a European industrial that makes power equipment held in a value portfolio may still be a play on data-centre construction.

So it is difficult to anticipate how widely any pain from an AI crash may spread.

The most value-focused global trust is AVI Global (LSE:AGT), while most UK trusts have a value bias.

Among open-ended funds, Ranmore Global Equity has consistent returns from a portfolio that is very different to a typical global fund.

Some niche funds to consider

A third option is to look at very niche strategies whose medium-term returns should hopefully be unrelated to the AI-heavy global index.

Majedie Investments (LSE:MAJE) is now centred around such investments. It's an interesting holding in its own right, while looking at its strategy may help shape your own.

There are many specialist investment trusts and funds such as BH Macro (LSE:BHMG), BioPharma Credit (LSE:BPCR), BlackRock Frontiers (LSE:BRFI), Nippon Active Value Fund (LSE:NAVF) and Rockwood Strategic (LSE:RKW) or Polar Capital Global Insurance.

However, picking such funds is an approach for experienced investors who clearly understand what they are buying.

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Putting money in the S&P 500 is popular among those who want to start investing as well as experienced investors.

The S&P 500 is an index that tracks the performance of 500 of the largest companies in the United States, and is therefore one of the most effective proxies for the US stock market.

If you put your money in the index, you are effectively backing large US companies to continue to perform and grow in the future. Historically, this has brought about large returns.

Between 1 January 2000 and 1 January 2026, the S&P 500 increased by around 386%, and in the year to 17 August 2026 alone, the index rose by around 20%.

Given the index’s historically strong performance, it’s a popular one for people to track – often using an exchange-traded fund (ETF).

ETFs are one of the “the simplest ways to start investing,” says Kate Marshall, investment analyst at Hargreaves Lansdown.

“They can offer a great entry point into investing because they provide exposure to a diversified mix of investments, such as shares or bonds, rather than relying on the fortunes of a single company or asset. This helps to spread risk and can smooth some of the ups and downs that come with investing.”

But with so many options, how do you choose the one that’s right for you?

What are the most popular ETFs that track the S&P 500?

The most popular S&P 500 ETF is the Vanguard S&P 500 UCITS ETF USD ACC (GBP), according to Hargreaves Lansdown.

That title has several components, each of which says something about the ETF:

• Vanguard is the name of the company that issues the ETF and S&P 500 refers to the index the ETF tracks.
• UCITS stands for “Undertakings for Collective Investment in Transferable Securities”, a regulatory framework that governs how ETFs in the UK and European Union operate. It effectively means the fund can be sold to UK and European investors.
• USD refers to the base currency of the ETF – in this case US dollars. Some ETFs hedge against the possible impact of currency fluctuations between their holdings’ domestic currencies and another currency.
• ACC means the fund accumulates and reinvests dividends.
• (GBP) at the end refers to the trading currency of the fund. As this particular ETF is listed on the London Stock Exchange (LSE), you can buy and sell it in British pounds, meaning you do not need to manually convert currency.

This particular fund is listed on the London Stock Exchange (LSE) with the ticker “VUAG”.

The second-most popular ETF on Hargreaves Lansdown’s list is also from Vanguard – it is nearly identical to the one detailed above, but the only difference is that this one distributes your dividends. It trades on the LSE with the ticker “VUSA”.

A list of the top ten most popular S&P 500 ETFs among Hargreaves Lansdown’s investors can be found below.

^{Source: Hargreaves Lansdown, 31 July}

How much does an S&P 500 ETF cost?

When comparing S&P 500 ETFs, one of your biggest considerations should be the fund’s fees as they can eat into your returns.

The main one is the expense ratio, an annual fee charged by the fund provider for managing the fund. These are typically levied as a percentage of your holding in the fund.

For example, VUAG has an expense ratio of 0.07% which is relatively low. In contrast, HSBC's S&P 500 ETF has slightly higher fees of 0.09%.

That means that while both ETFs track the performance of the same basket of companies, you will pay higher fees with HSBC.

You should also look out for other types of general fees involved with investing, like platform fees. These are also usually levied as a percentage by the platform you use to make your investments.

Should I pick an accumulating or distributing ETF?

ETFs often have two variants: accumulating (ACC) or distributing (Dist).

The two labels refer to dividends – payments some companies make to investors – and what happens to them when they are paid out.

An accumulating ETF will automatically reinvest dividends back into the fund. This has the benefit of adding more money directly into your investments, meaning your position may grow faster.

Meanwhile, a distributing ETF will pay dividends into a bank account of your choice to do whatever you want with.

Which ETF to pick will depend on your priorities. Afolabi Thomas, equity specialist, Vanguard said: "Investors focused on long-term growth may prefer accumulation shares, while those looking for an income stream may prefer distribution shares."

One rule of thumb is the further you are away from retirement, the more likely an accumulation fund is right for you, as they allow your investments to grow faster.

“A distribution fund might suit someone who wants their investments to provide a regular income, which could become more relevant as they approach or enter retirement”, Lynn Hutchinson, head of ETF and Index Solutions at wealth manager Raymond James added.

“Though it doesn’t have to be a case of accumulation for younger investors and income for retirees. It really comes down to what you want the income to do. Someone in retirement could quite happily continue using accumulation funds and sell some of their investment when they need cash. Likewise, an investor who is still building their portfolio might prefer to receive the income”.

Why does performance differ between ETFs if they all track the S&P 500?

The performance of S&P 500 ETFs can vary slightly from one another.

This is known as tracking difference. Marshall explains: “Tracking difference shows how much an ETF has outperformed or underperformed its benchmark over a given period and is often the more important measure for investors, as it reflects the return they have actually received.”

There are many reasons an ETF may lag its benchmark, like fees, tax rates or securities lending (where the ETF issuer lends holdings out in exchange for a fee).

“Tracking difference gives you a broader view of what actually happened to the ETF's return once the various costs - and potential benefits - of running the ETF came into play,” said Hutchinson.

“That doesn't mean fees aren't important, they are. But when comparing two ETFs tracking the same index, looking at the OCF alone only tells part of the story. Looking at cost alongside historical tracking difference can give a much better idea of how efficiently an ETF has actually done its job: tracking the index.”

Small cap stocks are often overlooked but, for that reason, they can reward patient investors over the long term.

“Small caps offer a rare combination of attractive valuations, growth, and diversification,” said Abby Glennie, co-manager, Aberdeen UK Smaller Companies Growth Trust. “We’ve also gone through market periods globally where the dominant tech themes have driven handfuls of mega caps to lead markets, but perhaps now is the time for market strength to broaden out. Or at least for investor allocations to broaden out from mega caps for risk diversification, as they become increasingly nervous on the artificial intelligence (AI) trade.”

Glennie highlighted that small cap stocks have held up surprisingly well this year in the face of the conflict in the Middle East – which, on paper, could have looked like a major headwind for smaller businesses.

The MSCI World Small Cap Index returned 13.8% in 2026 through to 31 July, outperforming the core MSCI World Index which gained 10.3% in the same period.

“We aren’t seeing risk-off market performance in the way many would expect,” said Glennie. “Part of this driver is that smaller companies are trading at significant discounts to their historical valuation levels.”

What are small cap stocks?

Investment bank Saxo Group defines a small cap stock as one with a market capitalisation (market cap) ranging between $250 million and $2 billion.

Not everyone categorises small caps in this way. The major index provider, MSCI, groups stocks into size categories according to the percentage of the investable market they cover in each individual country, rather than using an absolute figure as a threshold.

“When constructing the MSCI World Small Cap Index, MSCI looks separately at each developed market, such as the US, Japan, UK and Australia,” said Lynn Hutchinson, head of ETF and index solutions at Raymond James. “The large and mid-cap companies might make up around the first 85% of each country's investable stock market.” Small caps then become the rest, and MSCI then combines the small cap stocks from each country into a single, market cap-weighted index.

Generally, though, the $250 million to $2 billion range is a good rule of thumb for thinking about small caps.

With exceptions, their smaller size means small caps are less globalised than larger stocks – they may, for example, be more tapped-in to the domestic economy of their home country than larger cap stocks.

Why invest in small caps?

Small caps can offer diversification, especially in the current environment where momentum investing has concentrated lots of portfolios into the world’s largest stocks.

“Small caps provide exposure to a much broader range of businesses, sectors, and growth drivers,” said Glennie. “Small cap benchmarks and portfolios tend to be very diverse in that way, not dominated by handfuls of stocks or one overarching theme.”

They also offer the potential for higher returns, though this comes with the caveat that you might need to be prepared to ride out periods of volatility.

“In my view, small caps shouldn’t be treated with fear but with healthy curiosity,” said Angeline Ong, senior investment analyst at trading platform IG.

Small caps also offer good value to investors at the moment. The MSCI World Small Cap Index has an average trailing price/earnings (P/E) ratio of 18.4, as of July 2026 – compared to 23.1 for the MSCI World Index, according to data from investment research firm Morningstar.

Are UK small caps good value?

The UK’s small cap sector in particular offers good value. It trades even lower – at just 15.6 times trailing earnings, according to Morningstar.

“We see opportunities across global small caps, but the UK remains especially compelling on valuations,” said Glennie. “UK smaller companies have experienced a prolonged period of investor neglect, and the asset class has been unloved.

“This has left valuations substantially below both their own history and many international peers,” Glennie continued. “At the same time, many UK listed small caps generate revenues overseas, giving investors access to international growth opportunities but at a discounted price awarded for its headline UK listing tag.”

UK stocks are widely undervalued, across the market cap spectrum. But its small caps are weathering the economic storms that 2026 has thrown. The FTSE 250 index (which is made up of mid-cap stocks) gained 10.6% in 2026 through to 25 August, while the FTSE AIM All Share Index (comprising the country’s smallest stocks) gained 6.4%.

“While macroeconomic uncertainty remains, this isn’t holding back the asset class in the way many market participants might fear,” said Glennie. “Many high quality UK small caps continue to deliver strong earnings growth, maintain strong balance sheets, and generate strong cashflows, as well as support shares through ongoing share buybacks.”

The risks of investing in small caps

MSCI highlights the fact that small caps can be more volatile than larger stocks. Additionally, they might be less liquid, which can make trading them more costly.

“If you’ve not done your homework, your due diligence… you could be caught offside and end up nursing quite large losses,” said Ong.

The lack of liquidity, Ong said, could mean you can’t sell a position you want to exit quickly enough just because there aren’t enough buyers on the other side.

“The risk with small caps is you might not have the flexibility if you want to get in and out quickly,” she said.

How to invest in small caps

It’s tempting to try to pick the small cap stocks you want to invest in, particularly as many of these might be businesses you’re familiar with yourself.

But this approach can exacerbate the risks of small cap investing. “We’d suggest [small cap investing] is best approached through a portfolio holding, rather than direct individual equities,” said Glennie. “This is because of the benefit of risk adjusted returns that you get through a managed portfolio, whereas at individual stock levels the risk level is much higher- so that strategy is perhaps only suitable for a certain type of investor.”

Tracker funds replicating some of the major small cap indices include the iShares MSCI World Small Cap UCITS ETF (LON:WLDS) or the Vanguard FTSE Global Small-Cap UCITS ETF (LON:VSML).

Active funds tracking global small caps include the Janus Henderson Horizon Global Smaller Companies Fund or the Invesco Global Smaller Companies Fund.

Investment trusts that focus on small caps include The Global Smaller Companies Trust (LON:GSCT) and Edinburgh Worldwide (LON:EWI).

For a focus on UK smaller companies, you could select Aberdeen UK Smaller Companies Growth (LON:AUSC). Top holdings as of 31 July include investment platform AJ Bell (LON:AJB) and construction firms Morgan Sindall (LON:MGNS) and Galliford Try (LON:GFRD).

If you do want to pick your own small cap stocks, Ong stresses the importance of sticking to companies, or at least sectors, that you understand very well.

“It’s not like buying Microsoft,” she said. “You really need to know what you’re buying.”

When you’re planning your retirement, one of the key decisions you’ll need to make is whether you will live in your own home, or spend your golden years renting.

The latter is not a cheap option. Renting in retirement will cost an average of £419,000 as rents are expected to more than double in the next 20 years, according to research from retirement specialist Standard Life.

Data from the Office for National Statistics (ONS) shows that while rents are an average of £1,160 today, this could climb to £2,350 by 2046 if they continue to grow by an average of 3.8% a year.

The high cost means those who plan to rent during their retirement will need to ensure their pension pots support that choice. Despite this, over six million people who expect to pay housing costs in retirement don't know how they'll afford them, according to data from Royal London.

The data showed those who expect to pay housing costs in retirement have an average pension pot of just £34,948, a figure far lower than needed to cover rental costs during a 20 year retirement, let alone pay for other essentials.

Those who describe themselves as being in financial crisis are particularly affected. Nearly six in ten of this cohort say they expect to pay rent or mortgage costs in retirement, compared to just 11% of those who say they are financially comfortable.

Is renting in retirement on the rise?

Despite it being expensive, more people are now renting in retirement as higher housing costs mean buying a home is not possible for some.

Data from the government’s Pensions Commission shows the proportion of households renting privately in retirement has more than doubled in the last 20 years.

Sarah Pennells, consumer finance specialist at Royal London, said: "For generations, reaching retirement often meant reaching the point where housing costs were behind you. But for millions of today's retirees and future retirees, that simply isn't the reality.

"What's particularly worrying is that over six million people who expect to pay rent or mortgage costs in retirement don't know how they'll cover those payments. If you're heading towards retirement and expect to have housing costs, it's important to factor these into your retirement planning as early as possible.”

The true cost of renting in retirement where you are

If you are planning to rent during your retirement, you will need to take a careful look at your pension pot and work out if you can afford to do so where you are as prices vary wildly across the UK.

The most expensive place to rent as a pensioner is London, where the average price of a year’s rent is £28,520.

That works out to £859,000 when over the course of a standard 20-year retirement, factoring in rental price growth.

The region with the second-highest expected renting cost is the South East, where the average for a year is £17,610 or £531,000 over 20 years – much lower than the price in the capital, but still far more than in cheaper regions of the UK.

Royal London’s data shows people in London, the South East and the South of England are also among the most likely to expect to pay housing costs in retirement, with 34% saying they expect to still be paying rent or a mortgage after they retire.

As with house prices, there is a large North-South divide in rental costs as the North of England and the devolved nations are much cheaper than the South of England.

The cheapest region to rent in retirement is the North East of England, where a year’s rent costs an average of £9,670. This amounts to £291,000 over 20 years.

Meanwhile, the second-cheapest region is Yorkshire and the Humber, where the average rent for a year is £10,650 – or £321,000 over a 20 year retirement.

The interactive map below shows the projected cost of renting during a 20-year retirement.

Should you rent in retirement?

While renting in retirement is expensive, there are also some positive sides to renting rather than owning your own home.

“If you decide to rent, then you have the flexibility to move around without the burden of having to sell a home,” said Helen Morrissey, head of retirement analysis at wealth manager Hargreaves Lansdown.

This may mean you can be closer to your loved ones, or you may choose to move to a cheaper part of the country or one that fits your lifestyle better.

Certain maintenance problems with the home you rent will also be the responsibility of the landlord, meaning you will not need to fork to fix a leaky roof, for example.

Additionally, if you do not expect to pay off your mortgage before the end of your retirement, renting can be a more flexible solution and potentially a cheaper option depending on where you live.

There are of course drawbacks, the main one being that the home you rent is owned by your landlord, so you do not have the final say on what happens to the property.

In the worst-case scenario, you may be evicted from your home, though the new Renters’ Rights Act means this is much more difficult for landlords.

If you own your home instead, you will not need to worry about being evicted or getting approval to make changes to your property. Once you have paid off your mortgage, you will have far lower monthly costs too, meaning you will have more money in your pocket each month.

“Going into retirement owning your own home means your day-to-day expenses will likely be lower,” said Morrissey. “You can also use your home to release money either through equity release, or downsizing, should you need it.”

Ultimately, whether you should rent in retirement is dependent on your lifestyle, whether you already own a house, and whether you can afford it with your pension.

For all their talk of investing for the long run, active fund managers like to trade.

Take Terry Smith for example, whose flagship Fundsmith Equity fund reported portfolio turnover of 51.8% in the first half of 2026. In his mid-year letter to shareholders, Smith said the fund had started building positions in 12 companies while exiting, or starting to exit, 13 others. For a fund whose investment mantra ends with "do nothing", that's a lot of activity.

For investors in active funds, keeping tabs on what they own can be a challenge.

The latest Fundsmith Equity factsheet (31 July) lists only its top 10 holdings. It also says that, while a position is being built, the company name may be withheld until the intended weighting has been accumulated. That's a reasonable trading precaution, but another reason why monthly factsheets can be far from comprehensive.

A top 10 list is useful, but it's more like the signature dishes on a restaurant menu than an inventory of the kitchen. A fund can change materially beyond those 10 names, especially if several smaller positions are being added or sold.

While many funds only highlight their top 10, because in most cases these are the largest holdings, should investors be given more information to understand the risks and strengths in their portfolio?

Fund holdings: What the rules require

There's no law spelling out exactly what investment funds must disclose about their holdings. But the Financial Conduct Authority (FCA) requires funds to follow the Investment Association's Statement of Recommended Practice. These demand a full portfolio statement, listing every investment asset and liability, in the annual and half-yearly long reports behind the headline factsheet.

Some asset types have separate presentation rules, but the principle is the same.

The catch is timing. Annual reports can be published up to four months after year-end and half-yearly reports up to two months after the half-year. Because the snapshots are six months apart, the latest complete picture can be nearly 10 months out of date by the time the annual report deadline arrives.

But for investors, knowing more can avoid over-concentration and better understand their market exposure. But are they always useful?

The top 10 is a convention, not a rule

If you want to see a fund's 10 largest holdings, the latest factsheet is generally easy to find. But if you want more than the top 10, then that may not be so easy to find.

Publishing just the top 10 is not because of the regulator. The FCA doesn't require a monthly factsheet at all, let alone prescribe the top 10 format funds use when they publish one. Publishing the top 10 is an industry convention, not a regulatory judgement about how much investors need to see.

Anything beyond those 10 holdings sits in the fund's long report, which must list every investment asset and liability. It takes more digging to find than a factsheet, but that's where the full picture sits.

That full list can reveal changes the top 10 misses. It can show whether the manager's stated process is still visible in the portfolio, whether concentration has shifted and whether several funds you own increasingly hold the same companies. Smaller positions can also expose sector, country or company-type bets that the headline names miss.

Having the ability to see the full portfolio doesn't mean every new holding deserves an inquest. Active managers are paid to make decisions, and investors who second-guess every trade can create problems of their own.

But while questioning every individual trade is one thing, checking whether the fund still resembles the one you chose is another.

Funds transparency

Greater transparency is usually seen as a good thing. But it has its downsides. If, for instance, a manager reveals an unfinished trade too quickly, other investors can trade ahead of it, copy the idea or push the price against the fund.

The academic evidence points to a trade-off, not a simple case for more disclosure. Parida and Teo (2018) studied US mutual funds that moved from semi-annual to quarterly disclosure after the 2004 SEC rule. Funds that had performed well under the old regime subsequently lost about 22.5 basis points, or 0.225 percentage points, a month. The effect was particularly pronounced among funds holding illiquid portfolios.

Other research identifies further drawbacks. Agarwal et al. (2015) found that mandatory portfolio disclosure could improve stock liquidity, but at a performance cost for some funds. Xin, Yeung and Zhang (2024) linked more frequent reporting to window dressing: reshuffling a portfolio just before it is due to be seen. These are both US studies, and neither directly shows what monthly disclosure of near-current holdings would do to UK funds.

Full transparency can give investors a false sense of security. Woodford Investment Management published the full portfolio of the Woodford Equity Income Fund from its launch in 2014 and was widely praised for doing so. But after prolonged disastrous performance, the fund was suspended in 2019 and closed soon after.

Full holdings are still useful as they can show unusual or unquoted positions and prompt harder questions than a headline list ever could.

What they can't tell investors is how easily assets could be sold into redemptions, how uncertain valuations were or whether governance would hold up under pressure. Transparency can sharpen due diligence, but it cannot replace it.

How to check fund holdings

To see what’s in your fund, you may have to do the homework yourself. Begin on the manager's website. If there's no spreadsheet or report, find the latest annual or half-yearly report and search for "portfolio statement".

If it's hard to find, don't read too much into that. Treat it as an information disadvantage, not evidence of bad management or an automatic sell signal.

Once you have the full portfolio, check both the holdings date and the publication date. They can be months apart.

Then compare the latest complete portfolio with the previous one. Look for new and exited positions, changes in concentration, shifts in sector or geographic exposure and growing overlap across funds. You are looking for material change, not trying to reverse-engineer every trade.

Investors need enough visibility to spot material change; managers need enough delay to finish trading without being front-run. Making a recent, complete portfolio easy to find is a reasonable place to start.

Nvidia reported record adjusted quarterly earnings per share (EPS) of $2.22 for the second quarter (Q2) of its 2027 financial year following market close on 26 August – 5.7% above analysts forecasts of $2.1, and 120% higher compared to the same period last year.

Quarterly revenue was $96.2 billion, 4.4% above the $92.2 billion analysts polled by London Stock Exchange Group (LSEG) had forecast and representing a 106% year-on-year increase.

“Nvidia’s (NASDAQ:NVDA) results show that the artificial intelligence (AI) boom is not running out of demand,” said Lale Akoner, global market strategist at investment platform eToro. “The constraint is increasingly the industry’s ability to supply and finance the infrastructure required.”

The results sent Nvidia’s share price surging in after-hours trading. As of 9.45am BST on 27 August the shares had risen around 7.5% from the previous day’s close.

“AI has reached its inflection point,” said Jensen Huang, founder and CEO of Nvidia. “It’s doing useful work. Its tokens are productive and profitable.”

Nvidia’s results in detail

There were more positives for investors throughout Nvidia’s results.

Revenue for the Data Center division – the largest and most closely-watched of Nvidia’s business arms as it contains all of the AI hardware elements – beat expectations at $89 billion, up 117% year-on-year.

Nvidia’s gross margin increased from 72.5% a year ago to 75.0% in the latest quarter.

“Nvidia remains the main toll collector on big tech’s enormous AI budgets, capturing a large share of each new round of infrastructure spending,” said eToro’s Akoner.

Nvidia also issued Q3 revenue guidance of $108 billion (plus or minus 2%) – higher than the $105.1 billion that LSEG’s poll had projected.

“Blackwell Ultra drove the quarter, while Vera Rubin is already entering production,” said Akoner. “This smooth handover suggests the AI hardware upgrade cycle is accelerating without the pause some investors feared.”

How did other stocks respond to Nvidia’s results?

While growing demand for Nvidia’s products is a positive for the AI boom in general, it could be seen as a headwind for the companies that are reliant on buying them.

Alphabet fell 0.4% overnight, while Meta Platforms and Amazon both fell around 0.2%.

These are not large shifts, and could be due to other factors besides Nvidia’s results. But many are starting to question whether the so-called hyperscalers will ever recoup the hundreds of billions of dollars they are pouring into AI infrastructure.

“Once the initial excitement settles, questions are likely to resurface about the durability of this boom in revenues,” said Susannah Streeter, chief investment strategist at wealth manager Wealth Club. “It’s becoming less about whether Nvidia can keep climbing the AI mountain, and more about how long it can sustain this extraordinary pace of ascent and whether the vast sums being poured into AI infrastructure will ultimately deliver the returns needed to justify the colossal investment.’’

Higher costs for memory chips could also become a headwind for Nvidia in due course, according to Akoner.

“Rising memory costs are expected to push gross margins down from 75% to 71%-72%,” she said. “Nvidia’s ability to raise prices should help margins recover, showing considerable pricing power, but it cannot escape supply pressures entirely.”

It’s a difficult time for value investors.

The theory goes that value stocks – those trading at a lower price relative to their fundamentals than others – ought to outperform the rest of the market over the long term.

That’s not how it’s playing out. In the 10 years to 31 July 2026, the MSCI World Value Index generated an annualised return of 11.0%, compared to 13.3% for the MSCI World Index. The former index is based on the latter, with a tilt towards value stocks.

Momentum has been a more dominant investing factor during that time. The MSCI World Momentum Index has outperformed the main index over the last 10 years, with an annualised return of 15.2% during that time.

The rise of momentum investing was acknowledged in July 2026 by veteran value investor Terry Smith, CEO and chief investment officer of investment management company Fundsmith, when he told Fundsmith Equity Fund shareholders he would start paying more attention to the momentum factor when selecting investments.

“Periods of market exuberance can be particularly testing for valuation-driven investors,” said Cedric Jacque, investment manager at wealth manager Lloyd Capital. “Today, the combination of the artificial intelligence (AI) investment boom, strong momentum and elevated valuations has clear echoes of previous late-cycle markets.”

Why is value investing struggling?

There are two main reasons why value investing has trailed the returns of alternative strategies in recent years, though the two are interrelated.

The first is the rise of passive investing. According to data from investment research company Morningstar, passive funds’ share of the total investment fund market has risen from 12.4% in January 2008 to 46.4% in July 2026.

Most passive funds are market-cap weighted, meaning that the largest companies form the largest part of the fund. When investors buy index funds, they are therefore putting most of their investment into the largest companies in the index. In other words, the more popular passive investing becomes, the more money pours into the world’s biggest companies, pushing their share prices higher regardless of any change in their fundamentals. Indeed, many of their buyers are likely not looking at their fundamentals, but simply buying an index fund.

The rise of passive funds has coincided with an era during which technology stocks have ballooned in value. Developments like cloud computing, the proliferation of smartphones and, more recently, the AI boom have concentrated much of the market’s growth into tech stocks.

Tech is a tricky sector for value investors, because it tends to look far more at the future than the past or present. As of 21 August, software company Palantir Technologies traded at over 150 times its trailing earnings and 112 times its forecast earnings; the equivalent figures for Tesla are around 336 and 185 respectively. Tech investors price in expectations of rapid future growth that make the sector effectively off-limits for value-focused investors.

Terry Smith highlighted the convergence between these two phenomena in his shareholder letter, ascribing much of his fund’s underperformance to “a market which is dominated by so-called passive or index funds… and the boom surrounding AI which have combined to produce a market dominated by momentum rather than any fundamental factors like profitability, returns on capital and growth”.

Does value investing still work?

Smith hasn’t abandoned value investing outright, but he identified a need to “take more account of momentum… in our investment decisions”.

That shift has drawn criticism, though, with some arguing the current environment is precisely where it is most important to adhere to value investing’s principles.

“We agree with [Smith] that a market driven by passive flows and momentum can become increasingly distorted, that momentum sits at levels last seen in 1999, and that this will end badly,” said Lloyd Capital’s Jacque. “Where we part ways is on the remedy.

“We believe that becoming more of a crowd follower, and setting aside time-tested investment principles, is not a solution we can get behind,” Jacque continued. “We continue to believe that disciplined, bottom-up value investing, with a focus on earning power, is the right way to compound capital over the long term.”

Jacque argued that the passive investment boom isn’t a threat to patient value-driven investors, but rather creates an opportunity.

“Passive investing and index flows should increasingly expand the pool and the magnitude of the mispricing and therefore lead investment opportunities for the patient long-term shareholders,” he said. “We are thrilled about that.”

UK fintech PensionBee (LSE: PBEE) has carved out a successful niche for itself, to become the UK's most recognised pension consolidator with the UK pensions sector undergoing a major transformation over the last ten years.

Following the introduction of the Auto Enrolment scheme in 2012, assets in defined-contribution (DC) schemes have exploded, and the pensions industry has rapidly had to adapt to this new norm. The DC pension market has two main segments: workplace schemes and personal or individual wrappers. The latter is dominated by the self-invested personal pension (SIPP) market and the consolidation of legacy workplace schemes. This market is worth around £600 billion and is growing.

The larger workplace-scheme segment is far bigger and more complex. The government is pushing through regulations to consolidate this market, with a goal of consolidating pots into £25 billion-plus mega funds. Although the market has consolidated significantly over the past ten years, hundreds of schemes remain, some with as few as 100 members, which can add cost and complexity.

Where PensionBee comes into the picture

Auto-enrolment is widely recognised as one of the most successful pension reforms worldwide. Under the current rules, an employer must enrol an employee in a pension scheme if they are a UK resident, work in the UK, are aged over 22 and earn more than £10,000. The minimum contribution is 8% of salary, 5% from employees and 3% from the employer.

Employers can pick one of two approaches: either a contract-based approach, or a trust-based scheme. Under a contract-based scheme, individual contracts are agreed between the scheme member (the company) and the pension provider, usually an insurance company or investment platform. With a trust scheme, the company agrees a relationship with a large pension master trust, such as Nest or the People's Pension.

Auto-enrolment has greatly reduced the burden on employers of setting up pensions for employees. It also helps employees save for the future, as they are, as the name suggests, auto-enrolled in the scheme and contributions scale up with wage growth. But people do switch jobs regularly throughout their career and due to the fragmented nature of the industry, there's no guarantee your next employer will be able to offer access to the same scheme as you had previously.

How PensionBee consolidates retirement pots

PensionBee markets itself primarily as a pension-consolidation platform, but it also provides private-pension schemes, such as those for the self-employed. It does not manage the underlying investments itself, but takes a platform fee and partners with institutional giants such as BlackRock, State Street and HSBC to provide a range of low-cost funds.

PensionBee's real edge is its technology platform. Pension transfers and consolidation can be costly and time-consuming. PensionBee aims to complete electronic transfers within two weeks, although more complex transactions can take longer. The company's focus on technology, marketing and simplicity has really resonated with consumers. It estimates it generates around £100 of net asset inflows for every £1 it spends on marketing. It has a 57% brand-awareness score among consumers, one of the highest among pension brands, and customer retention of 95%.

The last time I covered the company in early 2022, it had just reported £5.8 billion in assets under management. According to its latest half-year results, that figure has grown to £8.6 billion of assets under administration across 327,000 invested customers.

With exposure in both the UK and US, the firm operates across markets representing more than $30 trillion in retirement assets. Currently, the US market is still tiny, with less than $5 million of assets under management. However, the company is in talks with more than 100 intermediaries and has an estimated $1 billion in potential recurring annual inflows over the medium term from this business line. This growth should be relatively inexpensive as it has already spent heavily on the technology it needs. As a result, most of its day-to-day spending is now on marketing, plus select technological improvements. PensionBee should be able to scale quickly and efficiently.

Profitability is in sight for PensionBee

In the first half of its 2026 financial year, the firm reported group adjusted Ebitda of -£1.1 million. The UK market alone generated adjusted Ebitda at £1.5m million in the first half or £7.5 million over the last 12 months.

According to estimates compiled by analysts at Peel Hunt, the company is expected to report adjusted Ebitda of £0.5 million for the full year across all markets. Analysts believe PensionBee will achieve sustainable profitability from 2027 onwards and reach management's 20% adjusted Ebitda margin by 2029.

PensionBee is still a small-scale business in a large market with much bigger and deeper-pocketed competitors. However, the opportunity should not be understated. Peel Hunt believes the firm will report £1.5 million of adjusted Ebitda by 2027 and then £8.08 million by 2028, as the group finally reaches an inflexion point in its growth. Sales are expected to rise from £43 million for 2025 to £83 million by 2028, according to Berenberg, as assets under management rise to near £13 billion. Canaccord Genuity has similar figures.

If the company hits these targets, it could achieve a return on invested capital of 34.5% by 2028. If there's one number that illustrates just how profitable PensionBee could be at scale, it's this. The next few years could transform its fortunes.

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Fidelity China Special Situations is an actively managed investment vehicle providing broad access to China's growth opportunities – from established technology leaders to entrepreneurial businesses that have yet to float on the stock market. In the year to date, Chinese and Hong Kong stocks have experienced greater volatility as geopolitical tensions, higher energy prices and concern over inflation weighed on sentiment, although China's diversified economy provides some resilience against these external headwinds.

It's not all about AI either. Semiconductor, power equipment and other AI infrastructure-related companies have seen stronger earnings momentum, while internet platforms have been market laggards. Domestically, consumers' confidence remains subdued amid ongoing property-market weakness. But there are signs that the economy is stabilising, supported by state policy that remains supportive, but targeted. Against this backdrop, many companies are trading at significant discounts to their global peers and there are attractive opportunities across a range of sectors spanning advanced manufacturing, property and domestic consumption, where strong long-term fundamentals are not reflected in valuations.

Three Hong Kong stocks for your portfolio

Contemporary Amperex Technology (Hong Kong: 3750) is the world's largest battery manufacturer and a global leader in the electrification value chain, supported by its leadership, manufacturing scale and continued investment in innovation.

Batteries for electric vehicles remain an important growth driver, but the firm is becoming increasingly diversified. Energy storage systems (ESS) are emerging as another major source of growth, supported by rising generation of renewable energy, electricity security needs and rapidly expanding demand for power from AI data centres. Commercial vehicles and accelerating EV penetration outside China provide further opportunities, with electrification in many markets still at an early stage. With its scale and technology leadership, this firm is well positioned to capture these multiple sources of long-term demand across transport and power systems.

Anta Sports (Hong Kong: 2020) is one of China's leading sportswear groups, with a multi-brand portfolio spanning mass-market sportswear, premium sports fashion and specialist outdoor categories. Its strong brand management, disciplined execution and proven direct-to-consumer model have supported consistent market-share gains in China's growing sportswear market. Importantly, Anta has demonstrated a strong record of acquiring, repositioning and scaling brands, providing additional avenues for growth beyond its core franchise. Newer additions, such as Jack Wolfskin and Puma, further broaden the portfolio. Anta is well positioned to continue gaining market share across China's evolving sportswear industry.

China Resources Land (Hong Kong: 1109) is one of China's leading property companies, with a high-quality investment portfolio, including shopping centres alongside its residential business. Despite the prolonged downturn in the market, the company has continued to gain market share as weaker developers have exited the industry, while its investment properties have delivered steady growth and resilient recurring income. The market is not fully appreciating the quality and value of its investment-property portfolio.

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When INPP – International Public Partnerships (LSE: INPP) – invested in the Thames Tideway Tunnel project in 2015, many investors thought its directors and managers were mad. Weren't infrastructure projects in the UK always delivered late and massively over budget? The project was a carve-out from the financially stretched Thames Water and would surely be dragged down by it.

Instead, the 16-mile super-sewer under the River Thames from Acton to Beckton was completed as planned in March 2024. In the year to 31 March, it “diverted over 20 million tonnes of sewage and drain overflow that would otherwise have polluted the River Thames and prevented over 1,000 spills”. This represents a 95% reduction in the volume of untreated waste water entering the river.

Win-win investing from INPP

Infrastructure investment is often denigrated as being expensive off-balance-sheet financing of projects the public sector should do itself. However, the success of Tideway shows why bringing in the private sector can help construct and manage infrastructure projects at a reasonable cost to the taxpayer, as well as offering good returns for investors.

INPP's stake in Tideway is one of its largest, representing 15.6% of its £2.9 billion of net assets. The investment in gas distributor Cadent is of a similar size, while a stake in 11 offshore transmission owners (OFTOs) is over 20%. The latter does the boring but essential job of connecting offshore wind farms to the onshore grid.

Lower down the list is the 4.2% invested in BeNEX. The British political class may have become disillusioned with the separation of Britain's railway system into network infrastructure, rolling stock and operating franchises, but Germany has copied the model. BeNEX has concession agreements with 14 of Germany's 16 federal states and owns more than 130 trains.

Last year, the trust won a deal to contribute £254 million to the construction of Sizewell C nuclear power station in return for a 3% stake, of which £35 million has been invested so far. The investment is “expected to generate an annual cash yield of 6% through construction and early operations, with a significant step-up in yield once fully operational”.

Meanwhile, it is trimming mature investments, selling part of its stake in Angel Trains, which owns over one-third of the UK's passenger rolling stock, for £3millionmn. It has also reduced its exposure to public-private partnerships (PPPs) through asset sales – this week, it sold stakes in 15 London schools for £58 million – and handing back concessions as they expire.

INPP’s shift to higher returns

This is part of a broader trend. Over the years, International Public Partnerships and its peers have moved away from the lower-risk PPP projects into ones that are riskier, but offer higher returns, such as Tideway and Sizewell. 3i Infrastructure (LSE: 3IN) was the first to do so, and International Public Partnerships and Pantheon Infrastructure (LSE: PINT) followed. More recently, HICL Infrastructure (LSE: HICL) has announced a further shift away from the PPP “yielders” in the portfolio (currently 53%) into “growers” (currently 47%) and “enhancers”, such as data centres and leisure facilities. This is expected to increase its annualised total return to 10%, from 8.5% historically.

The infrastructure funds have been held back in recent years by rising gilt yields, but discounts have fallen in the last year and operational performance has been good. Discounts to net asset value (NAV) range from 5% (3iIN) to 15% (HICL). Yields are between 3.5% (3iIN) and 6.1% (HICL), with dividends likely to rise with inflation.

International Public Partnerships is on a discount of 7%, yielding 6% and has 72% of its assets in the UK. A writedown of its £24 million investment in a UK broadband firm this week is not material (0.9% of NAV) and guidance is unchanged. Despite a 24% return over one year, it continues to look attractive.

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Tina Fordham is the former chief global political analyst at Citigroup and founder of Fordham Global Foresight. Tina has spent more than 25 years advising senior business, government and military leaders on navigating political and geopolitical risk; she has served as a senior adviser to the UK prime minister and advised military leaders. She also sits on advisory boards at Columbia University and the University of Cambridge. Her forthcoming book, Mad World: A Geostrategy Survival Guide for Leaders, is published by Whitefox in September 2026.

Matthew Partridge: Your new book, Mad World: A Geostrategy Survival Guide for Leaders, argues that in the current geopolitical climate, companies no longer have the luxury of ignoring politics?

Tina Fordham: Yes, ignoring geopolitics was something you could only afford to do in the era of globalisation, which happens to be the time that most of today's executives, myself included, grew up in.

Matthew Partridge: You've talked about the emergence of a new geopolitical supercycle.

Tina Fordham: The data for that study examines the period between 2010 and 2025. So even before Donald Trump's second term, we detected a tripling of events posing geopolitical risk. People hope things will get better after Trump leaves office in January 2029, but the evidence suggests that the drivers of geopolitical risks are multiplying and have been for a long time. Moreover, the guardrails that temper the risks are either eroding or being actively dismantled. So the idea that we only have to survive another year and a half before things return to normal is misplaced.

Matthew Partridge: Which guardrails in particular are being eroded?

Tina Fordham: There's a diagram in the book of the supercycle framework, where we talk about some of the long-term drivers, like declining trust, climate change and income inequality. However, when there are risky events or shocks, good government, liquidity from central banks, institutions or even social cohesion can help you mitigate these problems. But when these guardrails are damaged, even relatively small risks can become quite disruptive. This is difficult for most executives to get their heads around, but it's how we try to apply a systematic conceptual framework to thinking about geopolitical risk.

Matthew Partridge: Your book is primarily aimed at business leaders and executives, but would it also apply to ordinary investors deciding how to structure their portfolios and which assets to choose?

Tina Fordham: There are certainly implications for everyday people who are having to think about how to manage their own lives, their families and their careers in a time of unprecedented global change.

Most people have yet to recognise that we are in a new age. They assume we are still in the period most of us became used to: one of continuously improving living standards. In fact, the period between the fall of the Berlin Wall [1989] and the collapse of Lehman Brothers [2008] was actually the most peaceful and prosperous period in all of human history – not the baseline for the future. You can mess it up.

Matthew Partridge: Turning to specific issues, I've noticed that in your recent talks you've been a lot more pessimistic about the prospects for a lasting resolution to the situation in the Strait of Hormuz. Why is that?

Tina Fordham: We were among the few to come out strongly and say that the conflict between Iran, Israel and the US would not be a short war, which was counter to the consensus at the time that it would all be over very quickly. Our reasoning was based on how Iran has always negotiated. It was never going to be enough simply to order them to meet the White House's maximalist demands.

I also felt that there is vanishingly little evidence in history of aerial bombardment causing regime change, one of the original aims of the conflict. Every US president since Jimmy Carter in the 1970s has wargamed and studied possible options for dislodging this regime and concluded that it was too hard to do without massive loss of life and huge disruption, so president Trump wasn't going to change that.

So now, we've got the situation where the US has seemingly depleted its stock of long-range munitions, while Iran can regenerate its drones faster than the US can replenish its stocks. While the markets have been reacting to the good news – in the short term – that there may be a resumption of oil supplies to the Strait of Hormuz, the actual long-term effect of this war has been to give Iran a source of leverage that it didn't have before, a power it is not going to relinquish. Meanwhile, Trump seems to have got bored with this conflict, except he's realised he can't just walk away.

Matthew Partridge: What is the most likely outcome?

Tina Fordham: Most market participants have assumed that America doesn't want to have high petrol prices before an election. However, while this might have applied over the last 25 years, I think this time we're going to end up in a situation that is between war and peace, where Trump will keep threatening because that's the only tool he has.

What's more, the Gulf states have prevailed upon the White House not to destroy Iran's energy infrastructure because of what that would do to the rest of the region. So, we are likely to be left in a situation where Iran is more powerful – if battered – after this war. What's more, the situation sends a message to the rest of the international community that if they don't like their present borders, or have some beef with their neighbour, the US has a much smaller capacity to stop them.

Matthew Partridge: On a more positive note, it looks as though Ukraine is fighting back against Russia and seems to be regaining some of the territory the invader stole. Will that continue?

Tina Fordham: The Ukraine conflict is being fought over feet and yards of territory. While this is a quagmire for Russia, with China prevailing on Putin not to go nuclear, neither is he going to come to the negotiating table in any meaningful way and agree to a ceasefire. Russia will not seek a deal that gets sanctions rolled back. That is simply not how Putin thinks.

Given that 40% of Russia's energy infrastructure has been destroyed, resulting in queues for petrol, Putin may want to make a grand gesture to demonstrate control. There is therefore a material risk of Russia attacking a Nato member. Most British people don't seem to have factored this risk in, even though we're being attacked by Russia all the time.

Matthew Partridge: Could Putin end up like the Serbian dictator Slobodan Miloševic – who was overthrown in 2000 – and succumb to internal dissent or a palace coup?

Tina Fordham: While there is no chance of Putin ending up in The Hague, a palace coup is more plausible than a popular revolution. But, the trouble with palace coups is you really need an alternative. And Putin has made sure that there are no plausible successors to him. So, while he and his policies are increasingly costing the Russian elites more than they're gaining, leaders like this can hang on for a long time.

Matthew Partridge: Do you think Ukraine's brave resistance and the fact it's actually been able to at least block Russia will give hope for other countries like Taiwan?

Tina Fordham: Ukraine has certainly given Beijing pause for thought. The fact that both the US and Russia have been dealt a serious blow by much weaker middle powers suggests that might doesn't necessarily win and can leave you stuck in a very awkward position for a long time.

Matthew Partridge: Trump will have to leave office in January 2029. The Republicans are now expected to lose at least one House of Congress seat in the midterms. Do you think that a bad result in the midterms will rein in Trump, or do you think that he might become even more unpredictable?

Tina Fordham: This is the question on the minds of many. The Iranian regime have said that they weren't going to negotiate any longer with the US but are going to wait until after Trump has left office.

While the US constitution means that Trump is limited to two terms, he is printing “Trump 2028” hats already. There's also the possibility that Trumpism may outlast Trump himself. In the most sinister scenario, the dubious behaviour by many in the administration means that even if they are voted out, the threat of possible investigations may complicate the usual peaceful transfer of power.

Matthew Partridge: In your book, you say that while the big losers from automation had been older, blue-collar workers, the worst affected by AI will be middle-class people in their 20s and 30s, who tend to be more politically aware. Will this fuel opposition to AI?

Tina Fordham: Absolutely. It will also increase demand for policy solutions. Covid has led to a rise in both benefits and expectations of government support. The historians who speak very grandly about previous waves of innovation and industrialisation forget that during the Industrial Revolution, working-class people didn't have the vote, which is not the case today.

In any case, revolutions are not fought by the poor, they are launched by the middle classes, and it's not only university students and recent graduates who are angry, but also those in the their 50s who are being told they need to work longer because the pension age is being delayed. All of this is going to add to pressure on governments at the same time that Europe needs to spend more on defence.

Matthew Partridge: What is the upshot of all this for investors?

Tina Fordham: We used to think about geopolitical risk in terms of what could go wrong and undermine a portfolio. But recent geopolitical developments and other themes such as AI have led to a situation of constant potential danger, as opposed to sporadic upsets. The threats won't dissipate within a year or two; this backdrop is set to last longer than a decade.

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There is a pervasive belief that the “Magnificent 7” tech stocks are the drivers behind the relentless rise of the US stock market. The Magnificent 7, sometimes called the Mag 7, are Nvidia, Amazon, Alphabet, Microsoft, Apple, Meta and Tesla – seven of the largest companies in the US and therefore the world.

But the Magnificent 7 no longer ride together and their performances this year are very different. The S&P 500 has returned 13.4% year to date. Amazon has returned 21%, but Tesla -25%. In between are Nvidia (19%), Apple (16%), Alphabet (12%), Microsoft (6%) and Meta (0.4%). As a result, Meta and Tesla have been pushed down the list of the world's largest companies by TSMC, Broadcom, SpaceX and Saudi Aramco, now in sixth, seventh, eighth, and ninth place, respectively.

Fifteen companies in the S&P 500 have more than doubled in value this year, led by Sandisk (+413%), Dell (+255%) and Micron (+207%). None of the Magnificent 7 come in the top 150; Tesla is near the bottom. As strategist Ed Yardeni notes, the Magnificent 7 are up just 4.8% this year against 16% for the remaining “impressive 493”. Information technology is still the S&P's second-best-performing sector (up 23.6% against +28.4% for energy), but the Magnificent 7 no longer lead it.

The Magnificent 7 have invested heavily in AI

The dull performance may be accounted for by investors' concern about the gigantic amounts of money these companies are investing in AI. This may seem like collective insanity, but these companies are led by and employ many of the smartest people in the world. How likely is it that they are wrong and the itinerant pundits, with limited knowledge and experience, are right? In any case, any fall-off in investment and thereby an increase in cash flow could lead to renewed outperformance.

Yardeni notes that the forward multiple of earnings of the S&P 500 Growth index has fallen to 20.2 against 18.3 for the Value index. In 2000, he says, Growth traded on a multiple above 40. Growth's forward earnings have been boosted by mark-to-market capital gains, so the multiple of sustainable forward earnings is higher but, he points out, “bull markets do not die of old age or of accumulated gains. They usually die when earnings roll over.”

The driving force of the bull market is then “FEMO” – fabulous earnings momentum, rather than “FOMO”, or fear of missing out, as in the late 1990s. “In the current bull market, the S&P 500 is up 117% since it began on October 2022. That ranks fifth of the eight bull markets since 1969.” Taking a longer-term perspective, the index is up 277% since 2015, but between 1985 and the millennium, it was 625%. “If the analogy continues to hold and the market keeps climbing, the interesting years are ahead rather than behind.”

How other markets are faring

Yardeni also monitors sentiment, which suggests that institutional investors are bullish (a contrary indicator), but “retail investors not so much”. Markets do not go up in a straight line, so a setback or period of sideways trading would be likely to dampen sentiment, paving the way for a further advance. The chances of a serious setback to earnings growth are small; if the Gulf war and its effect on oil prices could not achieve that, what could?

Elsewhere, the outlook is at least as good. The reliably pessimistic and risk-averse British have led to a serious undervaluation of the UK market and a takeover bonanza for private equity and overseas bidders, which shows no sign of slowing. The yen, at last, is showing signs of stabilising if not reversing its 15-year bear market. This would mean that the strong underlying performance of the Japanese market would look even better for overseas investors.

The outlook for the European economy is improving while its companies have successfully globalised. Technology companies in emerging markets are doing even better than in the US with year-to-date performance of 32%, so South Korea (+71%) and Taiwan (+62%) lead the country performance table even after the recent setbacks. Earnings growth in the MSCI All Countries World index ex US has been pedestrian in the last three years, but is about to accelerate sharply, with 34% growth expected in the next 12 months.

Further evidence of a broadening market comes from the improved performance of smaller companies, with the Russell 2000 index for the US hitting record highs and outperforming the S&P 500 over the last year. Small caps in the UK, Europe and Japan have continued to underperform, but performance has picked up and may be moving ahead.

This is not the end for the bull market

The outperformance of the Magnificent 7 in recent years looks like having been a passing phase. Its end does not signal the end of the bull market, much less an imminent collapse, but a healthy return to the traditional pattern whereby mega-caps lag a broadly advancing market.

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The past few years have been very tough for UK housebuilders and their shareholders, says Jo Rands, a portfolio manager on the UK Equity Income, UK Managers' Focus and UK Rising Dividends strategies at ClearBridge Investment. The government has pledged to build 1.5 million homes in five years, but various headwinds, including cost increases and higher interest rates, have caused UK housebuilders' shares to plunge over the past two years. Yet with Andy Burnham entering No. 10 with talk of building more council houses, and even bringing back a form of Help to Buy, their shares have rallied recently. Will this continue?

Why are UK housebuilders struggling?

At the core of the British housing crisis is the fact that we're simply not building enough housing, either in the public or the private sphere. David Crosthwaite, chief economist of the Building Cost Information Service, notes that housebuilding peaked in 1970, with nearly 400,000 homes completed, of which just under half were council houses. Fast-forward half a century and only 200,000 homes were built last year, of which just 4,000 were council housing. Essentially, “you have a diminishing supply of housing, particularly social housing, at a time when the population is continuing to grow at a strong rate”.

Unsurprisingly, the gap between housebuilding and population increase has created a huge backlog. There are several ways of estimating this unmet demand, says Edward Clarke, an associate director at planning consultancy Lichfields UK. When you take into account what statisticians call “concealed households” – people who would like to start a household, but are currently “sofa surfing”, or living with their friends and parents – then “we really need to build two million more homes”. That might seem like a shockingly large number, but Clarke thinks it could even be an underestimate. Getting the homes-to-population ratio in line with continental Europe would require even more construction – around 2.4 million additional homes.

It isn't just young people, and those on the margins, who are suffering as a result. The shortfall in supply means that houses in the UK are less affordable, in terms of the ratio of prices to incomes, than they are in countries such as France and Germany, as Jeremy Matallah, co-founder of rent-to-own company Keyzy, notes. Just to meet the immediate needs of the market, “we should be building around 300,000 homes a year”, roughly a 50% increase from the 200,000 homes a year that we are building at the moment.

Hoarding land and restrictive planning rules

Most experts agree that the big factor behind the lack of supply is the planning system. In 2024, the Competition and Markets Authority, the competition regulator, was called in to investigate allegations that builders and developers were hoarding land excessively, says Paul Smith, managing director at The Strategic Land Group. It found that the market for land was not working properly and that the planning system was such a fundamental barrier to the delivery of new houses that it felt compelled to talk about it, even though this was outside its original remit.

The planning system acts as a block on development in two main ways, says Smiths. Firstly, there simply isn't enough land earmarked for development, with only a third of councils in England even bothering to have up-to-date local plans. Worse, the process for dealing with individual planning applications, which is supposed to act as a “safety valve” given the lack of local plans, is too subjective (and therefore unpredictable) as well as increasingly complex.

Even when decisions are made, the process is getting ever slower due to a shortage of town planners. Indeed, “applications for new homes take more than three times longer to be approved than they did a decade ago, with the median time around 349 days”, says Smith. This matters, as even putting in a planning application can be expensive for a developer, costing around £150,000-£200,000 per application, even if the application is not successful. “If the process was speeded up and the outcome was more predictable more developers would be willing to take the risk.”

The plethora of rules and regulations make the planning system dysfunctional. Section 106 agreements, for example, which oblige builders to help contribute to additional development-related infrastructure, have been around for decades, but their scope has been broadened to the extent that you now see local police forces asking developers to contribute money so they can buy more laptops, says Smith. The Future Homes Standard rules on carbon emissions also “typically add around £7,000 to £8,000 per home in extra building costs”.

The Building Safety Act, approved in 2022, which significantly increased the safety requirements for tower blocks, is particularly contentious. The intention, to avoid a repeat of the Grenfell Tower disaster, is of course understandable, but the legislation “feels like a bit of a sledgehammer to crack a nut, reducing the appetite that anybody has to actually build flats”, says Adam Murray, CEO of planning and development consultancy Urbana. Indeed, developers in Germany and the US are safely able to build high-quality tower blocks “without having to follow rules such as having to have two staircases”, says William Reeve, chief executive of property technology company Goodlord. Loosening these rules is key if we are not to end up depending solely on single-family homes.

A blizzard of other problems for UK housebuilders

Poor planning rules aren't the only constraint on housebuilding. Even when development is allowed, buying land can be difficult when a site is owned by multiple parties, says Matt Beckley, partnerships director at Keon Homes. Remediation of former industrial land to make it fit for housing can also prove expensive. The government provides some support in the form of grants, but “there needs to be a good, hard look at the amount of funding that's available and how that is financed”, says Beckley.

Housebuilders are also “contending with a notable skills shortage, which means builds are taking longer to complete and projects are stalling”, says James Anderson, a construction supply-chain expert at Catnic. The National Audit Office has estimated that as many as 755,000 workers are needed to help meet housebuilding targets, even before factoring in those leaving the sector. The industry, including Catnic, is providing training, but additional help will be required.

The demand side is a problem too, says David Smith, portfolio manager of Henderson High Income trust. Elevated mortgage rates and political uncertainty over tax issues have weighed on consumers' sentiment, leading to a “lacklustre number of transactions”. Higher inflation and borrowing costs are also having a negative impact, says Ronnie George of Volution. He believes some form of subsidies for those buying a home, along the lines of Help to Buy, could be useful.

Andy Burnham's challenge

New prime minister Andy Burnham clearly faces a significant challenge. But many are optimistic that he can really make a difference, given his record as mayor of Greater Manchester between 2017 and 2026. His achievements in that time in office were far from perfect, says Smith, and he didn't quite hit the ambitious housebuilding targets that he set himself – he ended up making some concessions to those who opposed greenbelt development. But he deserves credit for going out and creating his own plan for local development rather than just “kicking the can down the road”, as local leaders in other parts of the country did.

As mayor of Manchester, Burnham at least showed an “understanding of the problem and a willingness to try and address it”, says Matallah, who is impressed that Burnham has promised to go beyond the existing commitment to invest £39 billion over ten years in affordable housing by tackling the “structural undersupply of social housing for the past 40 years”. There are indications that Burnham may be willing to allow councils to keep more of the revenue that they make from the sale of council houses, to use public lands for development and even take on debt in order to build more houses.

Burnham's “Manchesterism" – the belief that growth can be boosted by “devolving power to give mayors and councils the power and resources to make decisions” – could work, says Terry Woodley, managing director of development finance at Shawbrook. “Of course, there needs to be some sort of national strategy put in place, with regular monitoring to make sure that the councils are using these powers to boost development,” but decentralisation, combined with Burnham's enthusiasm, represents “the best chance to boost housebuilding levels that we have seen in over a decade”.

And it's not as if Burnham is starting with a blank slate, says Clarke. Over the last two years, the Starmer government put a lot of effort into reforming the system in order to meet their targets of building 1.5 million homes in five years. This was expressed in their proposed reform of the National Planning Policy Framework (NPPF), a draft version of which was circulated last December (with further revisions in May). As well as trying to make the process more rules-based and hence predictable, the new NPPF encourages councils to free up more sites by pushing them to allow development in the “greybelt” – that is, lower-quality greenbelt sites. The NPPF has also raised overall targets for home building in various areas.

Signs of an uptick in the housebuilding sector

Already many in the sector are starting to become more upbeat about the prospects for an increase in the number of homes built. “You've always got to be optimistic in this game,” says Smith, and there are a number of “easy wins” the government can make to help remove “the grit from the system”. Smith is particularly happy that Matthew Pennycook, the minister of state for housing and planning, has been kept on and elevated to a Cabinet role.

“We have at last moved away from a situation where there wasn't a proper housing minister, and if there was, they were moved on every 12 months,” says Bleckley. It feels “like there is now a will to get more houses built than there has been for more than ten years”. This doesn't mean the government will hit its targets for housebuilding over the next five years (although Bleckley hopes he's wrong about this), but “I do think that there will definitely be an uptick”.

There are “many uncertainties”, says Clarke, but there has recently been an increase in the number of planning submissions made, which is a good leading indicator of future activity. We “should expect to see more homes being built if the market conditions allow for it”. Similarly, despite his concerns about the shortage of planners, Woodley is starting to see that “some of the developers that we work with are getting approvals” more rapidly.

The housebuilding market may be about to turn

The market may now have reached the point where it is too negative about the housebuilders, says Jack Fletcher-Price, an equity analyst for Morningstar, but things are unlikely to improve until something happens to shift investors' perceptions. If (or when) such a catalyst appears, things could change quickly. Shares in housebuilders shoot up, sometimes by as much as 5% in a day, every time there is a rumour that the government is going to bring back some kind of Help-to-Buy scheme, for example.

If there is an uptick in housebuilding, the big housebuilding firms will be best placed to profit “because they tend to have stronger balance sheets, established land banks and greater access to funding, allowing them to respond more quickly if market conditions improve”, says Guiseppe Scozzaro, a partner with chartered accountants and business advisers Goodman Jones. Any uptick would “also benefit a much broader range of firms, from planning consultants and specialist lenders, to building-materials suppliers and infrastructure providers”. We take a look at some of the most promising investment ideas below.

The most promising housebuilding investments to buy now

One of the most attractive housebuilders is Persimmon (LSE: PSN). Its relatively high exposure to the north of England, compared with London and the southeast, “was previously seen as a negative, but it is now viewed as a positive, as you're seeing much better house-price growth up there”, says Morningstar's Jack Fletcher-Price. David Smith of Henderson High Income also likes that the firm is “one of the most vertically integrated UK housebuilders, with in-house brick, tile and timber-frame manufacturing operations, helping to improve cost control, efficiency and security of supply”. Persimmon trades at 11 times 2027 earnings and on a yield of 5.8%.

If snapping up a bargain is your priority, then you might want to think about Barratt Redrow (LSE: BTRW). It is even cheaper relative to its fundamentals than Persimmon, says Fletcher-Price, although he thinks that Persimmon has the more attractive business. The stock is trading at just a touch more than half its book value (the value of its net assets). Barratt also appears cheap on other metrics, trading at 12 times 2027 earnings and offering an attractive yield of 3.97%.

If you're willing to take on a bit more risk, then Vistry (LSE: VTY) is even more of a bargain, trading at an even greater discount of more than 70% to its book value, and at only 6.4 times its 2027 earnings, following a series of scandals over understated costs, followed by poor results. The company has a unique model, says ClearBridge's Jo Rands. It partners with local authorities on projects and so “could possibly do well from a greater emphasis on affordable housing” (though Rands emphasises that she doesn’t have an overall view on the company).

As well as housebuilders, businesses exposed to drainage, piping, insulation, heating systems and other construction inputs could see stronger demand if housing output increases, says Smith. One promising play on that theme is Genuit (LSE: GEN), which provides water, climate and ventilation systems for buildings. The firm has enjoyed solid growth, with revenue climbing by a third between 2020 and 2025, and profits doubling during the same period. Despite this, the stock trades at less than ten times 2027 earnings and on a dividend yield of 4.9% Volution (LSE: FAN) also specialises in ventilation systems. It has had an even stronger record of growth than Genuit.

Aided by a series of acquisitions, the company has nearly doubled its revenues and tripled its profits over the five years to 2025. Chief executive Ronnie George thinks that greater awareness of the importance of good ventilation, especially following the Covid pandemic and several tragic cases where people have died from asthma triggered by mould, will drive further demand for its systems. The bulk of its business used to come from retrofitting old buildings, but new-builds account for around half of revenue. Volution trades at 15.8 times 2027 earnings and offers a dividend yield of 2.1%.

Another company that should do well from any uptick in UK housebuilding is Ibstock (LSE: IBST), which makes bricks and concrete for the UK construction industry. Revenue has been volatile since 2020, but the long-term trend is upwards, with both sales and profits expected to keep increasing over the next few years. Two new brick factories have been completed, which should help to keep revenue growing. Ibstock trades at 16.4 times expected 2027 earnings and offers a dividend yield of 2.8%.

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Over the last 12 months, developer Caswell & Dainow have seen a 50% increase in enquiries, the majority from homeowners interested in selling parts of their garden off for development.

Co-founding director Adam Dainow says: “In the cost-of-living crisis people are looking at ways they can release large sums of cash to help out."

But not everyone agrees that selling off some of your land, while appealing in the short-term, will have little or no impact on the value of your home when you come to sell up.

MoneyWeek investigates the pros and cons of selling off some of your garden.

Does your land have development value?

Your plot must be big enough for at least one property which is in keeping with the size expectations of similar neighbouring properties.

In inner city locations where space is scarce, your plot may not be expected to host a property and a garden, for example. A small terrace or balcony may be sufficient. In suburban areas, where large gardens and privacy may be expected, a desirable plot is likely to be larger.

How much money could you get from selling part of your garden?

That depends on whether you live in a higher or lower value housing market. According to Caswell & Dainow, a plot of land where a typical three- or four-bedroom house sells for £500,000 to £600,000, your land could be worth up to £100,000 before planning permission or between £150,000 to £200,000 after planning permission has been granted.

In housing markets where the same size property sells for between £750,000 to £1 million, homeowners could expect £150,000 to £175,000 for their garden pre-planning permission and from £200,000 to £275,000 post planning permission. These values rise to up to £300,000 and £400,000 pre- and post-planning respectively where nearby homes sell for up to £1.5 million.

Dainow says: “We worked with a homeowner in North London who received £150,000 for land to the rear of his property where planning was secured for a three-bedroom family home and a family in South London who received £140,000 for overgrown side land that had become a regular site for fly tipping.”

But those living in more modest neighbourhoods need not miss out.

“In areas of lower value, landowners may still net between £30,000 and £60,000 for a slice of their garden for a single home,” he says.

How does it work?

If your property has a mortgage secured on it, your lender must agree to the sale first.

The bank’s lending is based on the original value of your property, which will go down when you sell part of it – reducing the value of their security.

The lender will also be looking at the future saleability of your home, says Nicholas Mendes, mortgage technical manager at brokerage John Charcol.

“Practical details matter,” he says. “If the sale affects access, parking, drainage, services, boundaries, or rights of way, it can quickly become a problem.

“What often derails these plans is not the idea of selling land itself, but the knock-on effect.

“A lender may be nervous if the remaining property becomes less marketable, if valuable development potential is being carved away, or if the title becomes more complicated because of covenants, restrictions, or unclear boundaries.”

Your mortgage lender is likely to request a valuation at your cost before making a decision. Lenders can ask for part of the mortgage to be repaid from the sale proceeds depending on the size of your debt and value of your property after selling some of your garden.

If you have been given the go ahead, you have three routes to choose from;

• Sell your garden to a developer before getting planning permission – this is a quickest option but will net you the lowest price.
• Agree with the developer on a ‘subject to planning’ offer, whereby they agree to buy your garden at a higher price on the condition they can get planning permission – you’ll need to instruct a solicitor to draw up a contract.
• Apply for planning permission yourself. This is the costliest option but if successful, you’ll end up with the highest price for your land.

Will selling your land devalue your home?

That depends on the size of your original plot, the amount of land you are left with and the type of area you live in.

Richard Sexton, managing director of Legal & General Surveying Services, said: “In some cases, selling off some land won’t hit the value of your property, particularly where the remaining plot is still generous for the type and location of the property.

“A house with an acre of land may still feel substantial and attractive with half an acre of land, especially in rural or semi-rural settings. However, buyers will pay a premium for space, outlook and exclusivity – so removing development land can still reduce desirability even if the house remains objectively sizeable.”

Land only adds meaningful value to a home where it contributes to privacy, setting, future potential or overall enjoyment of the property. If the sale changes the character of the house or reduces separation from the neighbours there is usually a material impact on value and market appeal.

Those with a smaller plot to begin with, in a suburban location, are more at risk of damaging the value of their property.

“Carving off land can alter the balance of the property quite significantly, affecting privacy, parking, outlook and future extension potential,” adds Sexton.

“In valuation terms, buyers tend to react more negatively where the remaining plot begins to feel compromised or out of keeping with neighbouring homes.”

Brett Ray, registered valuer and founder of Survey Shack, an app-based property assessment tool, has seen the impact on saleability first hand.

“Part of the garden to a house on my street had previously been separated from the original plot,” he said.

“That property has now been on the market for over a year. Ray believes this shows how reducing garden size and altering the original plot can “affect future saleability”.

Since the pandemic, Ray says outside space has become much more valuable, particularly in and around large towns and cities so homeowners should weigh up the risks and benefits carefully.

What to consider before selling your land

A loss of privacy, your garden or windows being overlooked, extra traffic down your drive or side access to your property and the stigma of being the property with the smallest garden on the street are all serious considerations for sellers, says Trudy Woolfe, director of lender services at e.surv chartered surveyors.

“Many people just see the pound signs rather than thinking about the impact,” she adds. “It’s a fine balance.”

Practical complications around access rights, drainage and shared boundaries can all affect saleability and the chances of getting a mortgage if not handled properly.

If your garden has development potential, by selling off the land, you are eliminating an upside of the original property.

And, by selling it to a developer who secures planning permission and sells it on to a builder, you lose control over the design quality and materials used which could have a detrimental impact on the desirability of your home.

Dainow says a good developer will make sure any new homes built on garden land would be positioned to protect the homeowner’s privacy and property value.

But rather than take the developer’s word for it, you can get specific terms written into the contract with the developer.

For example, you could agree you don’t want to look at any windows from a particular elevation or that maintenance of any new access created is the responsibility of the new owner.

You can also include an ‘overage’ clause in your contract which stipulates that the seller gets more money if the land becomes more valuable after the sale because more homes are being built on the land than originally agreed.

Independent advice should be sought from both a solicitor and chartered surveyor with development land expertise before agreeing any terms as land values can vary considerably depending on planning prospects and local demand.

India is rapidly becoming one of the world’s economic powerhouses.

India’s economy grew by 6.5% in 2025, according to IMF data, making it the fifth-fastest growing that year. With a GDP of over $4.1 trillion it is also the sixth-largest global economy.

It overtook China as the world’s largest country by population in 2023, and its growing population – particularly its expanding middle class – underpins much of its current and expected economic growth.

“A young working-age population, urbanisation and rising incomes should continue to expand the consumer base and gradually shift spending towards financial services, healthcare and other discretionary categories,” said Chetan Sehgal, lead portfolio manager at Templeton Emerging Markets Investment Trust.

Its economy has been transformed over the last decade by reforms such as the goods and services tax (GST), a single indirect tax which simplified the pre-existing tax system in 2017, and the unified payments interface (UPI), a protocol that facilitates instant digital payments on mobile devices using a unique digital ID.

“Registered GST taxpayers have increased from around 6.7 million in 2017 to 16.5 million as of May 2026, while UPI processed more than 240 billion transactions in FY2025/26 and had more than 550 million users by June 2026,” said Sehgal. “This brings more consumers and businesses into the formal system, creates digital transaction histories and expands the addressable market for credit, insurance, payments and savings products.”

All of this amounts to a powerful shift that could create an enormous amount of value for the country’s consumers and investors.

“India today reminds us of China’s internet opportunity 20 years ago – but with artificial intelligence (AI) potentially accelerating the transformation,” said Kevin Carter, founder and chief investment officer of investment manager EMQQ Global.

What’s driving India’s stock market?

India’s stock market has come up against greater challenges this year than it has faced in recent times, particularly the consequences of the conflict in Iran.

Between the start of the year and 19 August, the MSCI India index fell 9.3%, reflecting a range of macroeconomic headwinds that mostly result from the US-Iran conflict.

“India has been impacted by volatility in crude [oil] prices as a result of ongoing wars,” said Sehgal, “as well as by cost inflation in the AI supply chain, where India is a major importer.”

Since hitting a low of 1,049.11 at the end of March, though, the index has staged something of a recovery, gaining 10.8% between the end of the month and 19 August.

“Indian stocks have stabilised after a bruising first quarter and are proving resilient to both the Iran war and the ‘AI-takes-all’ market environment,” said Peter Clark, chief executive at global wealth manager Bentley Reid.

“Though cyclical headwinds remain there are growing signs that the record foreign selling of Indian equities is over with $2 billion of net inflows being recorded in June,” Clark added.

He highlighted that the MSCI Emerging Market index is dominated by Taiwanese and Korean chipmakers. Three companies – Taiwan Semiconductor, Samsung Electronics and SK Hynix – account for more than 28% of the index as of 31 July.

“If the AI trade ever reverses, ‘AI laggard’ is a moniker the Indian market may be happy to own,” said Clark.

Which are the most appealing sectors in India’s stock market to invest in?

Though it is perceived to be light when it comes to AI, India’s stock market benefits from having several sectors where it is a major global player.

IT services

For years, IT services companies have been at the forefront of India’s economic growth. Companies like Tata Consultancy Services (MUMBAI:TCS), Infosys (MUMBAI:INFY) and Wipro (MUMBAI:WIPRO) are among the world’s largest, with combined market capitalisations of over $100 billion.

Despite fears that AI could disrupt this market, Sehgal still views it as a significant sector for the country. “India retains significant advantages from its large skilled workforce, global delivery capabilities and deep client relationships,” he said. “We believe that, as enterprises adopt AI in their workflows, there will be opportunities for such companies to develop new solutions and move further into higher-value consulting and transformation work.”

Financial services and banking

One of the most significant impacts of UPI is that it brought a population of Indian consumers that had previously been largely unbanked into the mainstream financial system – and continues to do so.

“As more households and businesses enter formal payment and tax systems, banks gain greater visibility over customers and cash flows, supporting credit underwriting and the cross-selling of savings, insurance and other financial products,” said Sehgal.

Sehgal picked out ICICI Bank (MUMBAI:ICICIBANK) as an example of the kind of bank he favours: “well-managed private-sector banks with strong deposit franchises and disciplined underwriting”.

Pharma and healthcare

“Healthcare remains a structural opportunity,” said Sehgal. “Rising incomes, greater insurance penetration and increasing expectations for quality of care should support demand across hospitals, health insurance and pharmaceuticals.”

India has also historically been a strong producer of pharmaceuticals and could benefit from further demand from the world’s largest companies.

“There’s a need from the multinational [pharmaceutical companies] to have an alternative supplier at scale,” Gabriel Sacks, manager of the Aberdeen Asia Focus fund, told the MoneyWeek Talks podcast. “When you don’t look at China, then you start to look at places like India.”

Consumer discretionary spending

India’s growing middle class and rising smartphone adoption is also creating rapid growth in consumer discretionary spending, “particularly in areas such as food delivery, convenience and other digitally enabled services” Sehgal said.

Coupled with the GST reducing tax rates on consumer goods, discretionary spending and demand for premium offerings are expected to rise.

Are Indian stocks overpriced?

There are clearly opportunities for investors here, but given its size relative to other emerging markets, India’s stocks don’t necessarily fly under the radar. The biggest challenge to would-be investors in India over recent years has been that its companies are relatively expensive.

According to the website World PE Ratio, India’s stock market has an average price/earnings (P/E) ratio of 22.4 as of 18 August. That makes it more expensive than the Dow Jones Industrial Average, which tracks 30 US large cap stocks with an average 21.5 P/E ratio.

The good news is that prices have come down this year. The MSCI India Index fell 8.9% in 2026 through to 18 August.

“Recent underperformance relative to other emerging markets has also reduced India's valuation premium to below its long-term average,” said James Thom, lead manager of Aberdeen New India Investment Trust. “The energy crisis has eased, liquidity conditions are becoming more supportive and policymakers are refocusing on the reform agenda… In our view, improving fundamentals combined with more reasonable valuations create a compelling backdrop for the market.”

How to invest in India

It can be difficult for DIY investors based overseas to access Indian stocks directly, though this may depend on your broker.

For most investors, using a fund or investment trust is likely to be the best means of gaining exposure.

Aberdeen New India Investment Trust (LON:ANII) targets “world-class, well governed companies at the heart of India’s growth”.

Banks ICICI Bank and HDFC Bank (MUMBAI:HDFCBANK), telecoms business Bharti Airtel (MUMBAI:BHARTIARTL) and automaking conglomerate Mahindra & Mahindra (MUMBAI:M&M) are the trust’s top holdings as of 31 May.

Templeton Emerging Markets Investment Trust (LON:TEM) has 8.3% of its portfolio invested in India as of 31 July. ICICI Bank is its largest Indian holding, accounting for 2.5% of the portfolio.

EMQQ Global issues the India Internet ETF (LON:INQP) which specifically targets the opportunities in India’s expanding internet economy. Top holdings as of 19 August include food delivery business Eternal (formerly Zomato), non-banking financial company Bajaj Finance and Reliance Industries, a conglomerate that includes the country’s largest telecoms operator, Reliance Jio.

The fund “focuses on the digital disruptors across fintech, e-commerce, quick commerce, online travel and consumer platforms,” said Carter. “These companies are already taking share from traditional businesses, and AI should accelerate that by lowering costs and improving monetisation.”

Fast-fashion retailer Shein is about to make its debut as a listed company. It is floating on the Hong Kong market at the end of this month, with a target valuation of between $25 billion and $30 billion. It remains to be seen whether it can get that away successfully, but it looks like a missed opportunity for the City of London.

Shein initially explored a listing in New York, and when that looked troublesome, switched its focus to the City. Over the course of 2024 and 2025, Shein was trying to get approval for its initial public offering (IPO) here. It jumped through all the hoops, but more and more questions kept being asked about whether it was suitable for the London market.

The UK Sustainable Investment and Finance Association, for example, objected that London must “uphold strong governance standards”. Liam Byrne, the then chair of the House of Commons Business and Trade Committee, wrote to the stock exchange to demand it put tests in place to “authenticate statements” by firms seeking to list, “with particular regard to their safeguards against the use of forced labour”. The questions went on and on, but the message was clear. Shein did not look like the right sort of company for the privilege of listing on a bourse as distinguished as the LSE.

Shein has legitimate questions to answer... but so what?

Seriously? Looking back, it has to be asked what the critics could possibly have been thinking. It is legitimate to ask questions about Shein's business model. When you are selling summer dresses to teenagers around the world for a fiver or less, you are probably not paying the workers in the factory a fortune. There are concerns about its supply chains, about its governance standards and its relationship with the Chinese government. It is probably not a company that many of us would want to work for, or even buy stuff from.

But so what? The harsh reality is that the London stock market is in terrible shape. More companies have left it than joined in every year since 2022. In the last 20 years, the number of companies quoted on the main market has fallen from more than 1,700 to less than 1,000. In 2024, London dropped to 20th place globally for IPOs, overtaken by Oman and Malaysia among many others. Almost every week brings news of another major company accepting a takeover from a foreign bidder – easyJet was the latest example – and each time it happens the market gets a bit smaller. On its current track, the City is trapped in a vicious cycle. The market gets smaller and smaller, global investors have less incentive to pay any attention to it, valuations remain low, and more companies decide to leave, or else never list their shares in the first place.

The London Stock Exchange is trapped in a vicious circle

A Shein IPO was a chance to break out of that. Whatever its faults, it is a huge player in the global fast-fashion industry, and has millions of loyal customers around the world and a formidable business model. It has made online retailing work in a way that few of its competitors have been able to. At a $30 billion valuation, it would have been one of the biggest IPOs in Europe this year, would have leapt straight into the top half of the FTSE 100, and would have added a major technology company to an index that is dominated by a handful of ageing banks, oil companies and pharmaceutical conglomerates.

Shein would have put the London market back on the map and stirred up some interest from global asset managers who have largely forgotten it even exists. In its wake, a lot more of the fast-growing Asian technology companies might decide that London was a pretty good place to list their shares after all, and investors buying Shein might well decide there were a few more companies on the same market that were worth adding to their portfolio too. Valuations would start to rise, the market would recover, and it would become a more attractive place for entrepreneurs to list their business. A vicious circle could have been replaced with a virtuous one. As it is, the London market must make do with ridiculous and self-important moral posturing that no one is listening to anyway.

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Investing ‘factors’ refer to a number of styles or strategies that dictate how investors choose their stocks. Some of the best-known are value and growth.

Momentum investing is one of the simplest investing factors, but paradoxically one of the most difficult to successfully adopt.

In essence, it means you buy stocks, funds or other assets that are rising in price, and sell the ones that are falling.

It is an especially prevalent factor in the current market environment. As of 18 August, the MSCI World Momentum Index has returned 21% so far this year, compared to 13% for the MSCI World Index (the former index is based on the latter, but has a heavier weighting towards stocks that have positive momentum traits).

In July, the respected fund manager Terry Smith, CEO and chief investment officer of investment management company Fundsmith, wrote to investors in the Fundsmith Equity Fund explaining that he would tweak the value-driven strategy for which he is known to account for the prevalence of momentum investing.

He compared trying to buy undervalued stocks to “trying to catch the proverbial falling knife”. “All we are getting is cut fingers as their downward share price spiral is exacerbated by the index momentum enhancement effect,” he said.

Momentum investing’s current outperformance is so strong, that it is forcing seasoned investors to change their approach.

It’s particularly important to understand the concept as it’s not an easy strategy to replicate.

“It’s wonderfully simple to apply but also fraught with risks if you blindly follow what you see as a trend without understanding what you are actually buying and the risks involved,” said Rob Morgan, chief investment analyst at Charles Stanley Direct.

What is momentum investing?

Momentum investing effectively means buying stocks or other assets that are increasing in price.

“Momentum investing is simple in principle,” said Angeline Ong, senior investment analyst at IG. “Buy what's already going up or sell (short) what's already going down. It's built on the idea that any asset that has performed well over the recent past tends to keep performing well in the near term, and vice versa.”

A basic approach might be to rank stocks or funds by their returns over a given time period (three, six or 12 months) and buy whichever has generated the greatest returns.

“Some investors are probably doing it without even thinking about it, by buying a share or fund they notice is performing well,” said Charles Stanley Direct’s Morgan.

More advanced momentum investors might make use of technical analysis tools which measure patterns in how an asset is trading.

For example, the relative strength index measures the speed and change of an asset’s price and quantifies this as a number between 0 and 100; a reading of 50 or above indicates positive momentum (though a reading above 70 is usually interpreted as a sign that a stock is overbought and that its price might soon fall back), while a reading below 30 indicates it might be oversold and due a rebound.

Some also use long-term moving averages to look for signs of momentum. A stock’s 50-day moving average price rising above its 200-day moving average can be interpreted as a ‘buy’ signal; (and vice versa: if it falls below, this can signal a ‘sell’).

Ong added that momentum investing is often considered a natural opposite to value investing.

“Value investors buy cheap stocks that the market has undervalued, and wait for them to re-rate,” she said. “Momentum investors and traders buy stocks the market already likes, and ride the trend.”

What are the drawbacks of momentum investing?

For most non-professional investors, momentum investing is a challenging strategy to execute over the long term.

One obvious reason for this is that the stocks or sectors that have momentum behind them are constantly changing. A stock can go from having positive momentum to being overbought – and then, oversold – very quickly, so if you’re not spending most of your waking hours looking at live market data, you could easily miss the switch and be left out of pocket.

It can also lead to significant over-concentration. Momentum investing by definition targets the most popular stocks at any given time. If a majority of the world’s investors are deliberately targeting momentum stocks, the effect can become circular; investors keep putting more and more money into a given stock or sector, simply because everyone else is.

That can generate excellent returns when the stock market is gaining, but it can unravel quickly when it falls.

“If $200 billion market valuation stocks are moving 33% a day in a bull market, you can reasonably speculate about what’s going to happen if or when things reverse,” Terry Smith wrote in his July letter. “In 2007–08, the S&P fell 57% in five months. Next time round, it would not surprise me if it accomplished this in five days.”

“Popular momentum trades can also become crowded, which amplifies the snapback when they unwind,” said Ong – as happened with silver prices in early 2026.

Momentum is arguably better-suited towards shorter term approaches.

“In momentum investing's purest, fastest-moving form, which involves chasing days-to-weeks price action, it is seen as more of a trading strategy, not an investing one, and needs discipline and speed most retail investors may not have time for,” said Ong.

As well as it being a difficult strategy to consistently get right, Ong highlighted that it can lead to higher costs; momentum strategies require frequent buying and selling, which racks up trading costs and, for taxable accounts, capital gains tax.

How can you adopt a momentum investing strategy?

If you do want to try momentum investing for yourself, you have two basic options.

The first is to attempt to identify momentum stocks yourself. This will take a lot of technical analysis, and given the potential of the market to change in a flash, it will be time-consuming to ensure you’re on top of all your picks.

The simpler approach would be to buy a momentum-focused fund. This leaves the hard work of deciding what to buy and sell to the fund manager or index provider.

There are plenty of passive funds, most of which are focused on the MSCI World Momentum Index or similar indices. Some examples include the iShares Edge MSCI World Momentum Factor UCITS ETF (LON:IWFM), the Xtrackers MSCI World Momentum UCITS ETF (LON:XDEM) or the L&G Developed World Momentum Factor Index Fund.

Active funds following a momentum strategy are less common. Active fund managers, in theory, earn their living by picking out opportunities the market has overlooked, rather than simply following what everyone else is doing.

But Smith is not the only active manager to acknowledge that momentum can (and, debatably, should) play a role in their investment decisions. So momentum does factor into the strategies behind some active funds and investment trusts.

Morgan, for example, highlights Artemis US Extended Alpha Fund as an active strategy that incorporates elements of momentum investing (its stated objective is to profit from both rising and falling share prices). Notably, though, the fund describes its approach as contrarian, which is in some respects antithetical to momentum investing.

“It’s not pure quantitative momentum but represents partial exposure to the factor,” said Morgan.

Investment trusts where momentum is one of the characteristics assessed include JPMorgan European Growth & Income (LON:JEGI), which targets companies exhibiting value, quality and momentum characteristics, and Aberdeen UK Smaller Companies Growth Trust (LON:AUSC) which assesses companies based on quality, growth and momentum criteria.

Investors have been warned against putting money into mini bonds issued by unregulated companies just five years after the Financial Conduct Authority (FCA) banned promotions of the risky products.

The high-profile collapse of London Capital & Finance in 2019 – where 11,600 bondholders lost an estimated £237 million – prompted the FCA to ban the marketing of mini-bonds to retail investors in 2021.

They can now only be sold to high-net worth and sophisticated investors who can handle more risk in their investment portfolio.

But the regulator remains concerned after the July failure of Woodville Consultants, a litigation funder that raised capital from retail investors through unregulated loan notes.

The FCA is now warning consumers about the risks of investing in loan notes and mini-bonds issued by unregulated companies, after it said it continues to see people lose money in these high-risk investments.

What is a mini bond?

A mini bond usually involves lending money to a company for a set period in return for interest.

Mini bonds were popular pre-pandemic when savings and interest rates were at record lows.

The rate of return is often high - even at double digits - to tempt investors and reflect the risk. But they are not regulated so you can’t get any recourse from the Financial Services Compensation Scheme or Financial Ombudsman Service if something goes wrong.

Ultimately, if the company fails, consumers could lose every penny.

Nouran Moustafa, practice principal for Roxton Wealth, said her starting point for an ordinary retail client with mini bonds is a very simple 'no'.

She said: “The word ‘bond’ sounds reassuring, but some of these investments are anything but. You can be lending to one unregulated company, with little liquidity, limited diversification and the possibility of losing every penny if that business fails.”

Moustafa feels they could “potentially” have a place, but if so “only for a very small minority of sophisticated investors who fully understand the structure" and who aren't relying on that money for the future.

“My rule is simple: if losing 100% of that investment would materially change your life, you should not be anywhere near it," said Moustafa. “No yield is worth destroying your financial plan.”

What is the latest mini bond warning about?

Despite promotions of mini bonds to mainstream investors being banned since January 2021, the FCA said consumers may still come across adverts for loan notes and mini bonds in everyday places including social media, online adverts or websites promoting high fixed returns.

The adverts can look simple and safe but may be scams, said the FCA.

Lucy Castledine, director of consumer investments at the FCA, said: “Big, fixed returns are a warning sign, not a guarantee. Loan notes, mini-bonds and other speculative illiquid securities are high-risk investments and are not suitable for most people.

“Ordinary retail investors should only invest through regulated firms because if they invest through an unauthorised firm, they may have little or no protection if things go wrong. We are working hard to prevent harm, but consumers should still stop and check before investing.”

Anita Wright, chartered financial planner for Ribble Wealth Management said mini bonds can be seductive but investors should ask why the offer reached them.

She said: “Credit this good doesn't need retail money, banks price it for a living, and private credit funds fight over the scraps. When the capital is raised instead from savers through a commissioned introducer, every desk with a credit team has already looked and walked away.

“You are not early. You are last,” Wright said, adding that the only people who know the business they are lending to and can afford to write off the investment completely should consider buying one.

“Even then the deal is lopsided,” she continued. “If the business fails you lose like a shareholder, if it thrives you still only get your interest.”

The Nutshell Growth Fund invests in quality stocks from exceptional businesses, but only when their valuations offer an attractive prospective return. Our concentrated portfolio of around 30 global companies is selected for two characteristics that do not always come together: exceptional financial quality and a reasonable price. By quality stocks, we mean businesses with a strong record of revenue and profit growth, resilient margins, attractive returns on capital and substantial cash generation. Quality alone, however, is not enough. A wonderful company can still be a poor investment when too much future success is reflected in its share price.

Three quality stocks for your portfolio

Adobe (Nasdaq: ADBE) provides software tools used to create and manage digital content, including Photoshop, Illustrator, Acrobat and Premiere Pro. Its products are vital to the daily workflows of designers, marketers and large companies, creating high switching costs and strong customer retention. Its subscription model provides predictable recurring revenue, high margins and substantial free cash flow. Adobe can reinvest this cash into product development while continuing to return capital to shareholders.

The concern is whether generative AI strengthens Adobe's product suite or allows cheaper competitors to erode its position. We believe Adobe's established customer relationships, proprietary content and ability to integrate AI directly into widely used products give it significant advantages. Importantly, the market is no longer placing a premium valuation on those strengths. Adobe's earnings multiple has fallen as investors have focused on the competitive threat from AI. We believe much of that risk is now reflected in the price. Adobe does not need to return to its former valuation: continued moderate growth, resilient margins and strong cash generation should produce an attractive prospective return. Management have backed their confident outlook by announcing a significant share buyback programme earlier this year – further support for the idea that the share-price weakness is overdone.

Auto Trader (LSE: AUTO) operates the UK's largest digital automotive marketplace, connecting car buyers with thousands of vehicle retailers. Its scale creates a powerful network effect: buyers visit because it offers the broadest choice of vehicles, while retailers advertise because that is where the buyers are. This makes its market position extremely difficult to replicate. Auto Trader also benefits from a capital-light business model, high margins and strong cash conversion. It does not own the vehicles listed on its platform; instead, retailers pay for advertising, data and digital services. The shares have weakened due to concerns about relationships with dealers and the impact of AI on online search. We believe these concerns underestimate the value of Auto Trader's brand, audience, inventory access and proprietary market data. Its reduced valuation offers investors the opportunity to own a highly profitable and cash-generative franchise at a reasonable price.

Amphenol (NYSE: APH) makes the connectors, cables and sensors used across data centres, communications networks, industrial equipment and aerospace. These components represent a small proportion of a system's overall cost, but they are critical to its performance and reliability. Customers value technical expertise and consistency over choosing the cheapest supplier, supporting long-term relationships and attractive returns. Demand is supported by investment in AI infrastructure and data centres. Amphenol is not conventionally cheap on a headline earnings multiple. However, relative value does not simply mean buying the stocks trading on the lowest price-earnings (P/E) ratios. We assess valuation relative to the durability of growth, cash generation and the opportunity to reinvest capital. We believe Amphenol's exceptional execution and potential for growth justify a higher multiple.

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Shrinkflation is rife. When did you last open a tube of Pringles and find the crisps reaching the foil seal? The gap at the top is no optical illusion – the makers of Pringles narrowed the canister and cut the contents from 200g to 165g while the price climbed towards £2.25. The result was a 118% increase in the price per gram.

Customers may see fewer crisps, but shrinkflation isn't just an irritation for consumers. Investors should see something more revealing: it can be an early signal that a company's ability to raise prices openly is beginning to weaken.

Economist Pippa Malmgren coined the term “shrinkflation” in 2009 to describe the practice of reducing a product's size while leaving the headline price unchanged, or even increasing it. Rather than risk the backlash of an overt price rise, manufacturers subtly trim the contents, relying on a simple behavioural quirk: shoppers notice the price on the shelf far more readily than the net weight printed on the packaging. It has become one of the defining responses to the inflationary era, helping consumer-goods companies to defend margins while avoiding the shock of higher prices.

When reducing pack sizes risks becoming too obvious, manufacturers often turn instead to “skimpflation”, replacing more expensive ingredients with cheaper alternatives. Tesco has reduced the pork content of its Finest sausages from 97% to 90%; Morrisons has lowered the beef content in its ready-meal lasagne. The prices barely changed, but the products became cheaper to make.

Why do companies rely on shrinkflation instead of raising prices?

For investors, the question is why companies rely on such tactics. Businesses with genuine pricing power can usually raise prices openly because customers value the product sufficiently to want to pay more. Companies serving more price-sensitive consumers have fewer options. Rather than test demand with a visible price rise, they shrink- or skimpflate. Executives describe this as “revenue growth management”, or “pack architecture optimisation”. Investors should recognise it as an attempt to protect margins when conventional pricing power is under pressure.

The reason the tactic works lies as much in psychology as in economics. Consumers are generally more sensitive to changes in the price printed on the shelf than to slight reductions in weight or volume. Behavioural economists describe this as asymmetric price perception. For a time, shrinkflation allows manufacturers to recover higher input costs without risking the sharp fall in demand that often follows an outright price increase. The strategy has limits. Used sparingly, it can help preserve margins during periods of unusually high inflation. Used repeatedly, it risks weakening the brand value that once gave a company its pricing power. Once consumers begin to question whether a trusted brand still represents good value, winning back that confidence can take years.

Shoppers who feel they are repeatedly paying more for less become more willing to switch to private-label alternatives offering similar quality at a lower price. Brands that repeatedly rely on hidden price increases risk training customers to look elsewhere.

Fortunately for investors, listed companies rarely succeed in hiding the effects indefinitely. The evidence usually appears in the accounts. Looking beyond headline revenue growth to the split between pricing and volumes often provides a clearer picture of a brand's health than sales growth alone. Mondelez's financial results reinforce the point. It reported 4.3% organic net revenue growth in 2025, which appears respectable at first glance. A closer look shows pricing contributed 8.0 percentage points, while volume and mix reduced growth by 3.7 percentage points. Revenue was still rising, but customers were buying fewer products. Nestlé's reporting tells a similar story. Organic growth remained positive as higher prices offset rising costs, yet its measure of physical demand, “real internal growth”, remained negative.

This matters. Strong pricing supported by stable volumes often signals genuine pricing power. Strong pricing accompanied by persistent volume declines deserves much closer scrutiny. Companies can protect profits for a time through smaller packs and higher prices, but falling volumes may indicate that customers are beginning to question the value of the brand.

A changing environment around shrinkflation

The environment that allowed shrinkflation to flourish is also changing. Consumers are more aware of the practice, retailers are paying closer attention to perceptions of value and regulators are making price comparisons easier. In the UK, reforms to the Price Marking Order require unit prices to be displayed more clearly and consistently from April 2026. French supermarket Carrefour has gone further, placing prominent shrinkflation notices beneath affected products during pricing disputes, while UK supermarkets have continued expanding their own-label ranges. Together, these developments make it harder for manufacturers to rely on shrinking packs without attracting greater scrutiny.

For investors, the lesson is not that every company using shrinkflation should be avoided. Commodity inflation sometimes leaves management teams with difficult choices and modest reductions in pack size may be preferable to price rises that drive customers away. The important question is whether shrinkflation has become a temporary response or a permanent habit. Investors spend plenty of time analysing margins, cash flow and valuation. They should devote equal attention to whether revenue growth reflects customers' willingness to pay higher prices, or simply the effects of shrinking packs and higher prices. Shrinkflation can be a valuable clue to a company's underlying health.

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JPMorgan UK Small Cap Growth & Income (LSE: JUGI) is worth considering as a way to play the recovery in UK small caps while earning an appealing income.

UK equities of all shapes and sizes have looked cheap compared with the rest of the world for the best part of the past decade. However, two things have changed over the past few years that have shifted the narrative significantly in favour of investors.

The first has been the demand from private equity and trade buyers to acquire UK businesses. This is a side effect of low valuations and excess capital in private equity markets, and the rate of take-outs is only accelerating.

The second has been the willingness of businesses to return money to their investors. The UK market has become the share buyback capital of the world as management – under pressure from their boards and investors, and lacking other compelling investment opportunities – have poured free cash into buybacks.

JPMorgan UK Small Cap Growth & Income trust pays dividends

The £500 million JPMorgan UK Small Cap Growth & Income trust, which was formed via the merger of JPMorgan's small and mid-cap trusts in 2024, is one of several JPMorgan-managed trusts that have committed to pay an annual dividend that is based on a percentage of net asset value (NAV), rather than on income received from their holdings.

The trust targets total annual dividends of at least 4% of NAV (based on NAV at the end of previous financial year on 31 July), which are funded from both capital and income. For example, the trust reported NAV of 373.1p for the year to 31 July 2026, up around 10p year on year. It hence proposes to pay dividends of 3.73p per share each quarter in the current year ending 31 July 2027, totalling 14.9p for the year. That represents a yield of 4.1% on the current price of 364p.

This approach makes a lot of sense in the world of small and mid caps, where reinvesting for growth should be a priority for the underlying companies over shareholder returns. It gives managers Georgina Brittain and Katen Patel much more flexibility to invest where they see growth, not just income.

The added side effect of this approach is that it forces managers to top-slice their holdings and book the profit, which is then returned to investors. An automatic approach to taking profits removes some of the market-timing risk that comes with active management.

JPMorgan UK Small Cap Growth & Income is deeply undervalued

Still, income is only part of the attraction here, since the portfolio is also deeply undervalued and should offer scope for capital gains.

The trust's portfolio of approximately 80 stocks is trading at a forward price/earnings ratio of around 11, according to Brittain, while the Deutsche Numis Smaller Companies plus AIM index trades on 13. The free cash-flow yield is around 9%.

The team focuses on finding the most profitable UK small and medium-sized companies with the best domestic and international growth potential. Return on invested capital (Roic) is one of their key metrics when looking for the most productive businesses. The top holding is Premier Foods, the owner of the Mr Kipling brand of cakes, at 5% of the portfolio.

JPMorgan UK Small Cap Growth & Income also makes use of gearing, with borrowing averaging around 10% of NAV – a level the managers feel is comfortable given the liquidity of the portfolio. So there are the four levers that can help create value: income, growth, valuation and gearing. What's more, the trust is still trading at a modest discount to NAV (5%, down from over 10% earlier this year), so investors can currently buy the underlying portfolio on a double discount.

Notwithstanding the headwinds that have held back UK equities over the past ten years, the shares have produced a strong total return of 11.9% per year compared with 5.9% for the benchmark. As these headwinds become tailwinds, the trust appears primed to keep delivering for investors.

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