We will find out soon whether Andy Burnham will face a contest for the leadership of the Labour Party or take office unopposed. Either way, it makes little difference now. One way or another, he is likely to be our next prime minister before the end of the summer.

There are some ways in which Andy Burnham will be an improvement on the outgoing Keir Starmer. He is a better communicator and more personable. As mayor of Manchester, he is untainted by the failures of the last two years and can make a fresh start. Perhaps best of all, he can get rid of the hapless Rachel Reeves as chancellor and replace her with someone less obviously out of their depth and with at least some grasp on how businesses operate and the challenges they face. Temporarily at least, this may start to lift Labour's dismal poll ratings.

There's a problem, however. Prime minister Burnham will be heading straight into a financial crisis. Britain's economic outlook keeps on getting worse and worse. At the end of last week, we learned that government borrowing in May came in way above forecast, with a 30% year-on-year rise. For the month, government spending was up by 7% year on year, while tax receipts, even with record increases, were up by just 4% (it is hard to see much sign of the “neoliberalism” Burnham complains about in those figures). Growth stagnated last month, despite all the extra spending the government has thrown at the economy. Unemployment is rising relentlessly, especially for young people, and the welfare bills are running out of control, with the number of working-age people on benefits above four million. All the warning signs for a crash are already flashing red.

Andy Burnham is only going to make things worse. It is hard to detect much in the way of a serious economic programme in the collection of soft-left soundbites that make up his standard stump speech. But insofar as he has one, it involves yet more borrowing and spending. He has promised to bring the utilities under greater state control but said nothing about how that would be paid for. He has promised to cut business rates for small companies and launch a massive programme of council-house building, without attaching any kind of a budget. And if Burnham has ever said anything about controlling public spending, especially the soaring welfare bill, he has kept it very quiet. Even if he only keeps a fraction of his spending promises, and it will be very hard to break all of them, then the deficit will keep climbing higher and higher.

Can Andy Burnham succeed as prime minister?

Even as the deficit rises, Andy Burnham has said almost nothing about how he intends to boost growth to pay for it all, nor has he made any attempt to bring business on board. Celebrity chef Tom Kerridge has backed him, but only because of his promise to reduce the rate of VAT on hospitality businesses to 10% (yet another unfunded promise). Other than that, Britain's major corporate leaders have remained silent. There is not going to be any wave of investment to welcome the new regime, nor is there likely to be any dramatic measures to encourage investment into the UK. In the background, Britain's financial position is steadily deteriorating. Very quickly, the markets are going to test the new government. Is it willing to cut welfare, or will it raise taxes to keep paying the £125 billion a year in interest on the national debt the country now has to pay? Traders will want to find out, and find out very quickly, and if the answer is no, then gilts will be sold off.

The last PM to take over from one who had been elected with a big majority was Liz Truss in 2022. We all know how that worked out – her lifespan in office was famously shorter than that of a lettuce. Burnham won't face quite the same set of challenges, nor is he likely to attempt anything as risky as the mini-budget that led to her unravelling. Even so, the British economy is in far worse condition than it was then, our debts are far higher and the bond markets already view us with suspicion. Andy Burnham will soon face the heat – and may well wilt as quickly as a lettuce.

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.

With a focus on British small-cap stocks, the Henderson Smaller Companies investment trust seeks to deliver long-term capital and income growth by investing in UK-listed companies at their most exciting stage of development. Our stock-picking approach is designed to identify this growth before others do, capturing the small-cap premium through disciplined valuation, ensuring we invest only where prices do not yet fully reflect a company's strong fundamentals in terms of growth and cash generation.

A tumultuous decade for British small-cap stocks, beginning with nerves around the EU referendum and culminating in an energy crisis and a sharp rise in interest rates, has left this part of the market unloved, overlooked and, most importantly, awash with value. We highlight three British small-cap stocks that are cheap compared with international peers, with precedent transactions (the price that peers have recently been purchased for in merger and acquisition deals) and with their own history.

Promising British small-cap stocks for your portfolio

Oxford Biomedica (LSE: OXB) is a contract development and manufacturing organisation (CDMO) specialising in manufacturing viral vectors for cell and gene therapy, treatments used to combat cancer and rare genetic diseases and used in a growing range of new applications. It is one of only a handful of players globally capable of developing these technologies at a commercial scale. The market is growing at more than 20% a year, and the firm has set ambitious targets to more than double revenues by 2028, underpinned by increased capacity coming online at its Oxford (UK) and Durham (US) facilities. The shares trade at about a 30% discount to internationally listed peers despite faster forecast sales and earnings growth. Meaningful consolidation across the CDMO sector in recent years and interest from private-equity firm EQT make the stock look even more attractive.

In a world where financial-services firms are fighting to get closer to their clients, Rathbones (LSE: RAT), which provides financial planning and investment advice, is well-positioned. Ageing populations and rising personal and wealth taxes are driving demand. The shares trade on a steep discount to multiples recently paid by NatWest for smaller competitor Evelyn Partners and offer an attractive dividend yield.

Everplay (LSE: EVPL) is an independent video-game developer and publisher with a resilient business model, operating in a structurally growing part of an already large market. In the premium “AA” and “AAA” segment of the market, firms sink large sums into individual titles and need big hits to drive returns. The smaller, independent players are different. Everplay spends on average £1 million-£1.5 million per game, releasing about ten new titles a year, meaning risk is diversified and earnings are not dependent on any single release. About 75% of earnings are underpinned by a strong back catalogue of well-known titles that continue to generate revenue – Worms, for example, is more than 20 years old and still makes money.

It also owns simulation-gaming business Astragon, with its niche customer base, and StoryToys, a mobile “edutainment” division targeting younger players and recurring revenues. Everplay is a leading scaled player in its sector and, despite resilient growth and strong cash generation, a robust pipeline for this year and significant firepower to pursue mergers and acquisitions to drive incremental growth, the shares trade at just over seven times EV/Ebitda – a significant discount to peers, precedent transactions and its own history.

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UK investors looking for income often concentrate on FTSE 100 companies. But it's not just the more defensive, established giants that can deliver attractive dividend yields; mid-sized and smaller companies can too. These smaller businesses tend to be more cyclical and faster growing, helping to drive earnings and dividend growth, which can boost total returns over time. “Time” is the word to emphasise there. Sometimes you have to wait for them to fulfil their exciting capital-growth potential. But if you've targeted good, well-managed companies paying out dividends, you know you're being paid to wait. This area of the market can go through difficult patches, but that can open up opportunities to buy at attractive prices and enhance the dividend rewards further.

It's in one of those difficult patches now. Smaller companies have substantially underperformed their large-cap peers. In my view, this is because smaller companies are more domestic in their exposure at a time when the UK economy is roughly flatlining. And they're more cyclical at a time when there are question marks about the global and UK economies. But this prolonged underperformance has arguably thrown up some interesting value opportunities. Here are three holdings within our multi-cap, income-focused Lowland Investment Company that we think illustrate the potential benefits for long-term investors willing to hunt among smaller companies, as well as larger ones, for dividend yield and potential capital growth.

Three UK smaller companies to consider

Marshalls (LSE: MSLH) makes building products such as paving stones and roofing materials. It's trading on less than ten times forecast earnings, on an earnings number that is depressed compared with its history. End markets, particularly in landscaping products, are challenged, but while you wait for things to pick up there is a dividend yield that is more than 5% and roughly twice covered by earnings. There are also divisions within the group that are more resilient. Its solar panels division, for example, has grown sales strongly in recent years.

Shaftesbury Capital (LSE: SHC) owns much of London's West End, including Covent Garden, Carnaby Street and Chinatown – a mix of retail, office and residential properties. It's trading on a roughly 40% discount to net asset value. The market is gloomy about property, but vacancy rates in this portfolio are very low. The dividend yield is more than 3% and the managers are targeting rental growth of 5%-7% a year. This should mean the company has the potential to grow that dividend sustainably to offset inflation.

Hilton Food Group (LSE: HFG) is a meat packer with customers globally, such as Tesco in the UK and Woolworths in Australia. It has struggled in recent years after expanding into adjacent areas, such as white fish and vegetarian food. But the current CEO seems to be shifting focus back to its core skills. The shares trade on a price-earnings ratio in the low teens and a dividend yield covered by earnings of more than 6%. Hilton is now investing in new growth opportunities. It's starting to work with Walmart in Canada, a venture that might eventually spin out to other countries covered by the supermarket chain. If people can feel confident the problems have been dealt with, they may get more excited about growth opportunities again.

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By European stock market standards, the size of the SpaceX initial public offering (IPO) will be breathtaking. The company is expected to be valued at between $1.75 trillion and $2 trillion, and given how frothy Wall Street is right now, it would hardly be a surprise if it went to a substantial premium on its first few days of trading. We can all question the valuation. The Starlink business that now provides internet access on flights is a clear money-spinner and it may be able to break into domestic broadband as well, but the plans for a colony on Mars look, to put it politely, a little optimistic. Even so, this is a huge business and a very successful one, and it has created a huge amount of value in a very short period of time.

It is far from alone. Anthropic, the company behind Claude AI, is reported to be planning an IPO in October, with a valuation of $1 trillion or perhaps more. Its rival OpenAI, the company behind ChatGPT, is also expected to list later this year, with a value of close to $1 trillion. There are slightly smaller companies just behind it. Last week, Cerebras, which makes AI chips, made its debut on Nasdaq, and after a first-day premium, saw its value soar to $95 billion. On the US market, incredible amounts of wealth are being created at dizzying speed. Anthropic is only five years old, OpenAI is ten (its profit-making unit only five) and although SpaceX was founded in 2002, it only really got going a decade ago.

The contrast with European stock markets is painful. SpaceX by itself will be worth almost as much as the whole of France's CAC-40 (valued at €2.6 trillion and falling rapidly as the value of LVMH slumps). It will be getting close to the entire value of Britain's FTSE 100, currently valued at £2.4 trillion, and SpaceX and Anthropic combined will certainly be worth more than all of the UK's 100 largest companies put together.

European stock markets need more mavericks like Elon Musk

The reason is clear. Very few new firms are being created. If you exclude mergers, the newest company on the CAC-40 is Eurofins Scientific, which was formed in 1987. Even where there are new companies, the best ones choose to list on Wall Street – the Cambridge-based chip designer ARM, for example, is now worth $220 billion, which would rank it as the third largest in the FTSE 100 if it had decided to list here.

Europe, including the UK, needs to realise how far behind it has fallen and start working out how to turn that around. First, it should radically reduce the taxes on start-ups to encourage more entrepreneurs. Britain has scaled back the break on capital-gains tax that anyone who started a new company used to benefit from, and most of Europe never had any concessions to start with. Instead, there is a constant stream of new wealth taxes and capital-gains taxes, with the Netherlands extraordinarily planning to tax capital gains before they have even been cashed in. No wonder there are far fewer start-ups and hence fewer giants ever emerge.

European stock markets should also roll back restrictions on growth industries such as AI and space. While the US has a booming space industry, Europe has a Space Act; while huge new AI businesses are created on the other side of the Atlantic, Europe is stuck with an AI Act. But there is no point in having a regulator if there isn't an industry to make rules for. There is still little sign that politicians in either Brussels or London realise how much damage has been done by trying to regulate industries before they have even begun.

Finally, Europe should relax the listing rule for entrepreneurs such as Elon Musk who want to keep control of companies. SpaceX will come in for a lot of criticism for allowing Musk so much control over the business and the $1 trillion pay package if he manages to create a thriving human colony on Mars. It doesn't follow Europe's governance rules. But so what? Entrepreneurs are often a little odd, and they are often control freaks, but they also have the drive and ambition to create huge new businesses. Europe could use fewer rules and more mavericks if it is to avoid turning into an investment backwater, with nothing more than a dull collection of very old companies.

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What force will shape the world in the next 20 years? The answer is China's drive to financialise, according to Diana Choyleva, founder and chief economist at Enodo Economics.

In this episode of the podcast, Diana speaks to MoneyWeek's Cris Sholto Heaton about how the AI race differs in China versus the West, the transformation of the country's equity market, and the breakdown of globalisation.

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Bank stocks were hit hard by the 2008 financial crisis. Years of heavy borrowing left many banks exposed, and some of the most trusted names collapsed. Investors faced huge losses as governments stepped in with taxpayer-funded bailouts. In response, regulators introduced strict new rules to prevent a repeat. These measures weighed on profits for years, but the sector has now come through that difficult period. Today, banks are much safer than they were before the crisis. Big investors have returned, helping to push up share prices; some have even tripled in recent years. As valuations edge back towards more normal levels, an important question remains. Do these high-yielding stocks still deserve a place in a portfolio, or have the easiest gains already been made?

Bank stocks’ wilderness years

For more than a decade, the banking sector struggled to regain the confidence of investors. Most professional fund managers suffered significant losses in the 2008 crash and subsequently found the industry difficult to navigate. Investors discovered they lacked understanding of complex balance sheets. Consequently, their appetite for banks' shares vanished for a generation. Even today, many professional investors remain wary because they find the internal mechanics of a global bank difficult to decipher.

While investors remained cautious, regulators rebuilt the global financial architecture. There has been a substantial increase in banks' capital, the cushion that stands between bank assets and insolvency. Core capital ratios, which give the size of this cushion expressed as a percentage of the bank's total risk, were as low as 4% pre-crisis; today, they often exceed 15%. In the UK, the Vickers Report mandated a separation between retail and investment banking operations. This altered the nature of the business and kept valuations low.

Jamie Dimon provided the first credible signal that this era of stagnation was ending. In February 2016, the chief executive of JPMorgan Chase invested $26 million of his own money into his bank's stock. He purchased the shares at roughly $56 per share, which aligned with the company's book value at the time. Dimon realised that the regulatory clean-up was largely complete. He saw an institution that was well-capitalised and undervalued, yet still priced as if it was ruined. His investment marked the start of a decade-long rally that eventually saw the stock price rise more than fivefold. It would take several more years and a radical change in the interest-rate environment for the rest of the market finally to reach the same conclusion.

The return of inflation

The stagnation of the previous decade ended with the return of inflation. Central banks tackled inflation by raising interest rates from near-zero to 5% and, with that, the fundamental engine of banking profit returned to health. This engine is the “net interest margin” – the difference between the interest a bank pays to its depositors and the interest it receives from its borrowers. For years, the industry struggled to generate a decent return in a world where interest rates were near-zero. The shift to higher rates boosted profits.

How much banks paid their depositors played a big role in this windfall – that is, how much of a central-bank rate rise was passed on to savers. When rates went up, banks were slow to increase interest on current accounts. At the same time, they quickly raised the cost of mortgages and business loans. This delay helped to boost profits. In theory, this rise in profits should only be temporary. But it made it easier for a bank to manage future earnings through a “structural hedge”, allowing them to lock in interest rates for several years and smooth profits as rates fall. The result is a more stable and predictable income stream. This improved profitability has transformed how banks manage their capital. After a decade of hoarding cash to satisfy regulations, they are now paying a lot back to shareholders via a mix of dividends and share buybacks. Total shareholder yields, combining dividends and buybacks, now often exceed 10% a year.

Strong recent results from the biggest banks have cast doubt on the idea that upstart digital challenger banks will disrupt them. While the challengers achieved high user numbers and launched attractive software, they lacked the massive and low-cost deposit bases that the traditional banks enjoy. The incumbents used their superior cash flows to adopt the best elements of the digital revolution, investing billions in their own platforms while maintaining the trust and regulatory licences required to dominate high-value lending, such as residential mortgages.

The established banks were also better able to absorb the higher costs of regulation and cybersecurity. For a smaller challenger bank, the compliance burden is often a significant percentage of its total revenue. For a giant bank, it is a manageable operational expense. Some challenger banks, most notably Revolut, have grown to a large size, but the biggest effect of the new banks is a forced modernisation of the older ones.

This combination of rising margins, disciplined shareholder returns and the resilience of the established model has restored the sector's momentum. The banks have demonstrated that they are no longer just safe utilities. They are profit-seeking enterprises with the capacity to deliver high yields to patient investors. The current challenge for investors is to identify which institutions can sustain this performance as the interest-rate cycle matures. The market has recognised the recovery, but the divergence between the winners and the laggards suggests that selection remains critical.

How to navigate the banking market

There are at least three distinct types of banking. Retail banking is the familiar world of the high street, managing residential mortgages and personal savings for millions of customers. Corporate banking offers services to the commercial sector, extending credit to firms and facilitating international trade. Investment banking is a more volatile endeavour that involves mergers, debt issuance and investing in the capital markets. The latter depends on the shifting appetites of the financial markets, which introduces a level of unpredictability that many investors find unsettling. The market typically rewards the steady stability of retail lending with a higher multiple, while it views the inconsistent profits of investment banking with caution.

The main concern for investors is the progression of the interest-rate cycle. Banks generally benefit from rising interest rates because the income they generate from loans increases more quickly than the interest they pay to depositors. However, as rates plateau this advantage often diminishes. Customers eventually move their money from low-interest current accounts into higher-yielding fixed-term products. This shift increases the bank's cost of funding and can lead to a lower profit. Asset quality is another area of vulnerability. Extended periods of high borrowing costs can put pressure on both households and businesses, leading to a rise in loan defaults. The commercial real-estate sector is currently viewed with particular caution, especially in markets where office and retail property valuations have fallen. If a bank has a high concentration of lending in these areas, it may be forced to raise its loan-loss provisions, which hurts profits.

Political and regulatory risks are also a factor. Governments may consider windfall taxes on high bank profits during hard times. Regulators often introduce new rules on capital requirements or consumer protection. Such measures increase operational costs and limit the amount of cash that banks are able to return to shareholders through dividends and buybacks.

Finally, structural shifts in the financial system present long-term challenges. The rise of non-traditional lenders and private credit markets has introduced new competition for corporate lending. Furthermore, the development of digital currencies could alter the traditional deposit-taking model. If consumers begin to hold significant portions of their wealth in digital sovereign currencies rather than bank accounts, the industry's funding costs could rise substantially.

To assess a bank accurately, investors must look past the price-to-earnings ratios used for ordinary companies. Instead, they prioritise the price-to-tangible-book-value ratio. This metric compares the share price against the net value of the bank's hard assets, once intangible items such as goodwill or brand value are stripped away. It provides a realistic view of the bank's worth if it were liquidated today. A bank trading at a discount to this figure suggests that the market believes the management is failing to earn its way, or that the assets on the balance sheet are not as safe as they appear. Conversely, a premium indicates that investors expect the institution to generate superior returns for years to come. In this new higher-interest-rate environment, investors must distinguish between high-quality cash machines and potential value traps.

The efficiency leaders of the banking industry

JPMorgan Chase (NYSE: JPM) remains the undisputed benchmark for the global banking industry. It is the largest bank in the world by a significant margin and is valued at more than double its nearest competitor. This scale allows the firm to simultaneously dominate both investment banking and retail lending. Under the leadership of Jamie Dimon, the bank has maintained a return on equity of nearly 16% while investing billions into its technological infrastructure. While the valuation is high compared with peers, its operational dominance and so-called “fortress balance sheet” provide a unique safety net. It is the go-to investment for those who wish to gain exposure to banking.

Lloyds Banking Group (LSE: LLOY) is a direct bet on the British economy. Unlike its more international rivals, Lloyds Banking Group generates the majority of its profit from domestic retail and commercial lending. Its net interest margin has improved significantly in recent years as it benefited from the shift in interest rates. With a price-to-tangible-net-asset-value ratio of 1.5 times and a healthy return on equity, the bank has become a favourite for dividend-seekers. Its aggressive share buyback policy continues to support the shares even during periods of domestic economic uncertainty.

HSBC (LSE: HSBA) has focused its efforts on the high-growth markets of Asia, which now drive the majority of its earnings. The bank trades at 1.7 times tangible net asset value and delivers a return on equity of 13.7%. For the income investor, the appeal lies in consistent dividends and regular share buybacks. However, the heavy exposure of HSBC to Hong Kong and mainland China remains a double-edged sword. These regions offer superior growth potential, but also introduce geopolitical risks.

NatWest Group (LSE: NWG) has completed its journey from a government-controlled institution back to a fully private enterprise. Many investors will remember the bank as the Royal Bank of Scotland, which rebranded to distance itself from the reputational damage suffered during the 2008 crisis. The bank has shown remarkable profitability recently, with a return on equity approaching 20% in its most recent results. The shares trade at a more modest 1.3 times tangible net asset value, offering an attractive entry point for those seeking exposure to banking. Its focus on digital efficiency has allowed it to maintain a competitive edge.

The recovery candidates

Barclays (LSE: BARC) trades at a discount of 0.8 times to tangible net asset value, despite delivering a return on equity of more than 10%. The market remains cautious regarding its large investment-banking division, which requires significant capital and produces volatile returns, but management recently vowed to return substantial capital to shareholders by the end of this year. If the bank can prove its investment arm is no longer a drag on the retail business, the potential for a valuation re-rating is substantial. It remains an interesting candidate for those looking for value and who are comfortable with higher risk.

UniCredit (Milan: UCG) has emerged as one of the most efficient banks in the eurozone. Under a disciplined management team, the Italian giant has achieved a return on equity of nearly 17%, far outstripping many of its domestic and international peers. It trades at 1.5 times tangible net asset value, reflecting a market that has finally begun to appreciate its streamlined operating model. By aggressively cutting costs and returning capital, UniCredit has proved that a European bank can thrive without the tailwinds of a massive domestic mortgage market.

Deutsche Bank (Frankfurt: DBK) has historically been the sick man of European banking. After years of losses and scandals, the bank has finally returned to consistent profitability, posting a return on equity of 9.2%. Reflecting this, it remains one of the cheapest major banks in the world, trading at just 0.7 times tangible net asset value. The discount is due to its poor reputation, but the structural improvements in its corporate and private banking arms are undeniable. For the patient investor, it represents a bet that the final stages of its turnaround will lead to a revaluation.

The specialists

BNP Paribas (Paris: BNP) is the closest institution Europe has to a diversified American-style giant. It operates a massive corporate and investment bank alongside a stable retail presence across several countries. Trading at 0.9 times tangible net asset value, it offers a diversified stream of earnings and a healthy dividend yield. The bank has successfully used its scale to gain market share as American rivals pulled back from certain European markets. It is a solid choice for those who want exposure to European growth without the concentrated risk of a single-country lender.

Banco Santander (LSE: BNC) has exploited its unique geographic footprint, spanning from Spain to Brazil and the US, to protect itself from regional economic shocks. The bank trades at 1.7 times tangible net asset value and delivers a return on equity of more than 12%. Its diversified model means that when the European economy slows, its Latin American operations often provide a profitable cushion. This geographic spread is its greatest strength, although the complexity of managing such a diverse empire often leads to a slightly lower valuation than its simpler peers.

Standard Chartered (LSE: STAN) provides a unique way to gain exposure to the emerging markets of Asia, Africa and the Middle East. Unlike HSBC, it has a smaller retail presence and focuses more heavily on corporate and institutional banking. It trades at 1.1 times tangible net asset value and has recently exceeded its own profitability targets. It is a primary beneficiary of the rise in intra-Asian trade and is well-positioned to benefit from the ongoing economic development in its core markets. It remains an attractive option for investors looking towards the emerging economies.

Bank of America (NYSE: BAC) is the second-largest lender in the US and serves as a bellwether for the US consumer. It trades at 1.8 times tangible net asset value, a premium that reflects its massive deposit base and its leading position in digital banking. While it is highly sensitive to US interest rates, its diversified earnings from investment banking and wealth management provide stability. It is often seen as a more conservative alternative to JPMorgan Chase for those who want exposure to the American financial system.

Goldman Sachs (NYSE: GS) remains the premier investment bank in the world. Unlike the universal banks, Goldman Sachs is heavily weighted towards merger advice, trading and asset management. This makes its earnings more volatile and dependent on the health of the financial markets. After a period of strategic drift into consumer banking, the firm has refocused on its core strengths. It remains an option for those trying to gain exposure to pure investment banking rather than more traditional lines of business.

The best bank stocks to invest in now

The banking sector has transitioned from a source of risk to a reliable engine of shareholder returns. For those seeking stability, Bank of America offers a good balance sheet and direct exposure to the US economy. Its historical resilience provides a degree of security for investors prioritising long-term capital preservation. Barclays represents a more opportunistic choice. It remains priced at a discount compared with its domestic peers, and the successful execution of its current strategy should allow this valuation gap to narrow, rewarding patient holders. Finally, Standard Chartered serves as a unique vehicle for those desiring exposure to emerging markets. As a UK-listed entity, it provides a regulated gateway to high-growth regions in Asia and Africa.

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Five years ago there were lots of reports about how the finance industry was going to move from London to Paris, Amsterdam or Frankfurt. In the wake of Britain's departure from the European Union, the City would lose its role as the main hub in the finance industry and all the jobs and tax revenues it created. Deals would have to be made within the bloc, and trades would have to settle under EU rules, so there would be little space for a country outside the EU. The only real question was which major city on the continent would take London's place.

But traders and analysts can forget about freshly baked croissants for breakfast and two-hour lunch breaks. It turns out that the US mega-banks are not moving en masse to Paris after all. Last week, JPMorgan started moving some of its staff in Paris back to London. Its chief executive, Jamie Dimon, warned back in 2021 that the bank might well move all its European operations out of the City. Instead, it has been steadily increasing its headcount and building the biggest tower in Canary Wharf to house them all. Its plans to make Paris the centre of operations appear to have been quietly wound down.

It is not hard to understand why. President Emmanuel Macron's promises to carve out a special regime for global bankers have come to nothing. The “temporary” tax surcharge on anyone earning more than €250,000 a year – not much for a star banker at JPMorgan – has been extended for another year. With the government paralysed and a huge deficit to fix, France will have to put up taxes again.

Meanwhile, Amsterdam is about to become a no-go zone for investors. The Dutch city mounted a challenge to London that was every bit as serious as the one from Paris. With its long traditions in finance and a powerful stock market, it attracted a series of high-profile listings, including giants such as Universal Music. But now the Netherlands is planning to extend the capital gains tax at 36% even to unrealised gains. In effect, if your investments go up in value by 10% over the course of the year, you will have to pay a big chunk of that in tax, even if you have not yet cashed them in.

Even worse, you won't be able to claim any kind of refund or allowance if those same investments fall by 10% the following year. In effect, the state will confiscate 10% of your winnings, but it won't share in any of the losses. It will be the most punishing system of capital-gains taxation anywhere in the developed world. It is impossible to see how Amsterdam can survive as any sort of financial or business centre under that regime. As for Frankfurt, there is absolutely no sign of any banks moving to the city and the German economy remains stagnant despite the huge rise in government spending to try and get it growing again.

How the City of London can reclaim the crown

Add it all up, and this is the perfect moment for London to reclaim its place as Europe's main financial hub. There have been modest moves in the right direction. Some of the listing rules have been relaxed, the cap on bankers' bonuses has been lifted and a new junior market in “unquoted companies” has been created. We are promised more reforms in the King's speech later this month. It is a start, even if only a very modest one.

But there are also obstacles: higher income taxes, the ending of non-dom status for finance staff moving from abroad, some of the highest inheritance taxes in the world, and now a higher rate of tax on interest and dividend payments as well. It may well get worse in the next Budget. None of that will do anything to persuade any more bankers to move to this side of the Channel.

The government should be doing a lot more to help. It could introduce a new version of the non-dom regime, perhaps modelled on Italy's flat-rate tax scheme that has helped create a boom in Milan. It could turn the stock exchange into a genuinely light-touch regulatory centre for new listings. Finance remains one of the world's largest industries and one in which Britain has huge residual strengths. Brexit has not damaged it nearly as much as everyone predicted. But the City will have to work a lot harder if it is to reclaim its crown.

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Hedge funds that focus on picking stocks have had a fantastic start to the year. So-called long-short equity hedge funds returned around 6.7% for the year to 14 April, before the rally in equity markets that took place on news of the ceasefire in the Middle East, according to a report compiled by Goldman Sachs. The MSCI World index gained 4.3% for and the S&P 500 3.9%.

Long-short equity hedge funds try to beat the market by taking long positions in their favourite firms and going short or betting against the companies they believe are overvalued. This is just one part of the $5.2 trillion hedge-fund sector. Because they are aimed at high-net-worth and professional investors, hedge funds can invest wherever they want and in whatever they wish to, as long as they have their investors' permission. The Andurand Commodities Discretionary Enhanced fund, for example, an energy-focused hedge fund managed by legendary oil trader Pierre Andurand, returned 31% in the first quarter of 2026, driven by bullish bets on oil markets (although it went on to lose 51% in April). Another fund, Point72 Asset Management, is what is known as a “multi-strategy” hedge fund, and trades everything from oil to interest rates, currencies and equities to earn a return. It ended March up nearly 4% despite the volatility in global markets.

The global hedge-fund industry attracted $89.3 billion in new capital over the six months to the end of March, the highest two-quarter period of inflows since 2007. “Macro” funds have been particularly popular with investors, according to the latest HFR Global Hedge Fund Industry report. These funds seek to profit from movements in financial markets driven by political or economic events and invest across all asset classes, using leverage to boost returns. Major macro firms include Bridgewater Associates, Brevan Howard, Caxton Associates and Rokos. HFR's benchmark index for these funds, the HFRI Macro (Total), returned 4.9% in the first quarter, outperforming the MSCI World index by 8.5%. Meanwhile, HFRI's fixed-income index, the HFRI Relative Value (Total), added 1.4% in the quarter, around 2.6% better than the -1.2% return for the BofA Global Broad Market Corporate bond index and 3.3% more than a broad index of UK gilts.

Hedge funds are not as exotic as they look

These returns illustrate the key reason to hold hedge funds in a portfolio: they can help fund managers and investors to reduce volatility by gaining exposure to assets they may not have the expertise or resources to trade themselves. However, most hedge funds require a minimum investment of around £100,000. Some won't talk to you unless you're willing to put up millions. What's more, to make the most of these vehicles investors tend to hold a portfolio of funds, each with a different focus. So, adequately to take advantage of the sector, investors need several million pounds. That's why the hedge funds tend to be off-limits to all but the wealthiest individual investors.

That said, UK investors do have some options. There are a number of hedge fund structured as investment trusts, as well as one publicly listed hedge fund based in London and traded on the London Stock Exchange.

In our globally interconnected financial markets, there are also options on other exchanges around the world that could be worth considering for those seeking to diversify their portfolios.

Hedge funds are often portrayed as exotic and complex, but in reality, they are very similar to the funds available to the average retail investor. A hedge fund is simply a fund formed by a group of private investors with the aim of generating a return on their investment over a set period. They often seek to achieve a positive absolute return, rather than outperform a benchmark – that is, they seek to achieve a positive return regardless of whether the broader market is rising or falling.

However, because hedge funds tend to focus on high-net-worth investors and institutions (such as pension funds), the regulations governing them are much more flexible. It's assumed that the institutions and wealthy individuals who decide to invest in hedge funds have the skills to evaluate the proposition themselves, so hedge-fund managers have much more flexibility around where they can invest and how they can invest.

There's also no obligation for hedge-fund managers to report what they hold and why they hold it. Some managers may decide to own just a handful of different assets and update investors once a year. Others may hold thousands of different investments, with teams of traders buying and selling positions every minute. Hedge funds also tend to have higher fees than the active funds available to the mass market. It's common for managers to adopt a “two and 20” structure, with a management fee of 2% a year and a performance fee of 20% of any profit, although managers will offer better terms for more important customers. While the additional fees do undoubtedly have an impact on returns over time, it ensures the managers, who often own a big stake in the fund themselves, have a strong incentive to achieve the best returns, and this level of incentive structure is something you don't usually see with active funds aimed at the mass market.

Hedge funds also frequently restrict their investors from withdrawing money. This can be helpful when using esoteric or illiquid investment strategies and managers don't want to have to deal with a large number of redemption requests in any particular period, which may force them to sell assets at a bad time. In this respect, hedge funds have a lot in common with investment trusts. Investment trusts have a fixed capital base; hedge funds can lock in their capital for a period. Some funds will require investors to commit for five years when they make an initial investment. Others may require them to submit redemption requests quarterly rather than daily. They also often reserve the right to “gate” withdrawals, or prevent investors from accessing their cash if the manager believes doing so would have a detrimental impact on investment returns.

Just like investment trusts, hedge funds can and do use leverage, or borrowed money, to enhance returns. However, this has led to disastrous outcomes in the past, when managers have borrowed too much, too quickly. One of the most notable recent examples was Bill Hwang's Archegos Capital, which imploded after borrowing $160 billion against just $20 billion in capital. The funds collapse wiped out Hwang's $20bn net worth overnight and ultimately led to the collapse of global investment bank Credit Suisse. In another example, in the first quarter of 2021, Melvin Capital, run by Gabe Plotkin, lost about $4.5 billion, or 49% of its assets, in a few weeks, betting against GameStop using borrowed funds. The fund survived only after receiving a $2.5 billion bailout, although it closed for good a year later.

Hedge fund managers are only human

Hedge funds have attracted plenty of criticism over the years, mainly on the issue of fees. A study published in February 2020, “A Bias-Free Assessment Of The Hedge Fund Industry”, found that between 2013 and 2019 hedge-fund managers created up to $600 billion in value added, before fees. Net of fees, the figure was significantly lower. In fact, one study of 22 years' worth of hedge fund data, also published in 2020 (“The Performance Of Hedge Fund Performance Fees”), found that fees consumed 64% of the gross returns on investors' capital over the long run.

Hedge-fund managers would, of course, argue that they deserve higher fees because they outperform the market. And that is true to a certain extent. But they are also only human. Another study published in May 2011, “Higher Risk, Lower Returns: What Hedge Fund Investors Really Earn”, found that although a hedge-fund portfolio's buy-and-hold return between 1980 and 2008 came in at 12.6%, higher than the S&P 500's total return of 10.9% over the same period, the dollar-weighted annual return, accounting for investors' inflows and outflows, was just 6% a year. This shows that, although most hedge-fund investors are far richer than the average investor, they're still subject to psychological biases. Indeed, Morningstar's latest Mind the Gap report revealed that the average investor lost 1.2 percentage points annually over the past decade due to poor timing of purchases and sales. Multiple studies have reached the same conclusion.

Focusing on this performance in isolation misses the point, however. Hedge funds and alternative strategies should only be used as part of a portfolio to provide diversification and help smooth long-term returns. Hedge fund Universa Investments is one of the best examples of what a hedge fund or alternative strategy can provide. Universa specialises in risk mitigation against “black swan” events – that is, unpredictable and high-impact drivers of market volatility. To this end, it employs a bespoke combination of credit-default swaps (a form of credit insurance on corporate debt), stock options and other derivatives to bet on market movements. The fund is highly secretive, but Universa reportedly manages $20 billion and posted a 100% return on capital when Donald Trump unveiled his sweeping tariffs last April. It reportedly earned 4,000% in March 2020 when the pandemic broke out.

Universa is far from the only fund that has used this approach to make enormous profits. Bill Ackman's Pershing Square hedge fund earned $2.6 billion during the pandemic after paying $26 million to acquire a portfolio of credit-default swaps, which then soared in value by more than 10,000%. These trades don't come around very often, which is why it can pay to have a manager focused on finding opportunities.

Wealthy individuals and companies that invest in hedge funds will do so as part of a broadly diversified portfolio. This helps reduce the risk of volatility, erosion of returns by fees and any individual hedge-fund blow-up. Insurers typically allocate between 3% and 10% of their funds to hedge funds and other alternative assets, while public pension funds allocate up to 12% on average, according to figures compiled by Goldman Sachs and the French bank BNP Paribas. University endowments can take larger positions, primarily because they have a much longer-term focus.

Endowments allocate 15%-40% of their assets on average to long-short, event-driven and emerging-market hedge funds. Family offices, which can also take a longer-term view, also tend to have a higher allocation, although typically capped at around 25% on average, according to research.

One of the world's most active hedge-fund investors is the Canada Pension Plan Investment Board (CPPIB). This $714 billion fund has been investing in and backing new hedge-fund managers for years and it's accumulated a $76 billion portfolio of internally and externally managed funds. According to the fund's 2025 annual report, its strategies have delivered $15.6 billion above its benchmark in net added value over the past five years, mainly due to external fund allocations.

Hedge funds for the average investor to buy

While most hedge funds are off-limits to the average investor, the UK is actually uniquely positioned in having a number of publicly traded hedge funds available for individuals to buy and sell on the London Stock Exchange. Two of these are in the FTSE 100: Pershing Square Holdings (LSE: PSH), and the world's largest publicly traded hedge fund, Man Group (LSE: EMG).

Pershing Square was listed in London in 2017 and is run by Pershing Square Capital Management, founded in 2004 by Bill Ackman. It's not an exact copy of the parent firm's fund, but rather a selection of the best ideas. The fund aims to hold eight to 12 core holdings (although a total of 15 holdings are currently listed), bundled up within an investment-trust structure. That means it's available to smaller investors and has the added benefit of an independent board of directors that provides oversight and ensures their representation. The trust has a typical hedge-fund fee structure, with an annual management fee of 1.5% and a performance fee of 16%. Management would argue that the returns have more than justified the high fees. Since its inception in 2012, the fund has produced an annualised return in terms of net asset value of 11.8% compared with 6.5% for the FTSE 100 in US dollar terms. Holdings currently include Uber, Amazon, Google and Meta.

Man Group runs a range of investment products operating under a variety of investment strategies. Its main options come under its computer-driven trading arm AHL, and they've performed particularly well this year. In the three months to the end of March, its AHL Alpha fund added 5.7% and AHL Dimension returned 5.6%. Man Strategies 1783 notched up a 3.8% return. Thanks to this positive performance in a quarter defined by volatility, assets reached $228.7 billion in the three months through March, up from $227.6 billion at the end of 2025. Buying shares in Man Group won't give investors direct access to its underlying strategies, but will provide exposure to the firm's income stream. For the year to 24 April, shares in the hedge fund returned 11.6% and over the past five years produced a total annualised return of 13.8%.

Another London-based option for investors is BH Macro (LSE: BHMG). This investment trust has just one investment: units of the Brevan Howard Master Fund, one of the world's largest and most successful macro hedge funds. This trust is designed to provide investors with a strategy to diversify away from equity markets. Since the first half of 2007, there have been 20 significant market drawdowns where the US S&P 500 index has fallen by 5% or more. In 17 of these 20 periods, BH Macro's net asset value actually increased. In October 2008, for example, when the S&P 500 fell by more than 15%, the fund's net asset value rose by several percentage points. The fund, with its 150 portfolio managers and traders, has achieved an annualised return of 8.5% since inception, with less volatility than in broader equity markets.

Another option is Tetragon Financial (LSE: TFGS). This trust owns a portfolio of private businesses, hedge funds, credit, real estate and bank loans. Its net asset value has risen 612% since its inception in early 2007, nearly double the MSCI All Country World index. It charges a performance fee of 25% and an annual management fee of 1.5%.

Blackstone (NYSE: BX) is one of the world's largest publicly traded asset managers. It was founded in 1985 and started life as a private equity and mergers and acquisitions shop and has since expanded into real estate, private credit, fund management and even hedge funds. The $1 trillion asset manager is leading the charge in bringing hedge funds to high-net-worth individuals with the Blackstone Multi-Strategy Hedge Fund, known as BXHF, which plans to start trading this year. According to Bloomberg, the fund will invest about 30% of its assets in other hedge funds as well as make its own investments. It will charge a 1.25% management fee and take a cut of 12.5% of profits once it earns at least a 5% return. Blackstone could be one of the best ways to invest in the booming market for alternative assets, offering diversification across multiple sectors.

There are limited options for investing directly in hedge funds and hedge-fund managers, but investors can use a selection of investment trusts to build exposure to alternative assets and diversify their portfolio themselves. For example, BioPharma Credit (LSE: BPCR), an offshoot of Pharmakon Advisors, one of the world's largest specialist biotechnology funds, lends directly to biotechnology companies and yields 7.5%. The trust has a near-spotless lending record.

Elsewhere, the TwentyFour Income Fund (LSE: TFIF) and TwentyFour Select Monthly Income (LSE: SMIF) focus on trading collateralised loan obligations and mortgage-backed securities to generate a high single-digit annual dividend for investors. These funds are highly specialised vehicles, but can help diversify portfolios.

On the credit side, there's also CVC Income and Growth (LSE: CVCG). This investment trust is managed by the private-equity giant CVC and holds a portfolio of senior secured loans acquired for yield and value. Once again, the trust could provide investors with diversification during turbulent times.

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.

Charles Jillings, co-fund manager of Utilico Emerging Markets Trust, discusses the outlook for emerging markets and the long-term investment opportunities in infrastructure and utilities.

In this episode of MoneyWeek Talks, Andrew Van Sickle speaks to Charles about how emerging economies are dealing with Donald Trump's tariffs, the after-effects of the war in Iran, and why countries like Brazil and the Philippines are overlooked markets.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – 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.

Shell, BP, HSBC, AstraZeneca, British American Tobacco – nobody's idea of an exciting portfolio.

Yet a study of every UK-listed stock over the past 50 years found that the top ten wealth creators, including these five, captured nearly a third of all the real wealth generated by UK stocks. Thousands of listings came and went in that time. These stayed and compounded, and also sometimes feature in the most popular stocks purchased by DIY investors.

This makes the current anxiety about market concentration worth examining. The Magnificent 7 now account for 39% of the S&P 500. Passive fund assets have passed 50% of all US equity fund assets for the first time.

In his January 2026 shareholder letter, Terry Smith warned that the shift into index funds is 'laying the foundations of a major investment disaster', though he conceded he couldn't say when or how it would end.

It's an argument that resonates. When seven stocks dominate a major index, something feels uncomfortable. But three recent studies, covering UK and US equities over periods from 50 years to nearly a century, tell a different story. Wealth creation has always been concentrated in a tiny minority of companies. The question isn't whether your index is top-heavy. It's whether the alternative gives you better odds.

And on that, the evidence is striking.

Which UK stocks created the most wealth?

Only three per cent of UK stocks created all the wealth. A newly published, peer-reviewed study in the Journal of Asset Management quantifies what many investors suspect but few grasp in full. Jonathan Fletcher and Michael O'Connell at the University of Strathclyde examined every stock listed on the London Stock Exchange, the Unlisted Securities Market and AIM between 1975 and 2024. Their finding: just 3.1% of those companies generated all of the market's aggregate net wealth creation in real terms.

The names that did the heavy lifting won't surprise anyone. Shell, BP, HSBC, British American Tobacco, AstraZeneca, Rio Tinto, GlaxoSmithKline and Unilever – dull yet dependable.

The top 10 alone captured nearly a third of all aggregate wealth created. These weren't the stocks that made headlines; they were the ones that compounded quietly while the headline stocks came and went.

More than half of all UK stocks failed to beat Treasury Bills over their lifetimes. The median stock lost money after inflation: a lifetime real return of −13.9%. AIM, the market segment most associated with exciting growth stories and tax-efficient wrappers, produced negative aggregate net wealth of −£2.6 billion.

This isn't a UK anomaly. Hendrik Bessembinder at Arizona State University, whose 2018 study first documented the pattern in the US, has updated his data through 2022. Across nearly a century of American equities, just 4% of stocks accounted for all $55 trillion of net shareholder wealth creation. The remaining 96% collectively matched Treasury Bills at best.

Two different markets. Two different time periods. The same conclusion: equity wealth creation has always been radically concentrated. The few carry the many.

So when only 3% of stocks generate all the aggregate wealth, today's top-heavy indices aren't a distortion. They reflect how markets work. And if you're picking individual stocks, you're betting you can identify those winners before the fact, from a pool where the median outcome is a loss.

Avoiding market concentration actually made things worse

If concentration is structural, what happens when you try to fight it? Mark Kritzman of Windham Capital Management and MIT Sloan and David Turkington of State Street Associates set out to answer that in their recent paper - The Fallacy of Concentration.

They built a dynamic strategy that reduced equity exposure whenever market concentration was historically high and increased it when concentration fell. The result: lower returns, higher risk and less than half the cumulative wealth of staying invested.

The buy-and-hold investor earned a Sharpe ratio of 0.52. The concentration-avoider earned 0.39. Both held the same average equity exposure over the full period, at 67.8 per cent. The difference wasn't about courage or conviction. It was about fighting a feature of the market that turns out not to be a bug.

Large companies aren't just large. They're structurally less volatile. Kritzman and Turkington found that the biggest decile of S&P 500 stocks had annualised volatility of 19.2 per cent, compared with 28.8 per cent for the smallest. A market dominated by large companies is, counterintuitively, a calmer one.

Smith is not wrong that passive flows direct money mechanically toward the biggest stocks. That's how cap-weighted indexing works. But whether that mechanism exists matters less than whether the concentrated index is more dangerous than the concentrated stock-picking portfolio. On that, the evidence is clear.

Buy the whole book

The Fletcher and O'Connell data leaves stock pickers with an uncomfortable question. If the vast majority of listed companies destroy value over their lifetimes, picking individual stocks looks less like a skill contest and more like a raffle. The rational response isn't to study the tickets harder. It's to buy the whole book.

Terry Smith, of course, would disagree. But his own record is instructive. Fundsmith returned 0.8% in 2025 against 12.8% for the MSCI World - Smith’s fifth consecutive year of underperformance.

Laith Khalaf, head of investment analysis at AJ Bell, noted that the fund has now lagged its benchmark over both five and 10 years.

Khalaf's wider point is worth hearing too: “Fundsmith's earlier outperformance was partly flattered by the low interest rate environment that suited Smith's quality style. Now that tailwind has reversed, the structural headwinds facing stock pickers are harder to ignore.”

None of that reflects on Smith's intelligence or his process. It reflects the odds, and those odds don't bend for reputation.

Market concentration is worth understanding. It's worth watching. But the evidence from three studies spanning two markets and close to a century of data points the same way: the risk most investors should worry about isn't a top-heavy index. It's a portfolio that bets against the 3 per cent carrying everything else.

For most of us, the better odds are hiding in plain sight.

What is stopping the UK from investing? It's a mixture of three main factors, according to Henry MacLeod, co-head of digital distribution at BlackRock.

In this episode of MoneyWeek Talks, Kalpana Fitzpatrick speaks to Henry about the state of investing in the UK, how we can debunk myths about risk, and whether AI can help you become a better investor.

Watch the full episode on our YouTube channel or on any podcast platform.

About the podcast

MoneyWeek Talks is a podcast that helps you unlock the secrets to financial success. Editors Kalpana Fitzpatrick and Andrew Van Sickle are joined by influential guests – from CEOs and entrepreneurs to economists and policymakers – 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.

A decade ago, advertisements for spread betting firms were ubiquitous. The industry promised simple, tax-free access to financial markets, with a large amount of leverage. However, it quickly became clear that for many people, spread betting is unwise.

After several cases of ordinary investors on the hook for hundreds of thousands of pounds, regulators cracked down, increasing the amount of cash that customers had to pay up front. Shares in spread betting firms plummeted, and took a long time to recover. However, recently the industry has enjoyed a revival.

One big winner from the upswing is IG Group (LSE: IGG). At the start of 2025, the shares were still trading below levels seen in August 2016, but over the past few months, they have surged by 50%. The company has successfully changed its business model to offer a much wider range of products, including traditional broking and investing services for ordinary investors, in addition to complicated, high-margin derivatives for wealthy ones.

What's new at IG Group

IG Group's CEO Breon Corcoran, who joined two years ago from money transfer business WorldRemit and had two years with Paddy Power Betfair under his belt, has also helped cut costs. He has pushed IG into new areas such as products based around the booming area of cryptocurrencies. Even though crypto is now widely deemed a mainstream asset, many investors would still prefer to buy it through a trusted provider, even if the fees are higher.

Meanwhile, with attitudes to gambling becoming much more liberal in the US, IG Group is thinking about expanding there, including a potential move into prediction markets (featuring bets on world events), and is even rumoured to be considering swapping its listing for one in the US, which should boost its share price. All these plans should help the company maintain the track record that saw sales jump by nearly two-thirds between 2020 and 2025. Earnings per share also grew by nearly the same amount during the same period. Margins have been strong, with a consistent return on capital employed (ROCE) of roughly 20%, far above the cost of capital.

IG Group also has a large amount of cash on its balance sheet, with little debt. All of this makes the fact that it trades at only 11.3 times 2027 earnings, with a dividend yield of 3.5%, seem a bargain.

Given these strong prospects, it should be no surprise that IG Group is one of the best performers in the FTSE 100, rising by more than a third in the past six months. What's more, it has continued to outperform the market over the last one and three months, and trades well above both its 50-day and 200-day moving averages. I therefore recommend going long at the current price of 1,444p at £2 per 1p. In that case I would put the stop-loss at 1,000p, giving you a total downside of £888.

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.

Andrew Van Sickle: Healthcare is a broad term. Could you start by outlining what exactly is in the MSCI World Healthcare index, the benchmark for your fund?

Sven Borho is the co-founder and managing partner of OrbiMed, and portfolio manager of the Worldwide Healthcare Trust.

Sven Borho: It captures every single part of the industry. You have the big pharmaceutical groups; more innovative smaller-cap pharma and biotechnology firms; generic drugmakers; medical-device makers; and service providers. These are the big health-management organisations (HMOs) in the US (the health insurers) and private hospitals. The index is diversified across the US, Europe and Japan, although it doesn't capture healthcare in emerging markets.

Andrew Van Sickle: It's often said that “health is wealth”, and investors have traditionally been able to count on both structural growth and income in this sector. But the index has had a difficult decade. What has gone wrong?

Sven Borho: One problem is that the price of pharmaceuticals became a political football, creating years of uncertainty. Drug prices were a key theme in the presidential election between Hillary Clinton and Donald Trump. We got a form of drug-price controls under Joe Biden, and the regime was tightened when Donald Trump returned to power.

The other key headwind was the rise in interest rates over the past few years. That hampers growth stocks, such as smaller biotechs, as dearer money reduces the present value of future profits. The S&P Biotechnology Select Industry index went nowhere between mid-2015 and mid-2025. The S&P Health Care Select Sector index gained 60% over that period, compared with 300% for the S&P 500 or 400% for the Nasdaq.

Andrew Van Sickle: Is the drug-price threat receding now?

Sven Borho: Yes, the sector knows where it stands now, so the uncertainty discount has started to recede. Trump was irritated that US drug prices were higher than elsewhere. He has now cut a deal with the sector, whereby the government will pay lower prices for future drugs and for current ones being delivered to Medicaid and Medicare programmes. The deal is being done with most-favoured nation (MFN) pricing, whereby prices will match those offered to a basket of other developed countries.

Meanwhile, mergers and acquisitions (M&A) are on the rise as big companies try to compensate for major drugs going off patent. When a drug reaches that stage, prices collapse by 98% as generic competition takes its toll. Merck's Keytruda, for instance, a cancer drug with annual sales of $30 billion, goes off patent in 2028. Each of the Big Pharma companies will see a large product go off patent between 2025 and 2028. This coincides with the Trump government's pricing deal, so the sector is facing a double whammy.

History shows it is impossible to rectify a pipeline gap like this through internal research and development (R&D) alone. So the big names will go shopping, acquiring the right to develop a drug from smaller firms with promising products, or buying them outright.

Big Pharma wants products with annual sales potential of $3 billion and above. If you're a speciality pharma firm or a biotech with a drug boasting that kind of potential, you're on someone's shopping list. That is why 30% of our portfolio is in biotech companies, with a heavy focus on those most likely to be bought out. Overall, 12% of the portfolio comprises a “basket” of the stocks most likely to be bought out.

Andrew Van Sickle: Returning briefly to drug development, what proportion of drugs successfully move from discovery to approval?

Sven Borho: The percentage hasn't changed much over the years: one in ten make it from pre-clinical trials through to regulatory approval. This is the biggest bottleneck in the sector. One can't speed up the process, which takes ten, even 15 years. Patients need to be on a drug for a certain amount of time, for instance.

And costs have risen sharply. Traditionally, it would cost around $1 billion to bring a drug to market. These days, it's north of $2 billion. Getting one person enrolled in a clinical trial can cost $300,000. Compliance and regulatory requirements, along with the general inflation trend, have driven up expenses.

Andrew Van Sickle: What effect could AI have on the sector?

Sven Borho: It is likely to help us come up with more compounds to test, but that will just add more potential treatments to the bottleneck building up before the clinical testing process. It is in the areas of diagnosis and treatment of disease that AI will be transformative. Given how it can amalgamate data – including your blood tests and MRI scans, say – and compare new information to it, it should become far better than a GP at diagnosing and treating disease. It may not be too long before people don't see a GP at all.

This should massively reduce costs – as should robots performing surgery. I think manual surgery will be a thing of the past in the not-too-distant future. Already today, you could have a physician operating in London on a patient in New York with a medical robot. One of our favourite companies, therefore, is Intuitive Surgical, which manufactures robotic surgeons.

AI should allow us to get a grip on healthcare expenditure; 12% of total healthcare spending (which in the US comprises a fifth of GDP) is on drugs, a proportion that hasn't changed over the years. Hospitals, surgeries, GPs and so on account for the rest. There should now be deflation in that 88%, counteracting the expense of the ageing of the population.

Andrew Van Sickle: What impact will weight-loss drugs have?

Sven Borho: People tend to think of the cosmetic element, and of course that spurred early adoption, but the big story is the impact on chronic diseases linked to excess weight, notably the big ones: cardiovascular disease, cancer and diabetes. Data suggests these treatments cut your chance of contracting Type-2 diabetes by 80%.

There are spillover effects in other areas – sleep apnea, for instance, or hip and knee surgeries, the odds of which dwindle if you are walking around with 20% less body weight. The next stage of the boom will be increasingly common oral treatments rather than injectables, with Eli Lilly the leader in the subsector. Weight-loss is a thriving division for other big names, but for me the most interesting way to play weight-loss drugs is Structure Therapeutics.

It focuses on oral treatments for obesity and related diseases. It has an oral obesity treatment about to enter phase III (the final stage of clinical trials) and it is second only to Eli Lilly's. It should hit the market a year after the pharma giant's treatment (which is supposed to arrive this month). The group will probably be acquired. Weight-loss treatments will be the largest drug category for years to come.

Andrew Van Sickle: Tell us about your fund and its top-three holdings?

Sven Borho: We launched it in 1995; I have been in the sector for 35 years. The trusts's net asset value (NAV) enjoyed a compound annual return of 13.5% from the fund's inception until the late spring of 2025, eclipsing the benchmark index's 11.3%. The secret to our success is an enduring focus on innovation – the highest-growth companies. We've always been agnostic about where those companies are, so we are widely geographically diversified. Our overweight position in biotechnology compared with the benchmark again highlights the concentration on innovation.

Eli Lilly, AstraZeneca and Boston Scientific are the top-three beyond our M&A basket. The last is one of the fastest-growing and best-managed medical-devices firms, a long-term compounder with 15% yearly growth in earnings per share. Eli Lilly is a bet on the weight-loss theme. AstraZeneca is the second-fastest growing pharma group in the world, mostly driven by oncology. We like to identify the fast growers, even in the large-cap segment. Intuitive Surgical and Boston Scientific are the fastest-growing medical-technology firms.

It's worth highlighting our holding in China's Jiangsu Hengrui Pharmaceuticals too. It's worth 5% of the portfolio and provides access to the extraordinary innovation in the Chinese pharma sector. Jiangsu has an R&D pipeline of approximately 150 projects, the second-largest in the world after Pfizer's 156. They have a competitive compound in practically every area.

What's more, going from the pre-clinical stage of the pipeline to phase one or two data (the stage at which you receive the first efficacy data in human clinical trials) takes them a third as long as Western companies and costs them 90% less. The scientists doing the work are just as qualified as in the West; many will have done their PhD or worked in a biotech here. Costs of R&D are much lower in China, as is the regulatory burden, especially when it comes to early stage trials.

Once they get to phase three of clinical trials, however, it gets trickier. A Chinese firm can't do those trials in Western markets. It has to licence the drug out to Western counterparts. The US regulator, the Food and Drug Administration, doesn't trust Chinese data, while there are also political sensitivities surrounding the process. As a result, Western firms' heads of R&D go to China to or three times a year to discuss such deals, which can be massive.

That is a transformative theme. At the epicentre is Jiangsu Hengrui. It is the Chinese biopharmaceutical equivalent of Nvidia. It is the biggest innovator. I mentioned that Jiangsu's number of R&D projects in clinical trials is second to Pfizer's, but if you include pre-clinical projects, it has the world's largest pipeline. I think it has another 500 projects. And the quality of its compounds is absolutely first-class.

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.

UK small-cap stocks haven't had an easy ride in recent years. With shifting interest rates and the outlook for the economy looking uncertain, many investors have gravitated towards the perceived safety of larger, more global companies instead. Look a little closer and a different picture emerges.

Across the UK small-cap market there are businesses continuing to grow steadily, strengthen their financial positions and build momentum. In many cases, this progress is being driven by long-term trends that are less dependent on the ups and downs of the wider economy. From infrastructure to healthcare and specialist services, these companies are benefiting from structural sources of demand that can support growth even in more challenging conditions.

The key is identifying those with the right foundations: scalable models, strong balance sheets and clear competitive advantages. The following three companies offer a good illustration of this.

Three UK small-cap stocks for your portfolio

Quartix Technologies (LSE: QTX) provides subscription-based vehicle-tracking systems that help small and medium-sized businesses monitor their fleets, then use that data to optimise routes and improve drivers' behaviour, helping to reduce costs and improve efficiency. The appeal for customers is that installation costs are quickly recouped through fuel savings and improved productivity, creating a clear and tangible return on investment. This supports strong customer retention as well as a dependable stream of recurring revenue.

With about 330,000 vehicles already connected to its platform and a growing international presence, Quartix has established a solid base, but there is still plenty of room for growth, especially outside the UK, where adoption remains relatively low. Its scalable, cloud-based platform and reputation for reliability and customer service give it an edge in a fragmented market.

Construction may not always seem like a predictable industry, but parts of the sector are underpinned by long-term government infrastructure spending, rather than short-term economic cycles. Galliford Try (LSE: GFRD) sits firmly in that camp, operating across areas such as schools, healthcare and water infrastructure.

Much of its work is tied to regulated, multi-year investment programmes, which provide strong visibility over future revenues and a steady project pipeline. In recent years, the firm has also become more selective in the work it takes on, helping smooth earnings and control risk. It has a strong balance sheet and is well placed to benefit from investment in public services.

Applied Nutrition (LSE: APN) is a UK-based sports nutrition and health company, which produces a range of wellness products, from protein powders to supplements. The business is vertically integrated, meaning that it makes the majority of its products in-house, giving it greater control over quality and costs.

Demand from health-conscious consumers is growing and the firm's ability to innovate and secure shelf space with key retailers has been an important driver of performance. The firm is well placed to build on this momentum, supported by a scalable model and exposure to a fast-growing market.

UK small-cap stocks are neglected, but that's often when the most interesting opportunities appear. Over time, small firms tend to grow faster than larger ones. Looking beyond the headlines and focusing on companies that are steadily improving can highlight opportunities others may be missing.

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Europe has lagged behind the US for years now, but what would it take for the continent to recover?

Daniel Avigad, manager of the TM Lansdowne European Special Situations fund, speaks to MoneyWeek's Andrew Van Sickle about opportunities in European equities, solving the continent's growth problem, and the consequences of populism.

You can watch the episode on our YouTube channel or subscribe to MoneyWeek Talks on any podcast platform.

About the podcast

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

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It is not just the London Stock Exchange that has been suffering a relentless decline. It is happening right across Europe’s main bourses. There was a 15% decline in initial public offerings (IPOs) across the continent in the first half of this year compared with 2024, according to accountants EY. Measured by revenues raised, the decline was 50%. The bulk of the IPO market is now in the US, China, India and the emerging stock markets in the Gulf. Europe is falling behind. Just as in London, firms have been leaving the markets, or have been taken over, and very few new companies have been coming through to replace them.

German chancellor Friedrich Merz has a solution. “We need a kind of European stock exchange so that successful companies such as biotech firms from Germany do not have to go to the New York Stock Exchange,” he told the German parliament last week. “Our companies need a sufficiently broad and deep capital market so that they can finance themselves better and, above all, faster.” Instead of separate exchanges in Paris, Frankfurt, Milan and Madrid, a single unified bourse could list all of the continent’s major companies, offering a scale and depth to match New York.

A single, unified exchange would be a lot simpler for investors, especially from North America and Asia. It would have access to a lot more capital, which might mean valuations were higher. True, with Euronext, which links the Netherlands, France, Italy and Portugal, we already have that. But a pan-European exchange would go a lot further. The London Stock Exchange, which has already dropped out of the top 20 for global listings and has seen a relentless decline in the number of companies traded, would almost certainly join. It is in bad enough shape already, and if a new European exchange were formed, it would be even more irrelevant than it is already if it were not part of it.

Would a single European stock market fix anything?

The catch is that this is just the same old, tired formula of more integration that has dominated policy-making in all the major European countries for the last 30 years. It hardly begins to address the major issues facing every European stock market. Firstly, the whole of Europe has imposed far too many rules and regulations on listed companies. In the City, there are an endless series of governance codes to comply with, including diversity quotas for boards and restrictions on executives’ pay, but it is just as bad across the EU. Companies with more than 500 employees have to comply with rules on sustainability and supply chains that typically run to hundreds of pages. Each one might be well intentioned in itself, but taken together, they add to the cost and complexity of listing a company.

Secondly, crushing taxes and rules across the continent mean there are few new growing companies. The US has an estimated 700 tech unicorns, as start-up companies with a value of more than $1 billion are known, compared with fewer than 200 in the EU, despite the fact that it has a significantly larger population. Companies such as OpenAI and SpaceX have valuations that already run into the hundreds of billions, far larger than anything that is coming out of Europe. In short, Europe does not have nearly enough new companies, the ones that it does create don’t grow quickly enough, and even the handful that do emerge don’t find listing their shares very attractive.

It is hard to see how a single European stock market will do anything to fix any of that. It won’t mean that the listing requirements are less of a burden. In fact, given all the compromises that will be required to make it happen, and all the extra powers that are likely to be handed over to EU officials to regulate it, it will probably make them worse. And it won’t do anything to lighten the taxes or the regulatory overload that now makes it so much harder to start a business in Europe than it is in the US, the Gulf, or much of Asia. All it does is double down on the failed centralising strategy of the last 30 years. It would be far better to have national bourses competing to offer the most attractive forum for listing a company. Having a single stock market won’t make any difference.

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UK stocks are still undervalued compared to international peers, but that might create enticing opportunities for value-focused investors.

The FTSE 100, an index of 100 large cap stocks (and some investment trusts) listed in London, fell 4.9% between 27 February, when it registered its highest-ever close of 10,911, and 8 June.

For UK stock investors, the decline is a disappointing reversal with the index having celebrated its best year since 2009 in 2025.

UK stocks had been trading at all-time highs prior to the Iran war’s outbreak. The inflationary shock that has resulted from this as well as persistent economic weakness has weighed on UK stocks, particularly at the smaller end of the market cap spectrum.

“Some of the challenges currently facing the UK economy will show up in different ways in different parts of the stock market,” said Tom Stevenson, investment director at Fidelity International.

“The FTSE 100 is relatively resilient during market corrections thanks to the defensive bias of its constituents and its more international focus,” said Stevenson, whereas “the FTSE 250, by contrast, is more exposed. It is more cyclical, weighted to sectors like consumer discretionary and housebuilders. It is also more domestically focused.”

Are UK stocks underrated – and if so, how can you gain exposure?

Are UK stocks undervalued?

UK stocks have been persistently trading at low values compared to international alternatives.

Analysis from Fidelity International found that the UK is one of the most undervalued of major markets based on a variety of metrics, while the US is the most expensive. UK stocks trade at, on average, around 13 times their expected 2026 earnings and 1.5 times their expected 2026 sales, compared to 22 times earnings and 3.5 times sales for US stocks.

“The UK market remains undervalued, certainly against the US,” Eric Burns, lead fund manager at asset manager Sanford DeLand, told MoneyWeek.

The relative undervaluation isn’t as extreme as it was 18 months ago, he added, largely thanks to the strong performance of UK stocks last year.

“However, when you look at what drove the market in 2025 it was quite narrowly-based, actually,” he said. “Things like defence did well, banks and resources did well.”

But in other parts of the market, the relative undervaluation persisted – and has even increased since.

“Parts of the market got completely left behind in that re-rating in 2025… that’s where I feel the performance is going to come from when we get through this holding pattern with the market that we’re seeing at the moment,” said Burns.

Could UK stocks rise in future?

The question is largely what might catalyse some sort of revival for UK stocks.

“If there is some resolution [to the Iran conflict], I think that will be the catalyst for bond yields to move a bit lower again, and for some of the momentum that we ended 2025 with to be picked up,” said Burns.

But some of the economic headwinds that the UK currently faces could be more enduring.

“In the short term it is hard to see a material re-rating of UK stocks thanks to the persistent productivity shortfall and political uncertainty,” said Stevenson. “But in the longer term the UK is home to many good companies, which are available at undemanding valuations.”

How to invest in UK stocks

To invest in UK stocks, you can either buy them directly, or choose funds or investment trusts that offer exposure to the market.

Burns picked out London Stock Exchange Group (LON:LSEG) (LSEG) and RELX (LON:REL) (formerly Reed Elsevier) as examples of British stocks that have been harshly sold off thanks to a misplaced perception that their business models are susceptible to disruption from artificial intelligence.

“They’ve got a hell of a lot of data,” said Burns. “The market is giving them no credit for that – quite the opposite… I think in three to five years’ time those businesses are going to look like fantastic investments.”

Tracker funds can give you exposure either to the whole UK market, or to specific indices. One option for the entire market is the Vanguard FTSE U.K. All Share Index Unit Trust; this tracks the FTSE All-Share Index which comprises more than 600 large-, mid- and small-cap UK stocks.

A FTSE 100 tracker like the HSBC FTSE 100 UCITS ETF (LON:HUKX) would be ideal for passive large cap exposure, while one tracking the FTSE 250, such as Vanguard’s FTSE 250 UCITS ETF (LON:VMIG), would do the same for mid-caps.

For passive small cap exposure, you could try the iShares MSCI UK Small Cap UCITS ETF (LON:CUKS).

If you prefer an active strategy, Artemis smartGARP UK Equity has performed strongly over the five years to 30 April, returning 124% during that time.

Investment trusts can also offer active exposure to UK stocks: Fidelity Special Values (LON:FSV) invests in unloved UK companies of all sizes and gained 62% in the five years to 30 April, while Rockwood Strategic (LON:RKW) targets UK small cap stocks in particular and returned 105% in the five years to 31 March.

On 8 October, UK retail investors will once again be able to invest in Bitcoin exchange-traded notes (ETNs), which will be listed on the London Stock Exchange.

The UK financial regulator, the Financial Conduct Authority, banned them in 2020, saying that crypto assets cannot be reliably valued by retail consumers because “these assets have no reliable basis for valuation”.

It was also concerned about “the prevalence of financial crime, extreme volatility, inadequate understanding by retail consumers, and the lack of legitimate investment need.

These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products”.

This accurately described many crypto assets at the time, but I believe it was heavy-handed to include Bitcoin, along with the other major projects such as Ethereum.

Other countries have recognised this, and it is right that Britain should do the same.

In 2020, Bitcoin was emerging as an institutional asset, as it already had an active futures contract in the US.

Bitcoin exchange-traded funds, or ETFs, were launching in Switzerland, Germany, Brazil, Hong Kong, and Canada, and a US version was being discussed. (In Europe the ETFs are often called ETNs or ETPs, exchange-traded products.) The US ETFs were approved in January 2024.

They were a huge success, and the iShares Bitcoin Trust has grown into an $88 billion product, marking the most successful fund launch in BlackRock’s history. Two months later, the UK regulator revised its 2020 statement, saying that crypto ETNs could list in a new segment on the London Stock Exchange dedicated to professional investors only. It reiterated that crypto assets were “high risk and largely unregulated. Those who invest should be prepared to lose all their money”.

Then, as Bitcoin has enjoyed three years of relative calm, in June this year the Financial Conduct Authority (FCA) announced it would lift the ban on crypto ETNs for UK retail investors. “This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.”

Catching up with the world on Bitcoin

The FCA recognised that Bitcoin was thriving and that the UK had become an overly cautious outlier. London is a major financial centre, and banning innovative financial products, risky or otherwise, would ensure London’s long-term irrelevance.

A little regulation is a good thing, but too much will certainly kill you. Some of its concerns were legitimate, because many crypto assets are intrinsically worthless. But Bitcoin, along with some other important crypto projects, stand out from the crowd.

For example, crypto assets are volatile, but even in 2020, Bitcoin was much less so than the rest. Its 360-day volatility was in line with Marks & Spencer or Legal & General at the time, and today it is even lower.

Bitcoin has also inspired many innovations, such as the stablecoin, enabling cash transactions in real time over the internet, and non-fungible tokens, which pave the way for the tokenisation of real-world assets. There have also been bright ideas in decentralised finance (DEFI), new trading technologies, and perpetual futures contracts. Many of these ideas are finding their way into mainstream markets. I think the next generation will not differentiate between equities and crypto as they will essentially merge.

Yet still to this day, many ask what Bitcoin's purpose is, and what value does it represent? I think the answer is simple, and the clue lies in its high correlation with the technology sector. While many describe it as electronic gold, its price doesn’t behave like it. It correlates with technology stocks because it is a technology. It has become the de facto reserve asset of the internet.

When you consider how fast AI is growing, and that it operates 24/7, can traditional banking keep up? Bitcoin trades instantly and settles within minutes. It is a very liquid asset trading around $40 billion each day, which is not as much as gold’s $150 billion, but is more than the most liquid stocks in the world, and growing.

The history of crypto regulation in this country mirrors the development of the asset.

As Bitcoin has matured, the regulator has shifted its stance.

At the time of the ban on 6 October 2020, the price of Bitcoin was £8,189. Today it is £84,497. There must have been concerns that Bitcoin was extremely risky, because I cannot recall a case where investors have been prevented from buying a publicly traded asset before.

In UK regulatory circles, we should presume that Bitcoin was seen to be highly toxic. As the FCA is at pains to point out, Bitcoin might still lose you all of your money, but it is also recognised that it could do the opposite.

For those who are intrigued but wary, I have the solution. By holding the 21Shares Bitcoin and Gold ETP (Zurich: BOLD), you get the best of both worlds. It tracks the BOLD index, which I created five years ago. By regularly rebalancing, it adds value by taking profits from the stronger asset, and adding to the weaker, which also keeps a lid on risk. And by owning gold alongside Bitcoin, losing all of your money becomes impossible.

Charlie Morris is the CEO and founder of ByteTree. It offers investment research for private clients through the Multi-Asset Investor (bytetree.com/the-multiasset-investor), in addition to other research services.

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Things haven’t been great for the UK stock market over the last two decades. Indeed, the City has been a “serial underachiever”, especially when compared with the US, says Andrew Jones, a portfolio manager on the global equity income team at Janus Henderson. It has seen poor returns, and there have been significant outflows from the market. UK equity funds have experienced net withdrawals for several years in a row. There has been an exodus of firms quitting the London market, going private instead, or heading for the American exchanges, and in some quarters this has given rise to the perception that the UK market is (or may become) “uninvestible”, as Jones says. There are, however, some rays of hope. An “uptick” in performance over the past few months has seen the FTSE outpace the US market. With valuations at “attractive” levels, this looks like a good time to start backing Britain.

UK stock market problems

Some of the poor performance of UK-listed shares is down to factors beyond anyone’s control, as investors naturally tend to gravitate towards the companies that are seen as “fast-growing”, says Michael Field, chief equity market strategist for Morningstar. Over the last 15 years, a large chunk of this growth has been come from a handful of large tech firms, initially in the form of the FAANGs (Facebook, Apple, Amazon, Netflix and Google) and more recently the “Magnificent Seven” (Meta, Microsoft, Alphabet, Amazon, Apple, Nvidia and Tesla). Their success has made the US “the place to be invested at the moment”, which has, in turn, taken “the limelight away from both Europe and the United Kingdom”.

Conversely, sectors traditionally associated with the UK market have fallen out of fashion. Chris Beauchamp, IG Index’s chief market analyst, points to shares exposed to commodities, which “faded once it became clear that the rise of China wasn’t going to lead to the expected boom in demand”. George Ensor, partner and portfolio manager at River Global, notes that while historically small caps have beaten their larger rivals by around 3%-4% a year, the cycle has turned against them, and “he can’t think of a single market around the world over the past four years where small firms have outperformed their larger counterparts”.

Some of these wounds have been self-inflicted. Chris Morrison of Jupiter Asset Management’s UK Income Fund argues that political turmoil, from the Brexit vote in June 2016 to the “disastrous” Liz Truss budget of 2022, has “knocked international investors’ confidence not only in the UK’s ability to grow, but also to balance its books”. Sentiment matters too. Britain’s current government says that “things will get worse before they get better”. Investors understandably find this approach somewhat less appealing than America’s current emphasis on “making America great again”. Tom Wildgoose, head of equities at Sarasin & Partners, agrees that in the UK we do “have a habit of talking ourselves and our companies down”.

Such problems have just piled on top of the underlying structural ones. US markets have benefited from the willingness of both American institutional and retail investors “to take on huge amounts of risk, which has given their firms access to large pools of capital”, says Simon Pryke, executive chairman of Findlay Park Partners. By contrast, British investors have proved to be much more risk-averse. Keith Hiscock, chief executive of Hardman & Co, notes that successive waves of regulations have also forced pension funds to shun shares in favour of bonds, in order to cover their liabilities, and many of them have shifted their remaining shareholdings from domestic to global index funds. All these things have weighed on the British stock market.

Finding value in the UK stock market

The poor performance of the UK market over the past few years may have caused frustration for investors, but it has also made its shares attractive from a valuation perspective. The UK market has nearly always traded at a discount to the US of around 10%-20% in terms of price/earnings and price/sales ratios, but today the “discount to the discount” is of around 30%-40%, say James Harries and Blake Hutchins of Troy Asset Management. And the US market isn’t the only one that the UK trails – “there are plenty of great London-listed companies that are trading at much lower multiples than comparable companies listed in other countries”.

Job Curtis, portfolio manager of the City of London Investment Trust, agrees that UK markets appear cheap. He notes that UK companies also provide a much better income than those in other countries. So even if valuations don’t improve, you will still benefit from getting more in dividends than you would elsewhere. UK firms may have faced criticism in the past for putting payments to shareholders above future investment and balance-sheet stability, only to be forced to slash dividends when things turn sour, but today’s dividends “are on a much more solid basis” in terms of dividend cover (the ratio of dividends to earnings).

British companies are also taking advantage of the low valuations to buy back their own shares, which helps investors by boosting earnings per share. Andrew Jones of Janus Henderson notes that (as of 30 June) the UK has one of the higher distribution yields (the combination of dividends and buybacks), with the FTSE 100 at 6.1%, compared with 4.4% for France’s CAC 40, 3.5% for the German DAX and only 2.4% for the S&P 500. UK investment trusts are also trading at a much higher discount than normal to the value of the net assets in their portfolio. According to data from the Association of Investment Companies, as of June the average discount is 12.7%. This is less than the 18.9% it reached in October 2023, but still substantially below the average of the last 17 years of around 8%.

Takeover mania

Just because shares are cheap doesn’t mean the valuation gap will necessarily close, of course.

“People have been saying this for quite a while and nothing has happened,” as Wildgoose points out. But a catalyst for change this time could be the large number of firms being bought out. That is a “double-edged sword”, says Iain Barnes, chief investment officer of UK wealth manager Netwealth, as it could lead to a diminishing number of listed firms and a “shrinking market” in the longer run. But it could help push up the valuations of UK shares “as people anticipate interest from these buyers, nudging prices in some sectors higher”.

Like it or loathe it, the foreign appetite for British companies is not going away. Expectations that it might be a short-term phenomenon have been disappointed and takeovers have become a “well-established” feature of the British market. A large number of “pretty significant takeovers at pretty high premiums” are taking place this year, as Charles Hall, head of research at Peel Hunt, points out. A case in point is the industrial company Spectris, which was taken over a few weeks ago after KKR gazumped rival Advent with an offer that was nearly double the prebid price. As Hall puts it, “the fact that two private-equity funds were willing to engage in such a battle tells you all you need to know about the UK market”.

It isn’t just private-equity firms with cash to burn that are looking around for British companies, either. Hall points out that the majority of the interest is coming from American firms, even though corporate buyers tend to be much more “risk averse” when it comes to buying other companies. Overall, the average premium paid has been around 40% so far this year, only slightly lower than the 45% that companies were willing to pay in 2024. This suggests that US companies have not been put off by president Donald Trump’s tariffs on the UK and that the UK has “gone from being at the bottom end of investors’ sentiment, to much closer to the top end of markets that are seen as desirable”.

Improving fundamentals

Interest from abroad may help boost valuations, but “it is not a long-term solution” to the languishing UK market, says Tony Dalwood, CEO of Gresham House. Fortunately, the fundamental outlook for UK shares is also “improving”, he says, thanks to “strong fundamentals”. He particularly likes the fact that the Aim junior market “continues to be a critical platform for high-growth businesses”, while the main market continues to list many “world-class companies”, particularly in the pharmaceutical, financial, support-services and infrastructure and energy sectors. Going forward, these companies should act as a “key driver in boosting the performance of the UK market and closing the valuation gap”.

George Godber and Georgina Hamilton of Polar Capital agree that although UK economic growth has been “anaemic” in recent years, things are starting to look up. Since the pandemic, UK consumers have been saving more and consuming less, motivated by an uncertain economic outlook and the need to refinance mortgages. But consumers’ confidence is on the rise and, along with the interest-rate cuts that are on the horizon, this “should help to boost the economy”.

Trump’s decision to impose swingeing tariffs in April, combined with his impulsive behaviour and frequent policy changes, has also made investors, both in the UK and around the world, “think that they might want to put more money into non-dollar assets”, say Godber and Hamilton. Political uncertainty in the UK, on the other hand, is starting to dissipate, especially in sectors such as energy, says Jean-Hugues de Lamaze, manager of the Ecofin Global Utilities and Infrastructure Trust. Hence UK companies in those areas are starting to seem a lot more attractive.

Saving the UK stock market

One political change that could have a big impact on the UK stock market is the increasing recognition that something needs to be done to stem the number of companies leaving the UK market, especially those leaving for foreign exchanges. Some see this process as inevitable, with George Hiscox predicting that “we could end up with London and other national exchanges being subsumed by New York, in the way that the regional exchanges in Manchester and elsewhere were eventually merged with London”.

Others are more optimistic. Richard Stone, chief executive of the Association of Investment Companies, praised the recent Mansion House speech by chancellor Rachel Reeves and thinks that it shows the government “clearly realises that, in order to deliver the government’s growth ambitions, you have got to encourage both individuals and institutions to invest more of their capital in the UK”. Crucially, the government also realises that such investment will have to involve people “putting money into public, rather than just private, markets”. With the new government “having spent much of the last 12 months listening to concerns that London has become unattractive as a destination for companies to list in, it is now starting to act”.

Not everyone thinks that the measures outlined by Reeves, which involved promises of “targeted support” to encourage savers to put more of their money into shares, go far enough. Chris Beauchamp of IG Index, which has launched a “Save our Stock Market” campaign, wants to see the government bring in a raft of extra measures. These include “increasing the pressure on pension funds to invest more in UK shares and an overhaul of the governance code to make it easier to offer the sort of salaries that can attract high-performance CEOs”. He also wants the government to think about cutting, or even abolishing, the 0.5% stamp duty tax on buying shares, “which is hobbling the stock market and making it much less attractive”.

Realistically, a cash-strapped government “will always want to spend money on the NHS, rather than tax breaks for investors”, say Godber and Hamilton. They also acknowledge that the idea of pushing (or even compelling) investors to buy more UK shares may be controversial, as shown by the last-minute decision to drop the closing of cash ISAs amid lobbying. However, over the next few years it is “inevitable” that the government will be forced to take more aggressive measures to push investors into shares.

This is partly because “we are pretty much the only major economy that doesn’t require pension funds to have a minimum allocation to domestic shares”. What’s more, if we don’t act, more companies will move their listing and domicile to the United States, which will reduce the billions that the government gets in corporate taxes, “blowing a hole in public finances”. Of course, when the government does start to bring in these measures, they are likely to act as a “magic bullet”, boosting valuations almost overnight.

The best investments to buy now

The most straightforward way to invest in the UK market is through an index fund, such as the SPDR FTSE UK All-Share UCITS ETF Acc (LSE: FTAL) or the SPDR FTSE UK All-Share UCITS ETF Dist (LSE: FTAD). As the names suggest, these aim to track the FTSE All-Share index and their five largest holdings are drug company AstraZeneca, bank HSBC, energy company Shell, consumer-products firm Unilever and the information and analytics company Relx. Both funds have a total expense ratio of 0.2%. The only difference between them is that the accumulation (Acc) fund reinvests the dividends, while the distribution (Dist) one pays them out. At the moment, the index has a yield of 3.5%.

A more active alternative is the City of London Investment Trust (LSE: CTY). This fund, which has been managed by veteran manager Job Curtis since 1991, primarily focuses on blue-chip companies, with an emphasis on ones with a good dividend, strong balance sheets and an attractive valuation (while aiming to avoid “value traps”). This conservative approach has been vindicated by four decades of dividend increases and by the fact that it has outperformed the market, both in the long run and over the last year. The ongoing charge is a relatively modest 0.35% a year.

A riskier alternative is the River UK Micro Cap Red (LSE: RMMC). Run by George Ensor, the fund focuses on listed UK companies with a market capitalisation of less than £100 million at the time of purchase. There are currently 33 holdings, with some of the largest including specialist lender Distribution Finance Capital Holdings, chain manufacturer Renold and consumer-goods company Supreme. Not only has the fund outperformed other UK-focused small-cap funds over the last year, but it also trades at a very attractive discount of nearly 20% to the net value of the shares in its portfolio, with an ongoing charge of 1.29%.

George Ensor believes that the UK market is particularly strong when it comes to fintech and is very bullish on Boku (Aim: BOKU). Boku helps the big US-listed technology companies, including Apple, Spotify and Meta, aggregate local payments providers, so the big merchants “only have to integrate once to Boku, rather than thousands of different payment networks”. This niche has enabled the firm essentially to double revenue since 2019, with earnings per share going up eightfold over the same period, more than justifying the fact that the stock trades at 29 times 2026 earnings.

Until recently, the UK energy sector has suffered from political uncertainty. Moving forward, its prospects are much brighter. One company that looks attractive is SSE (LSE: SSE). EcoFin’s Jean-Hughes De Lamaze notes that, despite its “well-diversified portfolio, clean power generation, good networks and strong earnings growth” it is one of the cheapest names in the utility sector in Europe and the world. The shares trade at less than ten times 2026 earnings and yield 3.8%.

Engineering company IMI (LSE: IMI) is also worth considering. It makes high-quality valves and industrial automation equipment. Sarasin’s Tom Wildgoose thinks IMI epitomises the extent to which UK firms are undervalued. Despite being a “great company doing great things, with steady sales growth and a good return on equity”, its shares trades at a much lower multiple of earnings, of around 16 times 2025 earnings, compared with similar US companies.

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Investing seems complex when you first start, but picking the right investment funds for beginners can make it much more straightforward, and give you an easy on-ramp to building your wealth over the long term.

So if you’re wondering how to begin investing, picking out one or two top funds could be a great place to start.

“Investing is a measured and long-term process,” says Rob Morgan, chief investment analyst at Charles Stanley. “It involves taking risk but doing so in a way that minimises and mitigates it, to more reliably harness the growth available across global economies and individual companies.”

Investment funds are a particularly good option for beginners because they offer a convenient way to manage the level of risk you’re taking. Investing in a fund spreads your money, and therefore your risk, across dozens of different companies.

There are funds for almost any type of investment, from sustainable funds that can grow your wealth while making a positive impact, to AI funds that track the world’s most cutting-edge technology.

Investment funds explained for beginners

There are several types of funds, including:

• Open-ended funds;
• Closed-ended funds (or, more commonly, ‘investment trusts’);
• Exchange-traded funds (ETFs).

Each has its advantages and disadvantages. But the simplest and most relevant for beginner investors are ETFs.

An ETF is a fund that trades as a single share on a stock exchange. Its price changes while stock markets are open in line with changes in the price of the assets it tracks. You can buy and sell it in a stocks and shares ISA, just as if it was a stock.

There are ETFs for almost everything, but beginners might be particularly interested in ETF index funds. These track a specific index, such as the UK’s FTSE 100 or the US’s S&P 500.

“If you’re not sure which companies you wish to own, you may want to consider a tracker fund, or an ETF,” says Claire Exley, head of advice and guidance at J.P. Morgan Personal Investing. “These will allow you to hold a small amount of, for example, every company listed in the FTSE 100.”

Index funds are usually low-cost: because they just track an index, there’s not much to pay by way of management fees.

Best of all, they usually outperform more active stock-picking strategies. AJ Bell’s December 2025 Manager versus Machine report found that only 20% of actively-managed funds (IE, those where the manager decides when to buy and sell stocks, rather than just tracking an index) outperformed a passive alternative over the last five years.

Three types of investment funds for beginners to consider

If you are drawing up a shortlist of the first funds to add to your investment portfolio, investment platform AJ Bell breaks the available fund universe down into three categories in terms of the kinds of investments they make.

Global equity tracker funds

Funds that track the global stock market are a great way to get started in investing without having to decide on any specific region or industry.

“These funds provide low-cost exposure to companies around the world, with representation from a wide range of sectors,” said Dan Coatsworth, head of markets at AJ Bell.

Four of the best-known global equities (another word for ‘stocks’) indices are MSCI World, MSCI All Country World, FTSE World and FTSE Developed World. Tracker funds following these indices should register the same price movements (or very close to them) over any given timeframe.

Some of the most popular global stock tracker funds on AJ Bell’s platform are:

Source: AJ Bell, based on net flows from 13 April 2025 to 12 April 2026

Global bond tracker funds

If you’re looking for a more cautious approach to getting started in investment funds, you could look at bond funds instead.

“When shares fall, bonds often fall less and recover faster, helping to smooth the overall investment journey,” said Coatsworth. “That might suit someone in their 40s or early 50s approaching retirement, those already in retirement, or more anxious individuals.”

There are typically three types of bond that bond funds invest in – corporate bonds, government bonds (such as gilts) or a combination of the two (these are known as strategic bond funds).

Some popular bond funds for beginner investors on AJ Bell are:

Source: AJ Bell, based on net flows from 13 April 2025 to 12 April 2026.

Multi-asset funds

Most portfolios combine bonds and equities, as well as other types of asset. You can do this yourself by buying funds specialising in different investments, but a more convenient approach is to buy a multi-asset fund which acts as a self-contained portfolio in its own right.

“The more cautious you are, the greater the proportion you might want in bonds,” said Coatsworth. “However, there’s such a thing as being too cautious. Those with time to ride out the ups and downs of the stock market might want to avoid having too much in bonds as a proportion of their overall portfolio given the returns might be much lower than a more equity-weighted portfolio.”

Six funds for beginners

With input from Charles Stanley’s Morgan, we’ve picked out six investment funds for beginners, which we’ve shared below.

Fidelity Index World

Risk level: medium-high

A low-cost, cheap tracker fund is a great starting point to gain exposure to a market or sector, giving you convenient ownership of all or most of the companies that make up that market’s index.

Fidelity Index World is a good fund for beginners to consider because it provides a convenient tracker for the global stock market.

Personal Assets Trust

Risk level: medium-low

Personal Assets Trust (LON:PNL) is a multi-asset investment trust that sets out primarily to avoid losing money in inflation-adjusted terms (making it a less risky investment compared to funds that are more concerned with growing wealth than preserving it).

The portfolio comprises four main asset types: equities, bonds, cash and gold.

This has proved a resilient combination. The returns from each of these asset classes tend to rise and fall independently of one another, meaning that it can hold up even in changing market conditions.

Vanguard LifeStrategy Funds

Risk level: variable

The advantage of this multi-asset fund range is that it has several different funds, each with a different risk profile, so investors can select the one that best suits them.

Interactive Investor includes three in its quick-start fund range for beginner investors: 20% Equity, 60% Equity and 80% Equity, though the full range also includes 40% and 100% equity options. The remainder of the portfolio is invested in bonds.

As a rule of thumb, the higher the percentage of equities, the higher the risk profile, and the higher the potential returns.

Royal London Short Term Money Market Fund

Risk level: low

Money market funds invest your money as if it was cash, but they tend to generate returns just above the Bank of England base rate.

Interactive Investor includes Royal London’s Short Term Money Market Fund in its quick-start range, and characterises it as very low risk. This is a very cautious option: your investment is very unlikely to fall in value with a money market fund, but it’s also unlikely to grow much beyond inflation.

M&G Global Dividend

Risk level: medium-high

Dividends are the payments that companies make to their shareholders. Ultimately, it is dividend payments – or the expectation of future dividend payments – that gives shares their value.

M&G Global Dividend harnesses the power of dividend stocks, with a global perspective. It holds a wide variety of companies and could be of particular interest to investors seeking a rising income from their investments.

Scottish Mortgage

Risk level: high

Scottish Mortgage (LON:SMT) is one of the best-known investment trusts for innovation-led growth investing.

Morgan believes that anyone taking a long-term approach to investing should consider investing in a fund that looks for long-term growth through technological innovation. Their long-term perspective ought to let them ride out short-term volatility and reap the long-term rewards.

Scottish Mortgage invests in private companies like Elon Musk’s SpaceX or TikTok owner ByteDance, as well as those listed on global stock markets, offering opportunities that are otherwise hard for beginner investors to access.

With the spring holiday season approaching, investors may be wondering: is the stock market open on Easter? The answer to this question is: no. The UK stock market will be closed on Monday, 6 April, for Easter Monday.

The stock market is also closed on Friday, 3 April, to observe Good Friday.

Typically, UK stock market opening times are 8am to 4.30pm Monday to Friday with a small break between 12pm and 12.02pm. This can vary depending on public holidays and major events, such as Christmas Eve, when markets close earlier than usual.

Investors gearing up for the end of the tax year will need to make sure they’re ready for the big money changes in April.

But with markets getting unpredictable due to the ongoing war in Iran, investors may want to prepare their portfolio for high inflation. Check out our weekly share tips guide to get an idea of where to invest.

Below, we look at UK and US stock market opening times during Easter, and how it will impact trading on those days.

Is the stock market open on Easter?

No. The UK stock market is closed on Easter, which falls on Monday, 6 April. This is part of the eight standard holidays observed by the stock exchange in the year.

The London Stock Exchange only observes English bank holidays – not Scottish, Welsh or Northern Irish holidays. For instance, Easter Monday is a bank holiday in England, Wales and Northern Ireland but not in Scotland. It’s a non-trading day for the stock market.

The UK stock market is also shut on Friday, 3 April, for Good Friday, which means the trading will cease for four consecutive days.

We look at the key money dates for 2026 for those who want to stay on top of their finances in the new tax year.

When is the UK stock market closed in 2026?

Below is a list of UK stock market holidays to help you plan your trading activities accordingly.

Source: London Stock Exchange

When is the US stock market closed in 2026?

If you invest in US stocks, also look at the New York Stock Exchange (NYSE) and Nasdaq’s open times and upcoming holidays this year.

Both stock exchanges’ standard opening hours are Monday to Friday 9:30am to 4pm Eastern Standard Time (EST) time, which is 2:30pm to 9pm BST in the UK.

London may be facing a further dent in its appeal as a location for public listings.

FTSE 100 stalwart Glencore this week suggested it could exit the London Stock Exchange (LSE) and find a “better” location to list.

It comes as individual investors and pension funds have snubbed UK equities in recent years and listed companies have been hit by rising taxes and regulations.

Glencore chief Gary Nagle told reporters that questions have been raised over whether London is the best place for the company’s valuation.

He said: “We want to ensure that our securities are traded on the right exchange, where we can get the right valuation.

“If there’s a better one, and those include the likes of the New York Stock Exchange, we have to consider that.”

LSE saw the largest outflow of companies in 2024 since the global financial crisis, according to data from auditing giant EY. In total, 88 companies moved out of the market last year, compared to just 18 new listings.

Takeaway giant Just Eat, Paddy Power owner Flutter and travel group Tui were among those to ditch their main UK listing.

Listing outside London does appear to have benefited brands.

Since ARM Holdings floated on the New York Stock Exchange in preference to London in November 2023, the semiconductor-design group’s share price has outperformed. So too has materials specialist CRH’s share price after it shifted its primary listing to New York. In a weak market for mining shares, BHP has also bettered Rio Tinto since it moved its listing to Australia in early 2022.

The success of their moves and the beneficial effect on their share prices is encouraging UK companies to follow in their footsteps. Indeed, in December last year industrial equipment rental company Ashtead Group announced plans to switch its primary listing from the London Stock Exchange to New York. The company said it had “concluded that the US is the natural long-term listing venue” where it generates 98% of all its profits.

In contrast, UK-based outfits face a rising rate of corporation tax (up from 19% to 25% this year); share prices depressed by the stamp duty investors have to pay on purchase; increasing and hostile regulation and a government at best indifferent to the private sector.

Why is London a less attractive exchange?

London is no longer a major capital market and the shareholder lists of FTSE 100 companies are now dominated by overseas investors, usually Americans. In the past 25 years, British pension funds have reduced their allocation to domestic equities from over half to just 6%. For regulatory reasons, insurance companies hardly invest in UK equities at all. Private investors do, via passive funds such as exchange-traded funds (ETFs), unit trusts and investment trusts, but in effect, UK companies are controlled from overseas.

The media and public opinion resent the profits listed firms make and, especially, the amounts paid to their senior management, even though pay scales are well below US levels. The tax they pay on those earnings is far higher than they would pay in the US, as are taxes on capital.

An increasing number of executives are non-domicile, and they will not appreciate the adverse change in the tax rules governing their status. Many are residents overseas, and therefore already detached from the UK. Moving their company away from London is attractive from a personal as well as a corporate point of view.

Read more: Is the London Stock Exchange in peril?

10 companies that could leave London

Who will be next? There has been much speculation and the list is long, but the following no longer have any special ties or loyalty to the UK.

Mining giant Rio Tinto is one possibility. Rio Tinto’s shares have been dual-listed in London and Australia since 1995. The London-listed shares have traded at a 20% discount to their Australian counterparts, though the discount has narrowed recently owing to speculation that Rio Tinto will follow BHP and become a fully Australian company. Needless to say, Rio Tinto has no mines in the UK.

And in December an activist investor in Rio Tinto, Palliser Capital, further fuelled speculation of a move after it demanded the miner scrap its primary London listing and focus on Australia, calling the dual-listing "outdated".

Shell could leave too. When Royal Dutch Shell unified its corporate structure in 2005, it moved its headquarters from The Hague to London and its primary listing to the UK. As the UK becomes more hostile to hydrocarbons and the Netherlands less so, it may be tempted to move back.

Shell’s rival BP could also go. BP’s diversification into renewable energy – a field in which it could add no value – is in retreat. BP still has assets in the North Sea, but the UK government seems determined not only to issue no new exploration licences but also to close down existing operations. Meanwhile, 13 years after the Deepwater Horizon disaster, BP is again increasing its focus on the Gulf of Mexico, where it is the largest producer, and plans to drill a new oilfield. Moving its headquarters to Houston, its main listing to New York and changing its name to AP (American Petroleum) makes sense.

Then there is HSBC, which moved its main listing to the UK in 1993 following its acquisition of Midland Bank. But its British business is small – hence the downsizing of its headquarters from Canary Wharf to the City. Half of global revenue comes from Asia and London is ceasing to be the global financial centre it once was. The Chinese would like to persuade it to move back, whether to Hong Kong or Shanghai.

Or could tobacco giant BAT be next? In response to pressure from investment management group GQG Partners to move its primary listing to New York, BAT’s CEO Tadeu Marroco described the idea as “a distraction” – not exactly a denial. BAT’s main rival, Philip Morris, listed in New York, trades on a significantly higher valuation.

BAT was formed a century ago when it agreed with Imperial Tobacco that it would leave the British market to Imperial while Imperial left the rest of the world to BAT. That agreement was torn up decades ago, but BAT’s sales in the UK are still insignificant, making a move to the US (44% of sales) an easy option.

The pharmaceuticals group AstraZeneca, meanwhile, is threatening to move its vaccine manufacturing to the US because the government intends to cut its financial support for a new factory. Furthermore, the reluctance of the NHS to pay for pioneering drugs hardly makes the UK a great place to base a pharmaceutical business. Unlike London, moreover, Stockholm’s stock market is thriving.

Prudential's London listing is surely doomed. Such has been the growth of the insurer's Asian business that it has come to dwarf the company’s once-dominant UK focus. After Prudential spun off its British business with M&G in 2019, Prudential no longer had a significant business here. It has joint primary listings in London and Hong Kong and its CEO is based in the latter.

Unilever, the food and consumer products behemoth was formed by the merger in 1930 of Lever Brothers with the Dutch Van den Bergh, which resulted in Unilever’s shares being dual-listed. An attempt in 2018 to unify the Dutch and British share classes in the Netherlands was thwarted by investors, so in 2020, the unification was effected with a sole listing in London. Perhaps those shareholders are now regretting their preference and the Dutch may have become more amenable on tax and regulatory issues. It would be surprising if Unilever were not thinking of going back to plan A.

Another Anglo-Dutch company, RELX, which specialises in data analytics unified its share classes in 2018 but retains a secondary listing on Amsterdam’s Euronext and is listed as an American Depositary Receipt (ADR) in New York. North America now accounts for 59% of its revenue, and Europe, including the UK, just 21% so RELX could as easily move to the US as to the Netherlands.

In addition, FTSE 100 companies that have chosen to list their shares in London but have little if any business in the UK, such as Antofagasta, Anglo American, Endeavour Mining, Fresnillo, Coca-Cola HBC, Airtel Africa, Mondi and Hikma Pharmaceuticals could easily move on.

Why have these firms not gone already? The answer lies in inertia, the inconvenience and cost of moving, the hope that things will get better and they are waiting to see what other companies will do. Many will have explored the pros and cons of moving and may have made contingency plans but have opted not to go yet. That could change suddenly. When the Titanic hit an iceberg, there was no immediate rush for the lifeboats, but as it became clear that it was sinking, the wait-and-see attitude turned into a stampede.

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 Spring bank holiday falls on the coming Monday, meaning the UK stock market will be closed on Monday, 25 May.

Typically, the UK stock market opening times are 8am to 4.30pm Monday to Friday, with a small break between 12pm and 12.02pm.

We look at the trading calendar below.

Is the stock market open on Spring bank holiday?

No. The London Stock Exchange (LSE) will be closed on the Spring bank holiday, which falls on Monday, 25 May 2026.

This is one of the eight standard holidays the stock exchange observes throughout the year, including Easter, Christmas and New Year.

The London Stock Exchange only observes English and Welsh holidays – not Scottish or Northern Irish. For instance, St Andrew’s Day on 30 November is a trading day for the markets, despite it being a bank holiday in Scotland.

If you want to know the key money dates for 2026, we cover those in a separate guide.

UK stock market holidays 2026

We’ve rounded up all the upcoming UK stock market holidays in 2026 and how they will impact trading on those days.

Source: London Stock Exchange

When is the US stock market closed in 2026?

If you invest in the US, you may want to know the New York Stock Exchange (NYSE) and Nasdaq’s open times and upcoming holidays this year.

Both stock exchanges’ standard opening hours are Monday to Friday 9:30am to 4pm Eastern Standard Time (EST) time, which is 2:30pm to 9pm BST in the UK.

The US stock markets will also be closed on Monday, 25 May, as it’s Memorial Day, which is a federal holiday.

Is London burning? Take a look at the headlines about the stock market exodus, and you might think the answer is ‘yes’. Eighty-eight companies left the London market or moved their primary listing elsewhere last year, and more than 70 have done the same so far in 2025.

There were 28 cancellations on the main market and 42 on the junior market in the first five months of the year to 31 May, according to investment platform AJ Bell. We have seen a wave of further announcements since.

In the first half of June, semiconductor group Alphawave agreed to a £1.8 billion takeover from US tech giant Qualcomm; university start-up Oxford Ionics agreed to be acquired by US quantum computing company IonQ as part of a $1.1 billion deal (£0.8 billion); and industrial technology company Spectris received a £3.7 billion takeover proposal from private equity investor Advent.

The £11 billion money transfer company Wise also announced plans to move its primary listing from London to the US this month.

Coupled with a lack of IPO activity, London’s stock market exodus means the market is shrinking. The London Stock Exchange saw just 18 IPOs last year according to EY, the lowest figure since the accountancy firm started recording this data in 2010.

“More companies have left the UK stock market than have joined it so far this year, which means we continue to see a shrinking pot of opportunities for investors,” said Dan Coatsworth, investment analyst at AJ Bell. He points out that takeovers have been a key reason for many of this year’s exits, as trade buyers and private equity companies swoop in to take advantage of cheap valuations.

“At the bottom end of the market, many small companies can no longer justify the cost of listing so they are voluntarily delisting,” he added. “Small-cap appetite remains scarce among investors and that situation might not change until we have significantly less uncertainty on the markets.”

Companies listed in the UK – large and small – have also expressed frustration at their depressed valuations compared to international peers. Shell is one such example. While the oil giant is not currently engaged in “live discussion” about moving its listing from London to New York, chief executive Wael Sawan told Bloomberg last year that he would “have to look at all options” if things didn’t improve. “I have a location that clearly seems to be undervalued,” he said.

There are other issues at play too – stamp duty on UK shares is sometimes cited as a deterrent for investors. Competitors like the US have no equivalent tax. A lack of investment from UK pension funds has also been identified as a problem, with international peers directing a larger proportion of their pension wealth into their own stock markets than the UK does.

LSE exodus: why does it matter?

If companies still have a presence in the UK, conduct business here, and pay tax to the UK government, does it really matter if they are listed elsewhere or privately owned?

Jason Hollands, managing director at investment platform Bestinvest, told MoneyWeek: “While shifting a listing to an overseas market does not in itself change where a company pays tax, if it is still based in the UK and has significant operations here, a change in where a company is listed can end up being followed by a gradual shifting of headquarters and focus overseas given the amount of time that senior management spend meeting investors.

“Likewise, when a company is acquired by an overseas firm, substantial UK head office costs and jobs will typically go as the acquirer achieves savings.”

A more immediate impact will also be felt in the City. As well as losing prestige, Hollands points out that London loses out on “future earnings from corporate broking, M&A advice, equity research, sales and trading and, in turn, ancillary services like legal advice” when companies decide to list elsewhere.

The fund management sector – one of the UK’s biggest industries – will also feel the effects if the UK continues to dwindle in importance on the global stage. “This should matter to the UK, as the City (and Edinburgh) and the earnings of the people who work in these key financial centres are significant contributors to tax receipts,” Hollands said.

As well as the economic impact, UK investors lose out when companies leave the London Stock Exchange, as they are left with less investment choice. Of course, most investors take a global view and diversify their portfolio with exposure to a range of different regions, but there are distinct advantages that come with investing in your home market as well. One of these is the lack of currency risk.

“When a company changes its primary listing to the US, an investor could in theory still buy the shares, but as a US listing will virtually always be denominated in dollars, UK based investors take on currency risk when buying these shares,” Hollands said.

“Over the last decade, a strong dollar has been a tailwind when investing in US companies so this risk may not be so apparent, but the tide has turned in 2025 with the dollar declining around -7% against the pound since the start of the year. This has turned the S&P 500’s small positive return of 2.6% year to date into a loss of -5.3% when translated into pounds.”

Can the London Stock Exchange turn things around?

The government has identified the lack of UK investment as a problem and is hoping to use pension assets as a vehicle for reinvigorating the domestic market.

Under the new Mansion House Accord, signed last month, workplace pension schemes have pledged to “back British” by investing 5% of savers’ money in UK private market investments. Despite being public-market assets, UK shares listed on the Alternative Investment Market are included in this pledge.

ISA reform has also been widely rumoured, with the chancellor keen to funnel more money into the stock market. This could involve reducing the cash ISA allowance in the hope that savers will be encouraged to invest instead.

It is unclear whether the government would take steps to ensure any additional ISA investment was funnelled into the UK rather than overseas investments. The previous government looked at introducing an additional £5,000 British ISA allowance, but the plans were ultimately dropped.

Last year, the City watchdog also relaxed its listing rules in an attempt to entice IPO activity. Changes included giving company bosses more power to make decisions without shareholder votes, and allowing them greater flexibility to adopt dual share structures (often used by founders to give them greater control).

Chancellor Rachel Reeves said the rules would bring the UK “in line with international counterparts” and help attract “the most innovative companies” to list here.

A potential Shein IPO was in the spotlight last year, but reports suggest the Chinese fast-fashion company is now looking to list in Hong Kong after its plans did not get the backing of Chinese regulators. The FCA had previously given the go-ahead for a potential London IPO, despite concerns about forced labour in Shein’s supply chains.

Despite the continued dearth of IPO activity, some have suggested that the outlook for UK equities is improving. The market remains undervalued, but performance so far this year has been good. Could it translate into a brighter outlook for the London Stock Exchange?

“There is growing optimism that new listings candidates are now considering London given recent regulatory reforms and uncertainty in the US making New York IPOs a little less attractive,” said Samuel Kerr, head of equity capital markets at market intelligence firm Mergermarket. “If these come through it could finally reverse some of the doom narrative for the exchange.”

The proof will be in the pudding – and this month brought more bad news when investment company Colbalt Holdings abandoned plans for a $230 million float (£171 million). It would have been London’s largest IPO in about two years, according to Bloomberg.

The fast-fashion group Shein, valued at $66bn in a fundraising round last year, is preparing to list in London, says The Guardian. 

Its attempt to float in New York earlier this year faced “regulatory hurdles and pushback from US lawmakers”. The news comes on the heels of warnings from the China Securities Regulatory Commission that it “would not recommend” a listing in the US. 

As a result, the online retailer may now file with the London Stock Exchange (LSE) as soon as this month. London may be Shein’s “second choice”, but the news will be welcomed by both the government and the London Stock Exchange, which have both been “pedalling hard to attract” fresh initial public offerings (IPOs), says Susannah Streeter of Hargreaves Lansdown. 

Still, despite the boost for the City, the company is likely to present “deep ethical issues for investors to navigate”. In particular, Shein has come under “significant criticism” for the “huge volumes of cheap clothes it produces, the lack of transparency in its supply chain and its appropriation of other designers’ work”.

Will Shein be welcomed on the London Stock Exchange? 

Shein certainly comes “with more baggage than a celebrity takes on holiday”, says AJ Bell’s Dan Coatsworth. However, the fact that it’s a “household name” in many parts of the world, as well as a company that “everyone is talking about”, thanks to the “attractive prices” that it offers, will give it a leg-up with investors. 

What’s more, many argue that the fact it wants “to be seen as a global player and not simply a Chinese firm flogging cheap togs overseas” means it will learn “to do things the right way and become a good corporate citizen”. That “could encourage others to look hard at the UK as a listing venue”. 

Not so fast, says Alex Brummer in the Daily Mail. Even if you ignore the ethical issues, the IPO may not live up to the previous “heady valuation” from its last round of fundraising. After all, “fast fashion can be a volatile enterprise”, as former “king of the high street” Philip Green found out the hard way. 

What’s more, while Shein is nominally headquartered in Singapore, its large exposure to China means that it could be caught up in the geopolitical fallout from any Chinese attack on Taiwan, such as sanctions, frozen assets or even delisting. 

Many British fund managers have seen plenty of consumer-orientated companies “disappoint” after coming to the market in a “blaze of hype”, says Sam Chambers in The Sunday Times. As a result, they may “proceed with caution”. 

Already, some observers are wondering whether the group’s “stratospheric rise could soon level off” thanks to intense competition from Shein’s rival Temu and the prospect of regulatory crackdowns on fast fashion. There is general agreement that Shein “can’t put off its float for much longer” if it wants to get a decent price.

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 most often-repeated investing mantras says ‘sell in May and go away, don’t come back until St Leger Day’, referring to a well-known British horse racing day which takes place in September.

The saying is thought to date back to a 1950s edition of Stock Trader's Almanac. In those days, financial professionals would typically spend most of the summer on holiday. The issue wasn’t so much that stocks would fall over the summer, but that they wouldn’t do a whole lot at all.

“The rationale is simply that, back in the mists of time, the main market participants (think bowler hats and coffee shops in London) were all away on their summer holidays and socials,” said Ben Seager-Scott, CIO at advisory firm Forvis Mazars. “There simply wasn’t much of a market and everything, at best, drifted until everyone came back after the summer.”

But does this stock market saying hold any value for your investments today?

The short answer appears to be no.

“There is scant evidence that it was true historically and I think there’s even less of a case now, with constant 24-hour news cycles, much wider market participation and ubiquitous mobile communication technology,” said Seager-Scott.

Did ‘sell in May’ work in 2025?

While the adage often fails to deliver, it rarely performs as badly as it did last year.

Major indices enjoyed encouraging returns between May and September, largely reflecting an uptick in investor sentiment following the chaotic fallout from Trump’s Liberation Day tariffs, announced on 2 April.

“Last year was a great example of when [selling in May] would not have worked out in your favour,” said Adrian Murphy, CEO of wealth manager Murphy Wealth. “Had you done so, you would have missed out on a good deal of the recovery from the tariff shocks in April – the S&P 500 rose more than 18% and the FTSE 100 gained more than 9% from May to mid-September

And the geopolitical tensions plaguing the market this year could be just as much of a reason to avoid selling in May in 2026 as they were last year.

“With the conflict in the Middle East, markets are volatile,” said Murphy. “No one knows how the situation will pan out in the short term, let alone the next few months and beyond.

“You are as likely to crystallise any losses and be forced to reinvest at a higher price at the end of the summer, as you are to make gains by buying back in again when the market looks cheaper,” Murphy added.

However, there is some evidence that trading volumes are lower over the summer and during the Christmas period. That can increase market volatility, because fewer buyers and sellers can necessitate larger jumps between prices in order to buy or sell a stock.

“But this is very much two-way,” said Seager-Scott. That extra volatility can push prices up or down, depending on sentiment.

“That may partly explain the Santa rally effect,” Seager-Scott said, adding that there is little evidence that this is a seasonal pattern and rather a label that is applied in hindsight whenever markets happen to rise in December.

Do stock markets tend to underperform over the summer?

It’s questionable whether or not there’s any empirical evidence to support selling your shares in May. Various studies have looked into the results, and between them they paint a fairly blurred picture.

Fidelity International, for example, found that selling stocks in May generated positive returns in just 14 of the last 38 years. Investopedia investigated the trend going back to the 1930s and while it found that summers have generally yielded higher returns than winter since the 1950s, the opposite was true for the two decades before then.

Analysis from investing platform IG has found that years when Trump is in office have completely subverted the traditional ‘sell in May’ mantra.

The analysis found that the S&P 500 has returned 9.5% between May and October during Trump years, vs 1.3% during non-Trump years over the past two decades. That said, Trump years have also seen better-than-average performance for the index across the full year, with average annual gains of 14.6% in Trump years compared to 6.8% in non-Trump years.

“While Trump-specific trading patterns have already emerged, most notably the TACO [‘Trump Always Chickens Out’] trade of buying the dip before Trump’s key trade and foreign policy deadlines, investors in US equities should also be reconsidering their summer trading habits,” said Chris Beauchamp, chief market analyst UK at IG. “We may yet see a ‘Summer of Trump’ trend emerge as investors cotton on.”

The FTSE 100, though, tends to fare worse between May and October when Trump is in power compared to years when he isn’t. The index fell 2% on average over the summer months in years when Trump was in power, compared to gaining 0.6% in non-Trump years over the last 20.

On the face of it, that might seem to suggest that if you are invested in UK stocks it could make sense to sell in May, at least when Trump is in power, but on the whole most investment experts don’t think this is a good idea.

“In terms of good investment practice, given that markets tend to rise over time and, importantly, dividend income also accrues through the year, I’m not convinced opting to be sat in cash half the time makes much sense to me,” said Seager-Scott.

On that basis, time in the market, rather than timing the market, seems to be the more reliable (and easier) strategy.

A new year is approaching and, if it is anything like 2025, it promises to be an eventful one for the stock market.

It’s difficult to know which stocks will come out on top in 2026. We’ve recently looked back at the most popular stocks of 2025 (as well as the top funds of the year), and have heard from various experts on where to invest for 2026.

The consensus seems to be that UK stocks and emerging markets (EMs) could be set to outperform.

“The FTSE 100 is ending 2025 near record highs and dividends and share buybacks are neatly supplementing the capital gains,” said Russ Mould, investment director at AJ Bell. “As we enter 2026, the UK market may still feature stocks that could appeal to a wide range of investment strategies and risk appetites.”

Meanwhile, Chris Tennant, co-portfolio manager of Fidelity Emerging Markets Limited (LON:FEML) says: “The outlook for EM today appears positive. The valuation backdrop is favourable, with EM trading at a multi-decade discount to the US even after the recent rally.”

That said, it would be a brave investor who wrote off the potential of AI stocks to keep leading gains, even as concerns of an AI bubble mount.

We’ve sought out investing experts’ top stock picks, and here are their highlights for the new year.

A small cap stock for 2026

Simon Barnard, portfolio manager of the small cap-focused Smithson Investment Trust (LON:SSON), picks out Oddity Tech (NASDAQ:ODD) as his favourite small cap pick for investors to watch in 2026.

Oddity is a US-listed company designing and selling cosmetics and skincare direct to consumers online, but its differentiator is its use of machine learning alongside its database of 2 billion consumer data points to successfully match customers to their most suitable products.

“Despite revenues growing by 155% and profits by 320% over the last three years, profit growth will be less spectacular in 2025 owing to product and marketing investments for the recent launch of its new prescription skincare brand, Methodiq,” says Barnard.

That drop has seen Oddity’s stock derated (shares fell steeply in August and are almost flat for the year to 16 December), but Barnard expects earnings growth to improve to around 20% annually once the recent investments subside.

A UK stock for 2026

Mould, at AJ Bell, picks out Telecom Plus (LON:TEP), which provides energy, mobile, insurance and broadband services to more than 1.4 million customers, as a balanced UK stock for 2026.

“A share price chart that goes from the top left-hand corner of the screen straight down to the bottom right is not a pretty sight, and shares in Telecom Plus are no higher now than seven years ago, after a fall of more than 30% in the past six months,” says Mould.

“Yet this fall could represent an opportunity to tuck away a stock with a strong long-term record of growing its customer base, profits and dividends.”

But Mould highlights that management stuck to its full-year guidance despite a fall in first-half profits, with CEO Stuart Burnett attributing the declines to timing issues.

“An increase in the interim dividend spoke of management’s faith in the outlook, and Telecom Plus can point to dividend payments worth 922p a share in the past decade,” said Mould. “Potential for further growth in customers, as they shop around for better deals, and cross-selling underpin the long-term outlook and this could help the shares if Telecom Plus convinces the doubters and delivers on its full-year profit outlook next spring.”

With forward P/E multiples of around 12 and 11 for the next two fiscal years respectively as well as a forward dividend yield of 7%, Mould believes Telecom Plus provides “the right mix of upside potential and downside protection”.

Mould also picked out FTSE 100 pharmaceutical giant GSK (LON:GSK) as a cautious UK stock, alongside housebuilder Bellway (LON:BWY) as an adventurous option for investors willing to take more risk.

An EM stock for 2026

Tennant, at Fidelity Emerging Markets Limited, picked Brazilian gold miner Aura Minerals (NASDAQ:AUGO) as his favourite EM stock of 2026.

Aura’s stock has doubled in price this year as gold prices have surged, but is still trading at just nine times projected earnings.

“At current production levels, the company can generate a free cash flow yield of over 20% at gold prices as low as $3k/oz, well below today’s spot levels,” says Tennant. “Capex levels are also high, although this can be funded out of cash whilst still maintaining a generous dividend, and production stands to double once the current project pipeline is complete.”

An income stock for 2026

Mould’s pick for income-focused investors is Lancashire Holdings (LON:LRE). Lancashire is known for underwriting in its specialist areas of insuring (and reinsuring) across aviation, property, marine and energy.

“Between 2008 and the first half of 2025, it has paid out more than 900p a share in ordinary and special dividends, a figure which catches the eye in relation to the current share price [614p as of 16 December],” says Mould.

“Some investors will shy away from catastrophe insurance and reinsurance, as they look at climate change and fear the worst,” Mould continued. “But Lancashire’s exposure to this year’s California wildfires proved more than manageable, and within the limits modelled by its underwriters for such terrible events, and the 2025 storm season has been relatively quiet, even allowing for the awful treatment handed out to Jamaica by Hurricane Melissa.”

Shares currently trade at approximately 1.3 times book value, which Mould says “does not look like a lofty multiplier for a business with Lancashire’s long-term returns profile”.

Clean-energy funds and related equities have taken a hammering this year. The Global Clean Energy ETF (exchange-traded fund) with $3.5bn in assets is the biggest, most liquid green-energy ETF. It has fallen by 26% since 1 January 2023. 

UK-focused investors will have noticed an echo of this pain in the investment trust sector. The battery storage industry has been especially badly hit. The three listed funds in this area have suffered huge falls in their share prices: 

• Harmony Energy Income Trust (LSE: HEIT) is down by 40% to 75p
• The Gore Street Energy Storage Fund (LSE: GSF) has fallen by 40% to 68p
• The Gresham House Energy Storage Fund (LSE: GRID) has declined by nearly 50% to 88p. (I am a nonexecutive director at GRID.)

This sector had been a market darling as the market for short-duration battery energy storage system (BESS) projects boomed in the UK. According to industry news site Energy Storage News, in recent years the UK market had “ become the largest in Europe with over 3.5GW now online, with projects benefiting from high ancillary service market prices, particularly in 2022”. 

That growth resulted in market saturation, which also coincided with falling revenues, partly because the operator of the electricity grid, National Grid, hasn’t opened up as many opportunities as expected in a segment of the market called the balancing mechanism (designed to maintain the stability of power supply). While efforts are being made to give battery storage a more prominent role in the balancing mechanism, investors haven’t stuck around. 

Other emerging parts of the clean-energy spectrum are having a better 2023, notably nuclear energy, and especially uranium prices. Over the last few weeks uranium prices have breached the important $60 and $70 a pound barriers. So far this year spot prices have risen by 46% (they are up by 400% since 2019). Unsurprisingly, share prices for uranium miners (and to a lesser degree the small handful of uranium processors) have shot up. 

Alternative assets advisory house Ocean Wall runs an index for the small number of stocks in this sector and it has gained 52% in 2023. The market value of global uranium equities is $50bn, made up of just 84 stocks. 

Options for UK retail investors
UK investors have two main options to play the uranium rally. 

The biggest listed play is Aim-listed Yellowcake (Aim: YCA), which owns a physical reserve – in Canada – of uranium oxide. Its market capitalisation is $1.2bn and with uranium prices above $70/lb, the investment company is trading at a 12% discount to its net asset value (NAV).

Another popular choice is uranium equities fund Geiger Counter (LSE: GCL), which has a NAV of 60p against its current share price of 49.6p, representing an 18% discount. The fund is overweight in US-sourced uranium and owns no Kazatomprom shares. The Kazakh producer is the biggest player globally but is largely state-owned and an integral part of the Russia/ China economic axis. Geiger Counter’s single biggest holding is NexGen Energy, which boasts one of the largest reserves of cheap uranium in a Western jurisdiction. The fund also owns big stakes in America’s Uranium Energy Corporation (7.6%) and Canada’s Fission Uranium Corp. (6.4%). 

Over in the ETF sector, one of the most popular ways of buying into the nuclear story is through the HANetf Sprott Uranium Miners UCITS ETF (LSE: URNM). According to HANetf’s Tom Bailey, there’s a decent chance that uranium prices could go even higher from current levels. The uranium spot price “is now only at a comparable level to the spot price right before Fukushima in 2011. In fact, if you were to increase the pre-Fukushima price by inflation, it would be in the high 90s today”. Furthermore, he says, “We are nowhere near the all-time high, which was near $140/lb”.

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.

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A new retail bond paying an 8.25% coupon has launched, beating the interest rates on top savings accounts.

The best savings account currently pays 4.7%, while customers can get up to 7.5% with a regular savings account.

Alternative property lender LendInvest’s 8.25% bond will likely appeal to savers fed up with falling interest rates, and investors looking for regular income.

Retail bonds pay a fixed rate of interest – known as the “coupon” – for a set period. They are issued by companies and charities looking to raise extra capital by borrowing from investors.

However, retail bonds are not the same as savings accounts; there are risks involved. We look at how the LendInvest bond will work, and the risks of retail bonds.

How will the LendInvest retail bond work?

The LendInvest bond will pay investors a fixed 8.25% rate bi-annually until its maturity in 2030. The offer period is expected to close on 11 November.

The bonds – which represent LendInvest’s fifth issue – will be listed on the London Stock Exchange’s Order Book for Retail Bonds and are available via AJ Bell, Hargreaves Lansdown, Interactive Investor and other major platforms.

The minimum initial subscription is £1,000, with increments of £100 thereafter. Interest payments are expected to be made on 18 May and 18 November in each year, with the first due on 18 May 2026.

The new bonds are expected to be admitted to trading on the London Stock Exchange's regulated market and through the electronic Order Book for Retail Bonds (ORB) on 18 November 2025.

So, what is LendInvest exactly? A UK-based alternative property finance platform, it provides short-term, development and buy-to-let mortgages to professional property investors and developers.

The company is listed on AIM. As at 31 March 2025, it reported funds under management of £5.13 billion and platform assets under management of £3.23 billion.

LendInvest says it has a strong track record, having repaid its previous two matured bonds in full without loss to its holders.

It says that investors buying the new bond “can gain exposure to a diversified and fast-growing portfolio of asset-backed UK property loans. This ranges from buy-to-let and bridging finance to residential and commercial development, aimed at experienced and professional borrower clients”.

Rod Lockhart, CEO of LendInvest, said of the new bond: “This issuance represents the continued development of our secured-income programme and provides investors with access to bonds backed by UK property-finance assets within a clearly defined structure.”

If you already hold a LendInvest bond, you may be able to swap it for the new issue under a proposed “exchange offer”. This would allow holders of the outstanding 11.5% notes due 2026 and 6.5% notes due 2027, each issued by LendInvest Secured Income II plc, to exchange their holdings for the new bonds.

What are the risks of retail bonds?

First, let’s look at the differences between savings accounts and retail bonds. Cash held in UK savings accounts is protected by the Financial Services Compensation Scheme (FSCS), with up to £85,000 per person, per banking licence, covered in the event of a collapse.

Retail bonds, however, are not covered by the scheme. So if the issuer were to go bust, there would be no guarantee that investors would receive their money back.

Laith Khalaf, head of investment analysis at AJ Bell, tells MoneyWeek: “While the headline rates on retail bonds might be extremely attractive, there’s no such thing as a free lunch when it comes to investing, and higher levels of interest generally reflect more risk.

“Investors need to consider the return of their money, as well as the return on their money. If a company you loan money to goes bust, then you may lose some or all of your capital, as well as outstanding interest payments.”

He says it’s crucial that investors have a handle on the finances of the company (or charity) issuing the bonds before buying them, which can be found in their accounts, and most specifically the balance sheet.

Khalaf adds: “If your retail bond doesn’t repay your capital in full, then you have no recourse to the FSCS. Consumers need to treat retail bonds as an investment, which carries capital risk, rather than as a high-interest savings account, which largely doesn’t.”

Having said that, it’s worth pointing out that while retail bonds like the LendInvest one have risks, they are not “mini-bonds”, the advertising of which has been banned by the Financial Conduct Authority.

LendInvest’s retail bonds will be traded publicly on the London Stock Exchange (LSE), so investors have the reassurance that the stock exchange’s requirements have been met.

What is the Order Book for Retail Bonds (ORB)?

The LSE introduced the Order Book for Retail Bonds (ORB), a dedicated platform for bonds aimed at retail investors, in February 2010.

Traditionally, bonds are traded in lots of £100,000, making it all but impossible for the average investor to buy a portfolio of their choosing. However, on the ORB, the majority of issues can be traded in lots as low as £100.

The ORB hasn’t really taken the market by storm. After an initial flurry of trading, new issues dried up, although a few firms continue to use the platform.

Companies using the ORB over the past few years include International Personal Finance (bond maturing on 12 December 2027 and paying 12% per annum), and Belong (paying 7.5% through to July 2030).

If you’ve been keeping a close eye on share tips 2026, then don’t miss this regular round-up of the top stocks to consider for your portfolio.

The MoneyWeek share tips 2026 guide pulls together some of the most popular stocks from top share tipsters around.

As well as the UK financial pages, we look at publications across the pond for investors who want to diversify their holdings internationally.

Investors will undoubtedly want to refresh their finances this year – we look at dividend heroes, what's happening with gold prices and the best way to invest. If you're new to investing, here's how to start.

This list is updated regularly.

Share tips 2026: top stock picks of the week

Five stocks to buy

1. XPS Pensions (LSE: XPS)
Investors' Chronicle
Pensions adviser XPS Pensions has reported a fourth consecutive year of double-digit revenue growth, thanks to a favourable pensions-transfer market and defined-benefit schemes shifting to a surplus amid higher interest rates. XPS' advisory division posted a 20% rise in revenues to £150 million, with upcoming regulations expected to boost growth further. The insurance division is growing too. Robust demand could bolster sales and profits in the coming years, and XPS expects stable margins this year. 311p

2. Babcock International (LSE: BAB)
Investors’ Chronicle
The aerospace and defence firm has delivered a 19% increase in full-year operating profits to £433 million. Free cash flow of £262 million supported a hike in the final dividend and a £200 million buyback. Earnings per share are expected to grow from 64.2p to 71.5p by 2028. Despite the risks inherent in certain projects and uncertainties over UK military spending plans, Babcock is on track to meet medium-term profit guidance, while sales in the group's nuclear division rose 14%. With the shares 30% below the consensus target, “we remain buyers”. 941p

3. General Motors (NYSE: GM)
Barron's
General Motors is a “cash machine”. It's generated $53 billion in free cash flow since 2021 despite a volatile economy. Even with lower car sales recently and setbacks in the electric-vehicle (EV) division, GM offers a free cash flow yield of 14%. The group is collaborating with defence contractor Lockheed Martin and aims to apply its unused EV battery capacity in utilities to support the AI-data-centre building boom. Further buybacks are expected. $78

4. Medtronic (NYSE: MDT)
Barron's
Medtronic is “deeply undervalued” and a good bet despite a reputation for underwhelming investors. The US medical-device company's fourth-quarter results eclipsed expectations, with revenue rising nearly 10% to $9.7 billion. Analysts think the stock could reach $120 in 12 months, with higher dividends on the cards. Its cardiovascular segment, which accounts for 39% of sales, saw a 10% increase in revenue and its neuroscience unit is growing. Its AI-driven surgical platform shows promise. Medtronic has spun off the diabetes unit and has made acquisitions. It expects organic revenue and adjusted earnings growth and higher dividends. Buy ($81).

5. AO World (LSE: AO)
Investors' Chronicle
AO World has announced record yearly profits and a £10 million special dividend. The electronics retailer's sales grew 11.4% to £1.27 billion, driven by its core retail operations and gains in market share. Profit improved after it used automation and offshoring to manage costs, including a robotics trial in warehouses. Free cash flow more than doubled to £66.4 million due to stronger trading. AO's 8% free cash flow yield and cash generation are “attractive”. Buy (92p).

One stock to sell

1. Wizz Air (LSE: WIZZ)
Investors' Chronicle
Wizz Air has reported 8% growth in annual sales to €5.7 billion. It carried a record 69.7 million passengers last year. Despite warnings of a potential €50 million impact from the Iran conflict, effective fuel hedges minimised losses, and increased cash reserves lowered debt. However, the oil shock is likely to have further ramifications, as Wizz's financial year only ended in March and the airline has not provided profit guidance for the upcoming year due to uncertainties related to the Strait of Hormuz. Leverage is high, and there could be further capacity constraints and unfavourable conditions for fuel negotiations. Sell. 1,202p

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.

Fraser Mackersie, co-manager of the Unicorn UK Growth Fund, highlights three of his favourite shares as part of MoneyWeek's regular fund manager interview series:

The past 18 months have been a tough period for growth investors, with interest rates rising rapidly in an attempt to curb surging global inflation.

Growth company valuations have contracted significantly, as less value is ascribed to expected future profits owing to the higher discount rates.

This trend has created a number of interesting investment opportunities in growth companies globally, and – of particular interest to us – in UK equities.

Companies’ operational and financial performances during the past year and a half have remained relatively strong, with businesses continuing to implement their long-term growth plans.

With interest rates now approaching levels widely expected to prove a peak, and with inflation set to subside during the remainder of 2023, we believe that current conditions have created an exciting opportunity for investors to back high-quality growth companies.

Secret of long-term success

In the Unicorn UK Growth Fund, we look to identify and back profitable and cash-generative companies capable of delivering above-market organic earnings growth over the longer term.

Many of these businesses are aligned with multi-year structural growth themes. Our focus on profitability, cash generation and balance-sheet strength means we can find companies with the solid foundation to fund and support ambitious growth aspirations.

This approach also ensures that higher-risk, earlier-stage and cash-consumptive companies are left out of the portfolio. Alpha Group International (Aim: ALPH) is a company we initially backed at its initial public offering (IPO) in 2015.

Alpha started life on UK markets as a provider of corporate foreign-exchange (FX) services, but in recent years it has diversified into alternative banking (digital-banking services) for companies.

The firm’s recent full-year results show that both sides of the business continued to deliver excellent growth rates, with revenue in the FX division expanding by 22% and Alternative Banking Solutions delivering sales growth of 41%.

The company also announced plans to move from Aim, London’s junior stock exchange, to the main market of the London Stock Exchange next year.

4Imprint (LSE: FOUR) supplies branded promotional products (ranging from pens and notebooks to bags and clothing) to the US corporate market.

The company experienced exceptionally strong sales growth in 2022 as a shift in its marketing expenditure to focus more on brand recognition delivered impressive results.

The company is the market leader in the US but continues to command a relatively modest market share, providing ample scope for future growth.

Recent highlights from the full-year results for 2022 included revenue growth of 45% and a sizeable special dividend, reflecting the strong trading performance and growing net cash position.

A deep dive into detailed data

FD Technologies (Aim: FDP) is a relatively small software and consulting business. The group’s kdb+ software is the world’s fastest time series database and real-time analytics engine.

It enables customers, which include Formula 1 racing teams, Fortune 500 manufacturing companies and financial regulators, to analyse large amounts of data in real-time.

In 2022 the company entered a strategic partnership with Microsoft which made the engine available on the Microsoft Azure platform. Initial preview customers reported performance up to 100 times faster at one-tenth of the cost of competing solutions.

The Scottish Mortgage Investment Trust (LSE: SMT) has been part of the MoneyWeek investment trust portfolio since its launch in 2012.

It’s likely this trust features in many of our readers’ portfolios and it has been a winning bet for much of the past decade.

At one point, the shares were up 1,000% on our purchase price, making it a key contributor to the 17% annual return the portfolio achieved between launch and the end of 2021.

As the trust has soared in value over the last decade, we’ve resisted the temptation to take profits mainly as a hedge against being wrong.

However, after a decade of market-beating returns, we’re now seeing what happens when the market turns against growth stocks.

After their outstanding run, shares in the trust have plunged 45% since the beginning of 2022.

Meanwhile, the trust’s discount to its underlying net asset value (NAV) has blown out to a 10-year high of 22%

These declines have wiped out most of the gains the trust achieved during 2020 and 2021, but its long-term performance is still impressive.

Over the past five years, the trust’s NAV has grown by 74.5%, compared to 57.3% for the FTSE All-World Index. Over the past decade, the NAV has gained 399% compared to 179.2% for the FTSE All-World Index.

The MoneyWeek view on the Scottish Mortgage Investment Trust

Despite its performance, the trust’s strategy hasn’t changed over the past year.

It continues to invest in the world’s greatest growth companies, whether they are public or private.

Unfortunately, this approach has fallen out of favour recently. Scottish Mortgage has a large portfolio of private investments, and over the past two years, investors have become increasingly concerned about private company valuations.

Private equity now accounts for 30% of the portfolio, close to the cap. Most of the holdings are small, but nine are in its top 30, including Northvolt (3.6%), SpaceX (3.2%), and ByteDance, the owner of TikTok (2.2%).

The firm revalued its private holdings 532 times last year, 84% of the holdings were revalued five times or more, with company valuations being written down by 28% on average.

Still, the trust’s discount to NAV suggests investors remain sceptical about the underlying values.

The trust has outperformed over the past decade by focusing on the companies of the future, holding these investments through thick and thin.

There will be some losers along the way, but in the long term, the winners more than make up for the losers.

Scottish Mortgage has owned 700 companies during the past two decades. Less than 5% have driven “all” of the returns, according to its co-manager Tom Slater.

Slater and his co-manager Lawrence Burns urged shareholders to remain “disciplined and patient” in the trust’s full-year earnings release.

The duo explained the “accelerating pace of change throughout the economy . . . has not translated into our investment results lately, but we need to remain disciplined and patient”.

And on that key pain point of the private portfolio, the co-managers defended the strategy, noting it gives shareholders low-cost access to companies “many of which have no public market equivalent.” The private portfolio also offers “a lens into the future” due to the fact businesses are tending to stay private for longer.

The managers also defended the trust’s “robust valuations process” and noted its largest private holdings are multi-billion dollar industry giants. “The companies that make up the bulk of our private company exposure are consequently neither small nor early-stage,” Burns explained. This suggests they’re less likely to suffer from the “material change in the funding environment . . . from a period of capital abundance to one of capital scarcity.”

The manager also cautioned “it is likely that a few of our smaller private company holdings may find themselves casualties of this new environment. Should this happen we expect the impact to represent only a small percentage of the portfolio’s assets.”

Scottish Mortgage Investment Trust’s private holdings

Scottish Mortgage’s public portfolio is much easier to value, but even this faced huge headwinds in 2022.

Nevertheless, the managers resisted the temptation to make any large changes. The only sale from its top holdings was Chinese tech giant Alibaba. Scottish Mortgage first bought the holding in 2012 when Alibaba was private. After a decade, the trust decided to reevaluate its position due to “concerns about the growth of big online platform companies in China after several regulatory interventions, as well as reflecting disquiet about deteriorating Sino-US relations.”

A holding in Illumina was also trimmed. While this gene-sequencing company may still have a big role to play in the future of healthcare, its “execution has been disappointing.”

Other trades last year included a new holding in gaming company Roblox, cloud networking-provider Cloudflare, and adding to its holding in Latin American ecommerce and finance company, MercadoLibre.

What should investors do about Scottish Mortgage

Growth investing isn’t easy, and as Scottish Mortgage’s returns show, there can be periods of high returns followed by losses and extreme uncertainty. The question for shareholders is, will the trust recover?

There’s no clear answer to this question. Growth investing might struggle for some time as investors pull back from growth-at-any-price stocks. Indeed, there’s some evidence growth stocks outperform in periods of falling interest rates, but struggle when rates are rising. The opposite tends to be true for value stocks.

But there’s no denying Scottish Mortage owns some of the most exciting and innovative companies on the planet. If investors want to own a piece of these businesses, the trust is still one of the most attractive ways to do so considering its track record.

• Additional contributions from Ruth Emery and Max King.

• The authors of this article do not have holdings in Scottish Mortgage Investment Trust

UK small- and mid-cap stocks, like those in the FTSE 250, are a gold mine for income investors thanks to low valuations and high dividend yields.

The FTSE 250 index comprises the UK stock market’s 101st to 350th largest companies - also known as medium-sized or mid-cap companies. While they are not big enough to be part of the FTSE 100, they are still some of the UK’s largest publicly-traded enterprises and often feature as the top stocks to buy.

Richard Hunter, head of markets at investment platform interactive investor, says: “The FTSE 250 index is widely regarded as being something of a barometer for the UK economy, as opposed to the FTSE 100 where some 70% of earnings come from overseas.”

The FTSE 250 gained 6.6% in share price terms in the year to 3 December. But on a total return basis – which factors in dividends – this return rises to 10.4%.

“Yields on both the FTSE 250 and the FTSE SmallCap (excluding investment trusts) indices remain above the FTSE 100,” said Chris McVey, deputy head of quoted companies at Octopus Investments.

Income investors have a “once-in-a-cycle” opportunity to buy into UK small- and mid-cap stocks at depressed valuations, according to McVey in Octopus Investments’ latest dividend barometer.

“Investors should take advantage of this now as UK smaller-cap stocks can offer them a compelling opportunity in terms of both absolute and relative value, as well as income, benefitting from attractive and growing dividend streams,” said McVey.

Why are FTSE 250 stocks good value for income investors?

UK stocks trade at a discount, especially compared to US counterparts. The year so far has seen a partial narrowing of this divide in the FTSE 100, but the re-rating has yet to spread to UK small- and mid-cap stocks.

This relative undervaluation means that UK smaller companies offer greater dividend yields (which are calculated as a percentage of share price) compared to their larger counterparts.

“There is an exceptional opportunity at the moment in medium-sized UK higher yielding companies,” said Simon Gergel, manager of Merchants Trust (LON:MRCH). “The stock market is highly polarised and negative sentiment about the UK economy has created a great opportunity set for long-term investors.”

“We believe it’s an anomaly that these companies are continuing to fly under the radar for traditional income investors,” said McVey.

Three FTSE 250 dividend stocks

Ithaca Energy

Analysts led by Werner Riding from investment bank Peel Hunt rated Ithaca Energy (LON:ITH) a Buy and raised their price target to 260p from 200p following strong third-quarter results announced on 19 November.

“Ithaca has continued to build momentum year-to-date, supported by active NOrth Sea development and strategic partnerships,” wrote Riding.

As of 4 December, Ithaca offers an impressive annual dividend yield of 10.9%.

B&M

Considering the pessimism over the UK economy that abounded at the start of the year, some experts anticipated discount retailer B&M (LON:BME) to struggle.

That has proved to be the case, with the company enduring a stark selloff. Shares are down 55% this year, but Peel Hunt analysts are optimistic that new management can turn the company’s fortunes around.

“Arriving at B&M, new CEO Tjeerd Jegen faced a long to-do list,” said Peel Hunt analysts Jonathan Pritchard and John Stevenson in a research note. “Before, too much time was spent obsessing over store aesthetics and too little on understand what customers wanted [and] what worked for B&M.”

Providing that the return to retail basics is successful, Pritchard and Stevenson “see potential for a format that clearly works to return to its past glories”. They set a price target of 200p on 25 November, implying 22% gains from the latest close at the time.

Income investors will note that, trading at current depressed levels, B&M offers a dividend yield of 8.2%.

TBC Bank

Shares in TBC Bank Group (LON:TBCG) have gained 29% in the year to date. Despite these gains, it is still offering a dividend yield of 5.2%.

While forecasts for 2026 have been cut thanks to regulatory changes in Uzbekistan, where the Bank does most of its business, Peel Hunt analyst Start Duncan views this as “a delay rather than a fundamental change to the longer-term growth potential”.

As we enter the new year, we’ve asked our contributors to put together their top investment ideas for 2023. Their ideas span everything from gold, silver and bitcoin to the best stocks for yield and psychedelic treatments.

Top investment ideas for 2023

Jonathan Compton

Jonathan Compton was MD at Bedlam Asset Management and has spent 30 years in fund management, stockbroking and corporate finance.

My pick is UK-listed Kape Technologies (LSE: KAPE), a £950m company that has been dragged down even as revenue and profits have blossomed and the outlook brightened.

It specialises in virtual private networks (VPNs) and cybersecurity. You probably don’t use a VPN on your PC or tablet today, but many of us will because it provides an encrypted server and hides your IP address from spammers, hackers and prying eyes.

In short, it keeps your data far safer than conventional security packages. Seven million customers already use Kape, while the market for computer privacy is huge and expanding fast; we’re all fed up with torrents of spam and hackers.

The forward price/earnings (p/e) ratio for 2023 is below eight.

Stephen Connolly

Stephen Connolly is managing director of consultancy Plain Money. He has worked in banking and asset management for over 25 years.

The US-listed conglomerate Berkshire Hathaway “B” shares (NYSE: BRK.B) is led by legendary investor Warren Buffett.

It’s ending 2022 in positive territory, up 3%, trouncing the S&P 500 index’s -16.7% fall. This outperformance from its undervalued investments across diverse sectors such as energy, technology, transport and financial services in companies such as Coca-Cola, American Express and Apple shows once again that Buffett knows his business.

Such skill is rare – only one in four fund managers beat index trackers this year, according to broker AJ Bell. Nearly two-thirds of them failed over a decade as well, a period when markets were relatively benign.

The new year will not, unfortunately, herald a fresh start and 2023 will remain difficult. So I’m going to keep quietly dripping my money into Berkshire.

Dominic Frisby

Dominic Frisby is the world’s only financial writer and comedian. He is MoneyWeek’s main commentator on gold, commodities, currencies and cryptocurrencies.

It’s hard to think of a time in the history of bitcoin when sentiment was lower.

However, usage is exploding in East Asia. It’s exploding in Africa, especially in Nigeria. It is exploding anywhere there is a currency crisis: Turkey, Venezuela, Argentina.

The member nations of the Shanghai Cooperation Organisation (China, India, Russia et al) are desperately seeking a non-dollar alternative money to trade in.

The issue is who will be the trusted third party in a world where trust is thin.

We need “a blockchain-based system of international settlements that … will not depend on banks or interference by third countries”, said Vladimir Putin last week. Bitcoin is international, independent settlements system that eliminates the need for trusted third parties.

Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018.

Energy is going to be a critical theme over the next few years.

There are many interesting opportunities in this sector, but I’ll highlight one that may not be familiar. Woodside Energy (LSE: WDS) merged with BHP’s oil and gas interests when the latter restructured last year, and added a secondary London listing to its main listing in Sydney.

Woodside is really a play on liquefied natural gas (LNG), which is an increasingly important source of supply, especially in Asia. Slightly under 50% of its portfolio is in LNG and about a quarter in piped gas. Annual production is forecast to rise by more than 20% by 2027 after its Scarborough LNG project off the coast of Western Australia starts up in 2026.

At Monday’s price of 1,960p, the stock trades on 6.5 times estimated 2022 earnings and a forecast dividend yield of around 10%. Investors are getting paid well to wait for growth.

Frédéric Guirinec

Frederic is an investment analyst. He started his career at JP Morgan in Paris. He has more than ten years of experience investing in private equity and also worked with the 3i debt management team investing in private debt.

I will focus on food here. While agricultural commodities prices have now fallen back from the highs printed in 2022, they allowed food-processing companies to increase prices and margins.

Companies such as General Mills, Nestlé or Mondelez are fully valued, but I would consider Premier Food (LSE: PFD) or Norwegian conglomerate Orkla (Oslo: ORK), which could be broken up.

In addition, palm-oil producers are out of institutional investors’ reach for sustainability reasons, but companies in the food sector are looking to reduce costs and will keep using cheap ingredients. This will favour the likes of MP Evans (LSE: MPE) or Sipef (Brussels: SIP).

David C. Stevenson

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. David is executive director on a number of stockmarket listed funds including Gresham House Energy Storage and the Aurora Investment Trust.

Compass Pathways (Nasdaq: CMPS) is a US-listed, UK-based life-sciences stock with a difference. It is the leader in clinical research into psilocybin (or magic mushrooms to the rest of us) for psychiatric disorders.

Psychedelics cause almost no dependency and are proving highly reliable in early stage trials. There are some difficulties, notably the setting in which the drugs need to be taken (preferably with a trained counsellor) and the current trials will hopefully rectify these.

It also has enough cash on the balance sheet to get it through the crucial next two years, which in my view will prove decisive for this promising area of research.

If the trials succeed, big pharma will come knocking. I own shares and have been adding to my holdings over the last few months.

Mike Tubbs

For decades, Dr Mike Tubbs worked on the 'inside' of corporate giants such as Xerox, Battelle and Lucas. Working in the research and development departments, he learnt what became the key to his investing. Knowledge which gave him a unique perspective on the stock markets.

This year I am playing it safe after noting that company insolvencies in England and Wales were up by 38% year on year to 1,948 for October 2022. They could increase if the country falls into a recession.

I am therefore recommending Begbies Traynor (LSE: BEG), which handles the UK’s largest number of corporate insolvencies, together with personal insolvencies, corporate finance, company valuations, sales of company assets and property consultancy.

The forward dividend yield is a healthy 2.6%.

Chairman Ric Traynor’s first-half statement said that he expects continued growth and is confident about delivering on full-year market expectations.

James McKeigue

James is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.

Feel like you had a tough year? Spare a thought for shareholders in Brazil’s national oil company, Petrobras (NYSE: PBR).

The firm is on target to post record profits and pay its highest-ever dividend in 2022, yet its share price is down 19% since the start of the year. The last few months have been particularly brutal, with the stock falling by 43% since 21 October.

That has left the profitable, well-managed oil producer looking ridiculously cheap.

It trades on a p/e of 1.7, compared with peers such as Shell that trade on a p/e of 4.8. Petrobras is also generous with its cash, currently offering a 2022 gross dividend yield of 27%, according to Bloomberg, although this is likely to change depending on profits.

Andrew Van Sickle

Andrew is the editor of MoneyWeek magazine.

The price of silver, having drifted downwards for most of the year, has suddenly come alive, jumping by 25% since early November to $23 an ounce. There should be plenty more gains ahead.

Solar panels, electric vehicles and 5G mobile technology are three key growth areas requiring silver.

Batteries for electric vehicles need up to twice as much silver as their counterparts designed for internal combustion engines, while one estimate foresees an 85% increase in annual silver consumption by the solar industry in a decade.

You can track the spot price with the WisdomTree Physical Silver ETF (LSE: PHSP). Just remember that it can be gold on steroids to the downside too.

UK stock market opening times can vary based on whether it’s a public holiday or the festive season.

While most stock markets are open throughout the working week, that doesn’t always mean Monday to Friday. For example, the Saudi Stock Exchange is open from Sunday to Thursday. Trading hours can also vary from region to region.

Whatever investment platforms or trading apps you use, and whether you’re a beginner investor or a seasoned trader, it’s worth knowing when the UK stock market is open.

UK stock market opening times in 2025

The UK’s stock market is the London Stock Exchange. It is typically open on weekdays from 8 am to 4:30 pm with a tiny break between 12:00 pm and 12:02 pm. This is unlike Asian and Middle Eastern markets, which close for an hour.

With a total trading window of 8 hours and 28 minutes, the UK exchange has some of the longest opening hours in the world. The trading session in New York is just six hours and 30 minutes.

The London Stock Exchange is closed on weekends. However, some big City traders can place deals outside of the standard stock market opening times – also known as extended hours or after-hours trading.

We look at the opening times for the London Stock Exchange throughout the year.

Is the London Stock Exchange open on bank holidays?

While the London Stock Exchange is usually open on weekdays, bank holidays in England and Wales disrupt trading services. For instance, the stock market will be closed on 25 August as it’s a bank holiday Monday.

We’ve rounded up all the bank holidays coming up this year and their impact on the UK stock market.

Source: London Stock Exchange

When a company floats on the stock exchange, the buoyancy of the share price represents a tension. Management wants to set a high price for the shares existing shareholders are selling, but that high price is anchored on future expectations. But the higher the expectations, the higher the risk of disappointment following the listing.

Currency trader Argentex (LSE: AGFX) was founded in 2011 and listed on Aim in June 2019 at 106p, valuing the company at a market capitalisation of £120m. It raised £12.5m in new capital in the initial public offering (IPO), while existing shareholders sold £46m of stock. At the beginning of 2020, the shares peaked at over 200p.

Then came the pandemic, then the departure of a co-CEO who sold his 10% shareholding, followed by earnings downgrades (see below). Investors are disappointed and the shares have tumbled 63% from their January 2020 high. That could now present an opportunity.

Beating the banks

Argentex acts as a “riskless principal”, so does not charge commission for executing trades. Instead, revenue comes from the spread it receives from each deal. That spread is not fixed – pricing depends on the client’s individual trading history and the dealer’s discretion. All the trades are over the counter (OTC) rather than centrally cleared. This might be open to abuse, with traders charging what they think they can get away with, but Argentex says that it wins clients from banks due to superior pricing and service.

Argentex’s customers are companies who need to convert between £1m and £500m annually into another currency. Its largest sector is financial services (ie, fund managers, pension funds and insurance companies) at 37% of revenue. It has signed up 239 clients in the last year to bring the total number of companies for whom it trades to 1,624. Given the bureaucratic nature of know your customer (KYC) and anti-money laundering (AML) forms, it’s unlikely that clients would go to the trouble of switching if the savings were not worth the effort.

Investing in growth

On the other side of the trade are large global banks, who price the trades keenly in return for Argentex meeting minimum trading levels. These counterparties require collateral to be posted in order to deal in forward contracts. That has been a constraint on growth in the past, and some of the £12.5m raised from the IPO in 2019 was supposed to fund growth, by allowing Argentex to increase the total volume of forwards trades with existing clients and win new ones.

The second use of proceeds was to hire a larger sales team. The plan at the IPO was to more than double sales headcount to 50 people within two years. Based on the numbers just reported, it has fallen short, which probably explains the earnings per share (EPS) disappointment. The firm hired 22 new people in sales in the two years following the IPO, but it looks like it wasn’t able to retain all of them. Headcount in sales is less than 40 people in the results to March. That’s important because management says that the longest-serving salespeople are the most productive. In the first year, a salesperson generates on average £42,000 revenue, later growing to £1.8m in year five. There is a large jump from £0.5m in the third year to £1.1m in year four.

This looks like a fixable problem, though it will take time. The firm is expanding internationally by opening offices in the Netherlands and Australia. And while Argentex started out with a similar model to a private bank – with a high-touch bespoke service – it is now also building an online trading platform for lower-value transactions. I own the shares, and despite the recent disappointment, they look like they offer good growth prospects at a reasonable price.

Tripped up by ambitious forecasts

In the two years before the IPO, Argentex’s sales and operating profit roughly doubled to £22m and £9m respectively and forecasts were for rapid growth. Management felt comfortable with ambitious forecasts by Numis (its former corporate broker) of 12p in earnings per share (EPS) for the financial year to March 2022, which implied a 15% compound annual growth rate (CAGR) in the bottom line.

But results did not meet expectations. Argentex has just reported adjusted EPS of 7p for the year ending March 2022, which is 42% below the original forecast.

Management has taken the unusual step of changing the firm’s year end from March to December, as well as changing the broker to Singer Capital Markets. Singer expects £47m of revenue in the year to December 2023, rising to £57m the following year, implying 18% growth CAGR from the level just reported. EPS is expected to drop this year, but recover to 6.4p in 2023 and 10.1p in 2024. At a share price of 75p, that puts the shares on a forward price/earnings (p/e) ratio of 11.7 for 2023, dropping to 7.4 for 2024. It’s worth noting that 2024 forecast is still 20% below the original forecast of 12p in 2022.

There are a couple of risks. Competition is one. Wise and Revolut could decide to target the corporate sector. Equals Money, a more directly comparable competitor, just reported that it is growing revenue at 84% in the first half of this year. Given the strong growth at competitors it is rather puzzling that Argentex rates itself above its peers for both price and service. A second risk is client concentration: the top 20 clients on average generate £621,000 of revenue, versus the long tail of customers who generate £14,000 on average. If one of those large clients failed to settle a forward contract, Argentex would be exposed to losses, as there is no centralised clearing.

At one point Scottish Mortgage (LSE: SMT) was the UK’s biggest investment trust by market capitalisation, championing a generation of disruptors from Amazon to Tesla. But if you look at the investor bulletin boards, it is now the subject of much scorn and vitriol.

The most recent trading update showed that net asset value (NAV) total returns for the year to 31 March were negative 13.1%, compared with a 12.8% gain for the FTSE All World index. The share price currently trades at 692p, a 55% decline from its 1,543p peak. It’s now on a wide 16% discount to NAV (the average discount over the past year is 1.3%).

The struggle isn’t over

The headwinds facing Scottish Mortgage are unlikely to abate soon. The fund bet big on technology; now, rising interest rates have triggered a sell-off in those growth stocks. There’s also the question of venture capital-style investments and what these are worth in today’s markets.

At first, Scottish Mortgage found itself somewhat insulated from the growth stock sell-off because a large part of its portfolio was in unlisted private investments; unquoted holdings represented 24.6% of the portfolio at 31 March, up from 20.2% a year ago. Initially, valuations for these companies weren’t hit as hard as the price of quoted stocks. That’s about to change: the current round of haircuts to valuations will be only the beginning of a long and painful process for many late-stage venture capital investments.

To be fair to Scottish Mortgage, there is a robust valuation system in place for these private companies. They are valued on a rolling three-month cycle (ie, roughly a third revalued every month), except for the half-year and full-year-end of the fund, or where there is a trigger event that indicates the fair value of the holding has changed, such as a funding round. I estimate we have at least another six months of cuts of anything between 10% and 30%.

Still, not all of Scottish Mortgage’s pain is external. Management has made some poor decisions, of which the big strategic mistake was a focus on Chinese internet platforms; one didn’t need a crystal ball to predict Tencent and Alibaba were in trouble with the Chinese government. That said, on pure valuation terms, firms such as Tencent are now some of the cheapest tech stocks on the planet (perhaps for a good reason).

So the rap sheet against Scottish Mortgage’s record is long and detailed; I can’t see the share price improving much this year. On paper this means I should sell my own holding, but I’m choosing to sit tight. The current portfolio is still unique – unlike many global equity funds, there’s diversification between both public and private assets, while maintaining a continuing focus on global businesses that can grow as technology disrupts more and more sectors.

Lower-risk alternatives

If you think the driving forces around technology and disruption are set to reverse, Scottish Mortgage is not for you. However, if you think otherwise, the situation calls for patience. I would argue that, as we face a more inflationary world, with more on-shoring of production and tighter supply chains, large-cap businesses with intellectual property assets and an ability to pass on extra costs to consumers will continue to thrive. In other words, the tech-enabled global brand platforms are precisely the businesses that might flourish in this new world.

Still, if you are yet to invest, perhaps you should wait for the discount to push out to 20%. Meanwhile, invest in a fund that actively benefits from market volatility, such as BH Macro (LSE: BHMU) or the Ruffer Investment Company (LSE: RICA), and move back into Scottish Mortgage once the mood shifts. If the fund’s focus on private, unlisted firms and its Chinese exposure still feels troubling, look at sister fund Edinburgh Worldwide (LSE: EWI), which has a more explicit mid- to small-cap tech and healthcare focus and is currently trading at a 13% discount to NAV.

Tech stocks have had a rough start to the year. The tech-heavy S&P 500 is down 13.5% since January and the Nasdaq Composite is down 23%. In the UK there have been some notable outliers, chief among them two London-listed digital infrastructure funds: Cordiant (LSE: CORD) and Digital 9 (LSE: DGI9). In the year to date, Cordiant’s share price on the London market is down just 5.3% (up 4.8% over the last year), while Digital 9’s share price is actually up around 1%. These two funds’ closest peers, established US players American Tower and Crown Castle, have both suffered much bigger losses so far this year, down 12% and 9% respectively.

Both UK funds have delivered positive results. Cordiant announced a net asset value (NAV) of 106.34p per share (compared to 101.6p per share on 30 September 2021), equating to NAV and shareholder total returns over the period of 10% and 10.3% respectively, ahead of its target return of 9% per year. Digital 9’s numbers have also been impressive.

But dig around, as many fund analysts have done, and you find a more interesting observation. These two UK funds have been canny buyers of private-market digital-infrastructural assets at good prices. For example, Cordiant acquired CRA, an operator of national digital networks in the Czech Republic which runs mobile phone towers, data centres and fibre optic networks, plus a national wireless network working alongside utilities. Digital 9 acquired a seed portfolio of undersea fibre optic cables that were upvalued in the listed portfolio shortly after listing.

Fund analysts at Liberum reckon that digital infrastructure is the fastest growing sector within infrastructure, with a forecast annual capital expenditure requirement of $600bn to 2035, surpassed only by roads and power. The volume of data created globally is forecast to increase by 23% annually to 181 zettabytes (close to 3.6 times the pre-pandemic level). Unsurprisingly, money is flooding into the sector.

A more daring option

Investing in mobile phone towers, data centres and fibre optic networks could provide steady cash flows. The assets have long lives, inflation-linked revenue streams and (especially in the case of Digital 9) first-tier global tech customers. Earnings before interest, tax, depreciation and amortisation (Ebitda) margins are typically in the 45% to 60% range and contracts are usually long term.

I’m currently invested in both Digital 9 and Cordiant but if the digital infrastructure theme really interests you, I’d suggest looking at a more adventurous option which has by contrast had a terrible start to the year. Helios Towers (LSE: HTWS) is a £1bn UK-listed operator of mobile-phone towers and base stations, mostly in Africa. Its shares are down by 30% in the year to date. Digital 9 and Cordiant have stuck to fairly boring Western assets, but Helios has focused on growth markets in Africa where mobile phone usage is shooting up. It has over 14,000 sites dotted throughout the continent and key customers include well known businesses such as Airtel and Vodafone.

Helios is heavily investing to build a trans-continental network of towers that it lets to mobile-phone firms, with $373m in capital expenditure last year. It could be a very profitable business: in 2021 it produced revenues of $449m, Ebitda of $241m and free cash flow of $168m. Analysts expect revenues of $690m by 2023 and Ebitda of $367m, though capital expenditure is still heavy.

Investors may also be wary of its heavy debt. Despite sitting on $529m in cash , it has gross debt of $1.4bn. If we are entering a global recession, that could scare off investors worried about increasing interest payments just as revenues could decrease. But if Helios can navigate these challenges its network of towers could be hugely valuable as African growth rates pick up again.

Oil prices have risen sharply since the outbreak of the conflict in Iran, and the chances are that you’ve felt the consequences in your portfolio as well as at the pump. But some investments can offer at least a measure of protection against higher oil prices.

Brent Crude oil futures have closed above $90 every day since 11 March, with the conflict in Iran having effectively closed the Strait of Hormuz – a critical shipping lane through which around 20% of the world’s oil passes.

“The huge disruption to oil and natural gas supplies in the Middle East over the past three months has materially tightened energy markets near-term,” said Mark Hume, co-manager of BlackRock Energy and Resources Income Trust. “The impact on liquified natural gas exports, primarily to Asia, has been even more pronounced.”

When oil prices rise, some of your other investments are likely to fall.

Given most of the world’s industry relies on oil and gas as inputs, higher oil prices have caused chaos in most stock markets and economies.

But high oil prices aren’t bad news for everyone. Some companies – such as oil and energy suppliers – could profit from higher oil prices.

British oil major BP (LON:BP.), for example, reported on 28 April that its underlying replacement cost profit (a measure commonly used by oil and gas companies that factors out inventory gains and losses) more than doubled to $3.2 billion in the year to Q1 2026.

BP’s profit jump was boosted by higher prices, according to Mark Crouch, market analyst at investment platform eToro.

“In many respects, BP has both absorbed and benefited from the same geopolitical tensions, with volatility once again proving a tailwind for an integrated major,” said Crouch.

Its success saw BP make the list of the most popular stocks among DIY investors using Interactive Investor’s platform during May.

How else can you profit from oil and energy price rises, and compensate for all the increased cost that rising energy bills and petrol prices bring?

The risks of investing in oil

Before going into how to invest in oil and energy you should remember that, as recent events have proven, oil prices are highly volatile.

“Investing [in oil and energy] via an exchange-traded product (ETF) that aims to follow the price can risk being whipsawed,” said Rob Morgan, chief investment analyst at Charles Stanley Direct.

Morgan also cautioned that many investors might already have reasonable oil exposure within their portfolios, if (for example) they hold assets tracking the FTSE 100 which includes several oil majors like Shell (LON:SHEL) and BP.

“It is important to avoid unwittingly doubling up on exposure,” said Morgan.

How to invest for higher oil prices

That said, it could make sense, depending on where else you are invested, to allocate a small part of your portfolio to focused oil investments in order to shield yourself from price shocks and the consequent inflation.

“Energy equities can protect a portfolio in certain inflationary scenarios but can also underperform for long stretches when the commodity cycle turns or policy shifts,” said Morgan. “This is why they should generally only be held in small quantities, for instance up to 5%.”

As well as holding oil price-friendly assets, it is also important to remain diversified.

“Diversification and explicit geopolitical hedges remain essential,” said Daniel Casali, chief investment strategist at wealth manager Evelyn Partners. “These include gold, hedge funds, inflation‑linked bonds, short‑duration sovereign bonds and energy equities.”

If you feel your portfolio could do with a barrel or two of extra oil price exposure, then there are several ways you can add it:

• Oil and energy stocks like Shell, BP or Harbour Energy (LON:HBR). These stocks gained 5.8%,19.8% and 12.5% respectively between 27 February and 27 April.
• Funds or ETFs that invest in oil and energy companies, offering diversified exposure to stocks like these. Some examples are the SPDR MSCI Europe Energy UCITS ETF (LON:ENGE), which tracks large- and medium-cap energy companies in Europe, and the iShares Oil and Gas Production UCITS ETF (LON:SPOG), which has a broader international footprint (nearly three quarters of holdings are based in the US and Canada, with most of the rest hailing from Australia, Japan and Norway).
• An exchange-traded commodity (ETC) can act as a simple way to track the oil price. One example is WisdomTree WTI Crude Oil (LON:CRUP), which offers investors total return exposure to WTI Crude Oil futures contracts.

Additionally, several investment trusts offer exposure to oil and energy companies. These include:

^{Source: theaic.co.uk / Morningstar (as at 21/05/2026 based on latest available published portfolio weights).}

The second half of 2022 is approaching. Six months isn’t much of a time horizon, even for a relatively short-term trader. But as I have a new batch of Aim stocks for you to consider today, let’s check in with my picks from the start of the year (‘Four speculative Aim shares for 2022’, 7 January 2022) to see if the theses still hold.

React (LSE: REAT): 1.15p – HOLD

My first pick was cleaning services firm React Group at 1.4p. Small caps can be volatile, with the stock trading above 2p only to close as low as at 1.10p recently. The company raised its market capitalisation in cash for the acquisition of LaddersFree – a capital-light business that the board believes can be integrated into React’s offering then scaled up. Shareholders may be smarting from this, but the board believes this is an incredible opportunity given LaddersFree’s service partner network and its impressive gross margins of more than 50% in the last two trading years.

Chair Mark Braund believes this can even grow – LaddersFree recently won a competitive tender which apparently came in “significantly below” the price of the next competitor. The deal is materially earnings-enhancing and none of the board are taking large six-figure salaries from the company (unlike many Aim shares), instead aiming to be remunerated through their options. Put simply, there is no reason to do this deal unless the board believes in the long term. So while there may be short-term pain, the investment thesis hasn’t changed.

Shoe Zone (LSE: SHOE): 160p – HOLD

This shoe retailer, which is very much bucking the “high street is dead” narrative, was my second pick at 110p, and it has already delivered a return of more than 45%. It’s also reinstated the interim dividend, which is not something management would do unless it was sure it could continue. I believe there’s more to come – if anything the investment thesis is now even stronger.

Iofina (LSE: IOF): 21.5p – SELL

My third pick was iodine producer Iofina at 18p. The stock has risen slightly but I’ve chosen to sell. The company is benefiting from a rising iodine price ($40 in October – now more than $60). Construction of its IO#9 plant was ‘in negotiations’ in the interim results in September 2021 and still in negotiations in December 2021 with the company expecting to “finalise an agreement in early Q1 2022”, and “close to finalising an agreement” in April 2022. Management has repeatedly failed to deliver, with zero acknowledgement of previous goals, nor any reason as to why Q1 turned into Q2 which will likely now turn into Q3.

Operationally, the company continues to trade in line with expectations and looks cheap, but this lack of communication, coupled with a hard-to-research commodity market, means I have chosen to sell due to my lack of trust and lack of understanding. I suspect it will perform well should the iodine market tighten. Iofina has been transformed from the debt-ridden business it was a few years ago, but it’s not for me.

Yellow Cake (LSE: YCA): 372.5p – HOLD

My final pick was Yellow Cake at 340p. It has traded as high as 485p but is currently around 372.5p. Uranium is starting to gain traction, with prime minister Boris Johnson pledging to move the UK towards nuclear power. Uranium miner Cameco noted in a recent earnings call that contracting in the first quarter was already above the 2021 total – a sign that utilities are now looking to lock in agreements. Yellow Cake is a pure play on uranium – with the investment case looking stronger, I remain a holder.

Another four Aim stocks for the second half of 2022

It just shows that even a mere six months can offer investors a wild ride in terms of volatility. This can even create opportunities – if you sold Yellow Cake at 480p you could now buy back the same shares at a discount of more than £1 – a nice turn! But it’s also a valuable reminder that share price fluctuations do not always reflect a great deal about the underlying business. The key is to do your own research and manage risk. Here are four more shares where I feel the potential upside is greater than the downside.

Digitalbox (LSE: DBOX): 9.25p

Digitalbox produces and publishes online content. It owns several publishers including Entertainment Daily, The Daily Mash, and The Tab. Its goal is to buy publishers that have great content but are struggling to monetise effectively. It has so far struggled to set the market alight, although in fairness 2020 saw ad revenue decline before starting to pick up by the end of the year. The company bought The Tab and is now seeing a return on investment, having integrated the business into Digitalbox’s proprietary Graphene platform. Digitalbox saw its first net profit in 2021 and is cash-flow positive. It bought TVguide.co.uk last month, which will immediately enhance earnings. This fits its model of buying smaller businesses then growing both the content quality and ad inventory. It’s a similar business mode to Future (MoneyWeek’s owner) but with one key differentiator: Digitalbox is primarily focused on mobile inventory.

At 9.25p the shares trade on a forecast price/earnings ratio of less than 12 but the real risk is heavy dilution should the board raise at a steep discount. That said, I’m comfortable with this risk and believe the board is aligned with shareholders. If the business keeps executing then this could be a much bigger and more profitable business.

Northbridge Industrial (LSE: NBI): 193p

Specialist industrial equipment group Northbridge Industrial Services has sold its Tasman drilling division and is now solely focused on Crestchic loadbanks (electrical testing equipment). To reflect this new strategy, the company will be changing its name (assuming the resolution is approved at its AGM) to Crestchic with the EPIC code LSE: LOAD.

Crestchic is a global business, and management believes it can be scaled up. Northbridge has completed a new loadbank production facility that will increase production capacity by 60% to meet strong levels of customer demand as well as future-proofing the business. Crestchic currently has 10% market share of the global power reliability market and the goal is to grow further in this expanding market.

The directors have been strong buyers of stock here, with Nicholas Mills, a non-executive, owning more than 24% of the stock. This is a turnaround play – the business has sold an unwanted unit and has a clear focus on growing production and capturing market share. The stock currently trades on a p/e of 15, so while it’s not cheap, the valuation is reasonable for a company now on a growth trajectory.

PCI-PAL (LSE: PCIP): 66p

PCI-PAL is a solution provider for card-not-present (CNP) transactions. PCI-PAL solves the problem of the secure handling and storage of customer data for contact centres, which are increasingly becoming omnichannel. GDPR is a problem for clients because breaches and customer data misuse can carry huge reputational and financial penalties. Companies can instead outsource this risk to PCI-PAL and get on with focusing on their core business.

This makes PCI-PAL one of the most exciting companies on the London market because of the sheer size of its potential market. Last year, it raised £5.5m at 95p to accelerate growth. This pushed losses out even further, but the board believes that going after growth is the best strategy. Annual recurring revenue (ARR) has now gone above £10m, and customer churn rates are below 3% – in other words, once customers have signed up to the service, they are reluctant to leave. Not only that, but customers add users once signed up, which gives PCI-PAL net revenue retention of 118% as of the recent trading update.

The elephant in the room here is that the company is currently the subject of a lawsuit from one of its main rivals, Semafone. The directors believe it is unfounded, and have also gone on the attack with counterclaims against Semafone. Many investors would consider PCI-PAL uninvestable due to this legal risk. This is sensible. That said, I am long as the company’s growth is increasing and I believe a settlement will be reached.

Aura Energy (LSE: AURA): 11p

Aura Energy is a uranium exploration company which owns the Tiris asset in Mauritania. It’s a leveraged play on the uranium trade and is aiming to become a producer early in this cycle in 2024. The company raised A$8.8m (£5.1m) at a price of A$0.25 per share in Australia (which was around 14p per share in London – the share is dual-listed).

This placing was heavily oversubscribed yet the shares can now be bought at 11p in the market, despite nothing changing. The funds have been raised to complete extra drilling at Tiris to expand the resource and fund the start of engineering, working towards a decision to proceed in Q2 2022.

So far Tiris has around 56 million pounds of uranium with a cut-off grade of 100 g/t. It also benefits from shallow, flat-lying surface mineralisation (a depth of one to five metres). This means that no drilling and blasting, or crushing or grinding is required. Every dollar increase in the uranium price trickles down to the bottom line, because Tiris has an all-in sustaining cost of $29.81 a pound.

Aura is a pre-producer and so carries even more risk than your average mining stock. There is no revenue and it is reliant on external funding. If Tiris becomes a producing mine, financing will come easily. But we also have to remember that many junior mining companies list with the goal of achieving production but few ever achieve it.

Michael Taylor is long on REAT, SHOE, YCA, DBOX, NBI, PCIP, and AURA. For more market insights get Michael’s free Buy The Breakout weekly newsletter at shiftingshares.com/newsletter

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The UK mid-cap equity market is filled with cutting-edge companies and exciting investment opportunities, many of which are more exposed to future growth drivers than larger companies in the FTSE 100.

However, the past few years have been a mixed bag for mid-cap stocks, with market uncertainty affecting domestically focused stocks particularly hard. Recent supply constraints have also led to a surge in inflation, which will no doubt remain a key focus for markets. Nevertheless, long-term performance has been healthy. Today, there is recognition that mid-cap UK companies are substantially undervalued, which could offer an attractive buying opportunity.

Watches of Switzerland – inflation-hedging through luxury retail

Despite a decline in overseas sales during the pandemic, luxury retailer Watches of Switzerland (LSE: WOSG) ended 2021 as one of the biggest risers in the FTSE 250, having gained almost 140% and trading more than four times its 2019 offer price. Consensus forecasts are for revenue in the coming 12 months to be more than double its pre-pandemic peak and earnings to increase almost four-fold. This is bolstered by the brand’s inflation-proofing potential – luxury watches are durable assets with higher demand than supply, and retailers can pass on cost pressures to their largely price-insensitive base of customers.

The retailer’s long-term growth prospects also look attractive. Sales of luxury watches in the US are 40% lower per capita than in the UK, providing Watches of Switzerland with a potential growth opportunity. The company has also just made its first foray into the $14bn European luxury watch market, thanks in part to its strong relationships with suppliers.

Dunelm – a cash-rich homeware champion

Dunelm (LSE: DNLM) is a leading homewares retailer with a long-standing reputation for offering high quality products at a reasonable price. It has consistently grown sales, predominantly through market-share gains. The company is differentiated by its scale, expertise and a supplier network that has been built up over many years. The refresh of its web platform in 2019 further enhanced its customer service offering and enabled it to produce excellent results during the pandemic.

The company is continuing to take market share across its multichannel offering while also expanding into adjacent categories, such as furniture. This, along with a store rollout programme, should enable it to continue growing the topline for many years to come. Dunelm has a net cash balance sheet and strong cash generation. This has resulted in two special dividends to shareholders within the last year alone – a trend we expect to continue.

Alpha FX – setting higher standards in FX

Alpha FX (Aim: AFX) provides foreign exchange services to corporate clients who are undertaking cross-border transactions with customers or suppliers. These services have seen increasing demand as the global economy has become more integrated in recent decades.

Alpha FX has a technology- and customer service-led approach in what has historically been a poorly-served sector, which has helped grow its client base ten-fold and revenue per client five-fold in the last ten years. Clients are supporting it in setting-up across the globe, which should continue to drive revenue growth. Its results have consistently beaten market expectations since it floated in 2017.

Insurance giant Aviva (LSE: AV) is flush with cash and it doesn’t look as if management is planning to hold on to this money for long.

Only months after returning £4.75bn to shareholders by way of a share buyback, the group is now planning further investor returns. In its first half results, Aviva said its Solvency II ratio - a measure of insurer liquidity against the minimum required by regulators - had reached 213%, significantly above both what management and regulators require.

Indeed, the company has previously said that it would consider returning excess capital if there were no better case for reinvesting the cash if its solvency ratio exceeds 180%.

Although Aviva has yet to say how much more cash investors are set to receive, analysts at investment bank Citi reckon it could return £250m to £300m quite comfortably. That’s without taking into account the group’s current dividend yield.

The stock currently supports a forward dividend yield of 6.9%, (based on the firm’s 2022 dividend guidance of 31p per share) making it one of the highest yielding shares in the FTSE 100. It also appears relatively inexpensive. Aviva is trading at a forward price/earnings (p/e) multiple of around 9.6.

Still, there’s more to investing than just picking the stocks that look cheap with high yields. If it were that easy, we’d all be rich. It’s not enough to know that a stock is cheap, we need to understand why.

The Aviva share price looks cheap, but is it really a bargain?

Aviva is a complex business to understand. At its core, it is a life insurance and long-term savings (pensions) provider, but it also offers non-life insurance products, wealth management services and has a “closed book” of legacy policies.

The company has been working to streamline its operations over the past few years, divesting £8bn of non-core operating units. Most of the proceeds have been returned to investors, although a chunk has also been used to reduce debt.

While these asset sales have helped simplify the operation, Aviva remains a lumbering beast with mixed growth prospects. That seems to be why the market is in no rush to buy the stock. Yes, the company is returning a lot of cash to shareholders, but life and non-life insurance has always, and will continue to be, a slow and steady business.

It’s also incredibly challenging to analyse how a life insurer and long-term savings provider will perform in the long run. Products sold today will be redeemed at some point in the future, and they require fastidious calculations to ensure a profit. Even a slight change in interest rates can have a big impact on these figures.

Aviva is trying to break away from this template by growing its non-life insurance and wealth management arms. Non-life insurance or short-tail insurance has a much shorter (as the name suggests) lifespan. Policies are typically renewed every year, generating a more predictable and quicker income stream for the business. There’s also more scope to adjust prices quickly to reflect changing market conditions.

This is a bright spot for the firm. In the first quarter of 2022 the group’s general insurance business reported its best sales in a decade as “people were attracted to the strength of the Aviva brand and the quality of our products.” In the first half of the year overall, general insurance premiums rose 6%.

Unfortunately, wealth management is proving to be a harder nut to crack, although the group is making some progress. Net investment inflows for Aviva Investors turned positive in the second quarter, reversing losses in the first. While these figures might not be that impressive, asset managers usually suffer outflows in periods of market volatility, so from that perspective, the fact that Aviva is treading water is a small positive.

Management believes wealth management will be a key area of growth in the coming years as rising numbers of retirees search for better ways to invest their money. To that end, Aviva recently decided to acquire Succession Wealth for £385m and it is looking for other deals (the company certainly has the resources to buy more assets and customers).

Aviva’s strong brand lends itself to this strategy; the cost of doing business for wealth managers is becoming prohibitive due to the regulatory burden and the rising price of liability insurance. With costs rising, many managers are pulling out of the market, but there’s a growing demand from customers for these services. This is where the firm can create value. It has the size and scale to deal with rising costs, and its brand is well trusted among savers.

A dividend play with limited growth prospects

In my view, the investment case for Aviva is all about the company’s dividend. Its portfolio of financial services generates a steady stream of cash, which management can return to investors. And as we’re seeing, as the businesses continue to grow they’re throwing off more cash, which may only lead to improved shareholder returns.

Still, I don’t think there’s any getting around the fact that Aviva’s portfolio of businesses are slow growers. Due to the nature of these markets it seems unlikely they’re going to be able to chalk up double-digit growth rates year after year. Management might be able to juice growth with acquisitions, cost cutting and share buybacks, but investors looking for capital growth rather than income might be disappointed. I think this is why the stock appears cheap - investors and analysts are struggling to digest Aviva’s growth prospects.

As such, while Aviva looks to me to be a solid income stock to tuck away and forget about, I think it should be owned as part of a more diversified portfolio.

The UK mid-cap equity market is filled with cutting-edge companies and exciting investment opportunities, many of which are more exposed to future growth drivers than larger companies in the FTSE 100.

However, the past few years have been a mixed bag for mid-caps, with market uncertainty affecting domestically focused stocks particularly hard. Recent supply constraints have also led to a surge in inflation, which will no doubt remain a key focus for markets. Nevertheless, long-term performance has been healthy. Today, there is recognition that mid-cap UK companies are substantially undervalued, which could offer an attractive buying opportunity.

Inflation-hedging through luxury retail

Despite a decline in overseas sales during the pandemic, luxury retailer Watches of Switzerland (LSE: WOSG) ended 2021 as one of the biggest risers in the FTSE 250, having gained almost 140% and trading more than four times its 2019 offer price. Consensus forecasts are for revenue in the coming 12 months to be more than double its pre-pandemic peak and earnings to increase almost four-fold. This is bolstered by the brand’s inflation-proofing potential. Luxury watches are durable assets with higher demand than supply, and retailers can pass on cost pressures to their largely price-insensitive base of customers.

The retailer’s long-term growth prospects also look attractive. Sales of luxury watches in the US are 40% lower per capita than in the UK, providing Watches of Switzerland with a potential growth opportunity. The company has also just made its first foray into the $14bn European luxury watch market, thanks in part to its strong relationships with suppliers.

A cash-rich homeware champion

Dunelm (LSE: DNLM) is a leading homewares retailer with a long-standing reputation for offering high quality products at a reasonable price. It has consistently grown sales, predominantly through market-share gains. The company is differentiated by its scale, expertise and a supplier network that has been built up over many years. The refresh of its web platform in 2019 further enhanced its customer service offering and enabled it to produce excellent results during the pandemic.

The company is continuing to take market share across its multichannel offering while also expanding into adjacent categories, such as furniture. This, along with a store rollout programme, should enable it to continue growing the topline for many years to come. Dunelm has a net cash balance sheet and strong cash generation. This has resulted in two special dividends to shareholders within the last year alone – a trend we expect to continue.

Setting higher standards in FX

Alpha FX (Aim: AFX) provides foreign exchange services to corporate clients who are undertaking cross-border transactions with customers or suppliers. These services have seen increasing demand as the global economy has become more integrated in recent decades. Alpha FX has a technology- and customer service-led approach in what has historically been a poorly-served sector, which has helped grow its client base ten-fold and revenue per client five-fold in the last ten years. Clients are supporting it in setting-up across the globe, which should continue to drive revenue growth. Its results have consistently beaten market expectations since it floated in 2017.

When shareholder activists target financial firms, history is not encouraging. In 2005, there was an activist campaign to prevent Deutsche Boerse from buying the London Stock Exchange.

Werner Seifert, the chief executive of the German exchange, lost his job and Rolf Breuer, chairman of the supervisory board, later resigned.

Yet the Deutsche Boerse management could see value where the activists who disliked the deal could not. London Stock Exchange has increased in value by 16 times since the public spat.

Then there was Knight Vinke’s activist campaign against HSBC during the 2007-2009 financial crisis, encouraging the bank to take more risk at precisely the wrong point in the credit cycle.

More recently, hedge fund Elliott Management’s six-year fight with Bank of East Asia in Hong Kong and Edward Bramson’s three-year battle with Barclays both ended in failure.

I think the reason for those activist failures is that financial companies tend to be run by dull, unimaginative finance types who try to create shareholder value by doing finance-type things: improve margins, cut costs and announce share buybacks. Any activist who buys the shares in a financial company is fighting an uphill battle, because management are already trying to do the obvious and it hasn’t been working.

A declining market

Now an activist hedge fund called Phase 2 has taken a stake in TP Icap (LSE: TCAP), the interdealer broker (IDB) formed from the all-share merger between Tullett Prebon and Icap in 2016. The shares jumped by 11% in response at the end of March.

Interdealer broking has been in a secular decline since after the financial crisis. IDBs match buyers and sellers (normally bank A versus bank B) without revealing the identity of either and take a small cut of the transaction. As the transaction sizes are large and complex, the counterparties prefer to arrange deals over the phone (known as “voice broking”) rather than type orders into a computer.

The brokers then spend the evenings drinking and sharing “market colour” in the pub, where there are no recorded phone lines or legal and compliance staff. This approach often means banks A and B both receive a better price than if they knew the counterparties that they were dealing with. But it’s easy to see why regulators might dislike the opacity of the “over the counter” (OTC) trades that are not centrally cleared, and resent the alcohol-lubricated unrecorded pub banter. Traders at IDBs were key “enablers” of the Libor rigging scandal.

Thus regulators have been keen to move business away from IDBs to more standardised financial products trading on exchanges with central clearing. Until March, that is, when the drawbacks of exchange-traded contracts have become more obvious.

Saved by the LME

Last month, the London Metal Exchange (LME) – the largest market for industrial metals – suspended trading in nickel for a week and cancelled $3.9bn of trades after Tsingshan, a Chinese steel and nickel firm controlled by billionaire Xiang Guangda, was caught in a short squeeze trying to hedge its nickel production.

The problem seems to have been something that IDBs have warned about: many OTC trades can’t transfer to exchanges because they’re impossible to standardise.

Tsingshan mined nickel, but was shorting the standardised nickel contracts that traded on the LME. Tsingshan’s own nickel output was not in a form that could be settled on the LME.

So a firm that should have benefited from the rising nickel price when Russia invaded Ukraine was instead receiving margin calls and was at risk of failure. That is clearly not ideal. One possibility is that regulators may now accept that the voice broking and OTC trades that TP Icap arranges have a place in the financial system.cial system.

Scottish Mortgage investment trust (LSE: SMT) (one of the components of the MoneyWeek investment trust portfolio) continued to trade at a discount to its net asset value (NAV, otherwise known as the value of the underlying portfolio) in March this year.

But the discount marginally narrowed from 0.7% to 0.5%, suggesting that the trend of a widening discount could be turning. The trust typically trades at a premium to its NAV, but its share price declined every month from November to February.

Despite the narrowing of the discount, the trust’s share price has continued to tumble in recent days as investors ditched growth stocks in favour of value stocks.

Tech stocks, which have come under pressure from rising interest rates and a more hawkish stance from central banks, form a core part of the trust’s holdings.

SMT’s holdings are risky

As the trust has shed around 30% in the six months, investors may consider the stock to be cheap. But James Fox in the Motley Fool still urges investors to exercise caution and “reconsider the valuation of Scottish Mortgage”.

Some of the holdings in the trust are overvalued, says Fox. The value of Moderna, one of the leading vaccine producers during the pandemic, is uncertain as its profits are predicted to fall from $12bn in 2021 to just $2bn in 2024 once the demand for Covid-19 jabs is expected to dissipate.

He also cast doubt on the value of other stocks that feature heavily in the trust such as electric car manufacturer Tesla, which hit a valuation of $1trn at the end of last year, and Chinese tech firm Tencent.

“Tencent also represents a major holding and the Chinese firm has reported falling revenue growth in recent years,” Fox says.

But there is no denying the trust has had a very impressive record so far. SMT rose by around 638% in the last ten years compared to just 232% for the FTSE All-World Index, the trust’s benchmark index.

A glance at SMT’s top ten holdings

Moderna remained the company’s biggest holding, increasing from 6.3 to 7.1%.

Tesla moved from fourth to second place, accounting for 6.6%.

French luxury company Kering dropped from eighth place to ninth place, representing 2.4% of the trust. The trust retained all holdings in its trust in March that it had the month before.

Biotech company Illumina dropped from third to fourth position, while American multinational technology firms Nvidia and Amazon retained their sixth and seventh spots, respectively.

Chinese shopping platform company Meituan dropped from ninth place to tenth place, accounting for 2.3% of the fund. This represents a 0.2% fall compared to February levels.

The UK’s financial regulator, the Financial Conduct Authority (FCA), has made some important changes to its listing rules, in an attempt to reverse the long-term decline of the London Stock Exchange (LSE) as an attractive place for growing businesses to float.

First, earlier this month the FCA eased the rules on dual-class share-listings. Dual-class shares mean that some classes of shareholders get greater voting rights than others: notable examples of firms with this structure include Alphabet (Google) and Facebook, as well as many other tech firms. This is controversial in the UK because it violates the City’s long tradition of “one share, one vote”, which is seen as important for corporate governance. But they are popular with business owners looking to raise capital by floating, and are permitted by London’s international rivals.

Second, the FCA has also decreased the proportion of its shares that a firm must make available to the public in order to list in London, from 25% to 10%.

What do the changes mean?

Dual-class shares will now be allowed in the premium segment of the London market. That means that their shares can be included in the main FTSE indices – notably the FTSE 100 and FTSE 250 – which is in turn significant because it means that passive tracker funds will buy their shares, broadening their investor base and increasing liquidity.

The idea is to make it more attractive for the founders of innovative companies to bring their businesses to the market – letting them raise capital and providing an opportunity to UK investors – while also allowing them to keep more control of their businesses and giving them more protection against the threat of hostile takeovers that comes with going public.

Who stands to benefit?

Three distinct groups may gain, said The Economist. First, investors in UK shares, because firms with dual-class shares tend to generate higher returns (an analysis of North American companies between 2007 and 2017 found that dual-class stocks outperformed those with equal voting rights by 4.5% a year – although this may be because many are in the tech sector, which has done very well).

Second, firms with dual class shares that have listed on the LSE’s standard segment in recent years – such as Deliveroo, Oxford Nanopore and Wise – can now get a premium listing.

Third, the overall UK market may benefit from increased global attention if this entices more high-growth, founder-led tech companies to list in the City instead of choosing the US or other rival markets.

What’s the reaction?

Not everyone approves of this idea. For example, Richard Buxton of Jupiter Asset Management reckons it will “reduce investor protection and sow the seeds of scandal and losses”.

But the FCA (and the government, who pushed the review that led to the relaxation) is extremely keen for London to level the playing field with other exchanges that already have dual listings (Amsterdam, Singapore, Hong Kong, the US) and arrest London’s decline.

What’s the scale of that decline?

Over the past 15 years, the LSE’s share of all initial public offerings (IPOs) globally has slumped from 20% to 4%, and since a peak in 2007 the number of companies listed on it has fallen by two-fifths. The total market capitalisation of the 1,964 companies that remain adds up to less than just five US tech giants – Google, Apple, Amazon, Facebook and Microsoft.

Astonishingly, the daily trading on Wall Street in just one stock, Tesla, is worth more than three times the trades on the entire LSE, said Larry Elliott in The Guardian. That’s why the FCA’s relaxation of the rules is so welcome, he argues. It could help persuade fast-growing tech firms looking to list in Europe to choose London, rather than the increasingly favoured Amsterdam exchange. This year the Dutch capital – the world’s oldest stock exchange – overtook London in terms of the average daily value of the shares traded.

What’s a more optimistic take?

The fashionable “self-denigration” of London is being overdone, said Ben Wright in The Daily Telegraph. First, a good part of the LSE’s decline since the mid-2000s is down to the “massive tech boom (bubble?) in the US” and the rise of the Asian economies, especially China. There’s not much anyone could do about that.

Second, the high-water mark for London listings was 2007, when the market was pumped up, pre-financial crisis, with a “flood of bilge”. In truth, the LSE still “punches above its weight” – and the first half of this year saw a giant 467% surge in new IPOs. In the year as a whole (to 4 November), the value of IPOs was $20bn (according to Dealogic) – not far off the total for the previous three years combined.

Meanwhile the huge currency volatility associated with Brexit has settled down, and JPMorgan recently turned bullish on UK equities for the first time since the referendum.

What are the UK market’s prospects?

MoneyWeek has been arguing for some time that the unloved UK stockmarket is a buying opportunity – particularly when it comes to value stocks in a period of higher inflation. Few other indices are as top-heavy with leading oil and mining finance stocks as the FTSE, with six of the world’s biggest, said Jeremy Warner in The Daily Telegraph.

Environmental, social and governance (ESG) concerns have made such stocks unfashionable, but the irony is that transitioning to green energy will require vastly bigger quantities of metals, including copper, nickel, cobalt and lithium. We will need the UK-listed “ageing corporate dinosaurs” – the likes of Glencore, BHP, Anglo American and Rio Tinto – “more than ever if the energy transition required to meet net zero targets is ever to be achieved”.

So don’t write the FTSE off: it “may be about to come back into its own, dragging the wider City with it as a go-to source of green energy fina

Interdealer brokers make up one of the less glamorous subsectors of financial services; you will rarely see them appear in the news. They provide the electronic infrastructure to allow big financial institutions to trade with each other in cases where there is no centralised exchange, such as a stockmarket.

This usually means bonds or complex products, such as financial swaps and some commodities (notably energy). One such broker is TP ICAP (LSE: TCAP), which has seen it shares fall by nearly 50% over the past year thanks to a dividend cut, the fall in trading volumes induced by the pandemic and the disruption caused by the UK leaving the EU’s single market.

TP ICAP had hoped that the UK would agree a deal with the EU that would allow it to keep serving EU clients, possibly in the legal context of “equivalence” (a rule meaning the UK could gain limited access to EU markets as long as its regulation was deemed equivalent).

The broker’s back-up plan was to get around the rules by relocating some of its staff to a hub in Paris. However, it looks as though a deal between the UK and EU on financial services is unlikely, while restrictions on travel between the two countries have caused the reopening of the Paris office to be delayed.

New revenue streams

Nevertheless, TP ICAP still managed to increase its revenues in 2020 and is expected to keep growing sales over the next few years. Profits are also expected to return to pre-pandemic levels by 2022. TP ICAP is also developing a number of interesting projects to diversify its revenue streams.

Chief among them is a platform, launched earlier this year, allowing institutions to trade cryptocurrencies such as bitcoin and ether. While digital currencies may be overvalued at present, there is no doubt that they will become an important asset in the long run, especially if central banks devise their own digital currencies. Perhaps the most compelling reason for being bullish on TP ICAP, however, is its valuation. Even though its sales doubled between 2016 and 2020 and are expected to keep expanding by around 7% a year over the next few years, the stock still only trades at 6.8 times 2022 earnings.

It is also on a discount of around 7% to its book value. Finally, the company has started to rebuild its dividend, giving it a very generous yield of 7%, which should be covered by earnings.

I recommend that you go long on TP ICAP at £18 per 1p. But because the shares have fallen so much over the past year, it may be a good idea to wait until they rise above 220p so it’s clear that market sentiment has turned on the company. I would set a stop loss at 165p, which would give you a total downside of £990.

Trading techniques... beware the death cross

A few weeks ago, bitcoin crashed through the dreaded “death cross”. This is a chart formation whereby the 50-day moving average (an asset’s mean closing price over the past 50 days) falls through the 200-day moving average.

The rationale behind a death cross is that since the 50-day moving average is based on more recent price information than the 200-day one, a “death cross” indicates negative price momentum.A “golden cross”, which is generally seen as bullish, is the opposite, with the 50-day moving average climbing above the 200-day one.

There is some evidence from the stockmarket to support the idea that death crosses are a signal to sell, at least in the short run. Research by Sundial Capital Research found that between 1928 and March 2020 the S&P 500 fell by a median of 2.9% in the month after a death cross.

However, the study also notes that its power as a trading signal in the longer run is much less powerful. In the year after a death cross was formed, the median annual return was 9.7%, only slightly lower than the median return since 1928.

The evidence that golden crosses are a buy signal is similarly weak. Research by Georg Vrba of Advisor Perspectives compared a strategy of moving from the S&P 500 into US government bonds after a death cross and vice versa after a golden cross with a simple buy-and-hold strategy between March 1966 and the end of January 2020.

He found that the approach involving golden and death crosses would have returned an annual average of 9.99% compared with 9.14% for a buy-and-hold strategy. What’s more, between January 1990 and January 2020, buy and hold actually outperformed the other strategy.

How my tips have fared

The last four weeks have been mixed for my long tips, with two rising and the other three depreciating. Construction firm Morgan Sindall rose from 2,235p to 2,275p and US Housebuilder DR Horton climbed from $87.98 to $89.03.

However, media group ITV fell from 129p to 125p, cruise-ship operator Norwegian Cruise Line went down from $31 to $27.28, and spread-betting firm Plus500 declined from 1,442 to 1,407p. The impact of the losers has outweighed those of the gainers, with net profits on my long tips falling to £4,022, down from £4,405 four weeks ago.

It has been a similar story with my short tips. Electric-lorry manufacturer Nikola fell from $17.71 to $15.05 and hydrogen fuel-cell electric-vehicle maker Plug Power declined from $30.57 to $29.02. Cinema chain AMC also fell below $45 (the level at which I said you should short it), and is now at $42.61.

Bitcoin declined from $39,601 to $33,233. However, online grocer Ocado increased from 1,917p to 1,922p, cloud-computing specialist Snowflake increased from $244 to $267, while electric-car company Tesla rose from $618 to $685. Overall, my shorts are making a total net profit of £2,308, compared with £2,236 a month ago.

I now have five long tips (Morgan Sindall, DR Horton, ITV, Norwegian Cruise Line and Plus500) and seven shorts (Nikola, Plug Power, bitcoin, Ocado, Snowflake, AMC and Tesla). This is not only unwieldy, but also unbalanced. Although all my shorts (apart from Tesla) are in the black, Nikola and Ocado are the oldest, with Nikola more than a year old. So I suggest you close both, taking profits of £1,099 on Nikola and £337 on Ocado. I would also cut the point at which you cover Snowflake from $400 to $390.