Unlocking growth through diversification

Over the past decade, many investors have let diversification fall by the wayside, despite its key role in portfolio construction.

That’s where F&C Investment Trust could add an edge to a portfolio. With a history dating back to 1868, F&C Investment Trust is the world’s longest-running collective investment scheme. F&C’s approach aims to provide a reliable foundation for steady, long-term capital growth and healthy dividend income growth.

This means seeking investment opportunities and assets that add something different to a portfolio and complement each other. F&C’s management team, led by Paul Niven, has carefully built a portfolio exposed to key AI themes and the growth this new technology could bring, while reducing overall portfolio risk through diversification.

Driver of growth

AI has driven earnings growth and equity-market returns in 2026 and, while there are numerous risks, Paul Niven expects positive momentum to continue into 2027. F&C has exposure to this theme across the portfolio, including US and emerging-market companies.

However, AI also illustrates how a portfolio can appear geographically diversified while still being heavily exposed to one underlying investment theme. Asian semiconductor companies, US technology businesses and European semiconductor-equipment suppliers may be domiciled thousands of miles apart but can still depend on the same AI capital-investment cycle spending by US hyperscalers.¹

Indeed, investors have flocked to AI market leaders, their suppliers, and related technologies over the past few years. Developed-market equities have become heavily concentrated in the US. As of April 30 , 2026, the US. made up 72% of the MSCI World Index by market capitalisation,² suggesting most investors are heavily exposed to this region and the leading AI themes that have driven market leaders such as Nvidia and Microsoft higher over the past 12 months.

Some investors may not realise just how concentrated their portfolios may have become. The MSCI World Index is now heavily weighted to the US, and the US. weight is itself narrowly concentrated, with the information technology sector accounting for 37% of the MSCI USA Index and gaining nearly 27 percentage points of index weight since 1974.³

Diversification

F&C takes a different approach to portfolio management. Niven aims not to avoid successful themes such as AI, but to participate in them alongside a wider range of regions, investment styles and private-market opportunities. F&C holds over 400 names and at the end of September had a majority of capital in US domiciled investments, with positions in key AI names, such as Nvidia and Taiwan Semiconductor Manufacturing Company.

Niven says, “Owning lots of investments isn't the same thing as owning lots of different risks. The aim is not to miss powerful growth trends, but to ensure the portfolio has more than one way to succeed."

F&C’s strategic approach makes it a smart and simple way to add global diversification to any portfolio. Alongside the core holdings of strong, global, well-established companies, investing in F&C lets investors tap into the growth prospects of emerging markets.

The trust also has a 10% allocation to private equity opportunities, which individual investors often find harder to access on their own.

Dividend Hero

F&C’s portfolio is constructed to capture a range of growth opportunities while avoiding excessive dependence on any single market, investment style of theme. Its blend of regional and global listed-equity strategies, value and growth exposure, emerging markets and private equity is designed to provide a broader spread of return drivers.

The portfolio approach also helps underpin F&C’s trusted dividend track record. F&C is an Association of Investment Companies (AIC) dividend hero, having increased its dividend every year for 55 consecutive years.

To learn more, head to fandc.com

*There is no guarantee that dividends will continue to increase.

Disclaimer

Capital at risk.

Investment in private equity provides exposure to companies that are not publicly listed. Such investments may be less liquid, more difficult to value and carry a higher degree of risk than publicly traded investments.

Issued by Columbia Threadneedle Management Limited, No. 517895, registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority. Approved as at October 2026.

Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. The mention of any specific shares or bonds should not be taken as a recommendation to deal

Sources:

¹ MSCI, Scenario Analysis: The AI Supply Chain Under Stress, 5 August 2026.

² MSCI, Another view of concentration in developed-market equities, 16 September 2026.

³ MSCI, The changing shape of US. equities, 23 September 2026.