Pacific Horizon Investment Trust (PHI) delivered a 65.1% NAV total return in the year to 31 July 2026, almost 30 percentage points ahead of its benchmark, as its exposure to Asian semiconductor and artificial intelligence companies paid off.
The performance represented a dramatic turnaround from the previous financial year, when PHI’s NAV return of 8.3% lagged the MSCI All Country Asia ex Japan index’s 17.1%.
This year, the benchmark returned 35.8%, while PHI’s share price produced a total return of 63.3%. The discount to NAV ended the period wider at 10.5%, compared with 9.5% a year earlier.
The largest gains came from the portfolio’s exposure to the AI infrastructure boom, particularly in South Korea and Taiwan. Samsung Electronics, SK Square and TSMC were among the largest contributors, while stock selection in China also added significantly.
SK Square was PHI’s largest individual contributor, with its shares rising 551% during the period. The company provides significant economic exposure to memory-chip producer SK Hynix and benefited from surging demand and tighter supply as investment in AI infrastructure accelerated.
Samsung Electronics gained 255%, while Chinese AI investments also generated substantial returns. Z.AI, which PHI backed at IPO, rose almost eightfold from its issue price. PHI subsequently exited both Z.AI and fellow Chinese AI company MiniMax after their valuations increased sharply.
The managers took profits from some of the strongest performers during the year, reducing SK Square by more than 5.5 percentage points and recycling capital into other AI-related businesses.
The strong year has also put PHI well ahead of the performance hurdle attached to its conditional tender offer. Between 31 March 2025 and 31 July 2026, NAV has returned 80.2%, against 53.2% from the benchmark. A tender for up to 25% of the shares will only be triggered if PHI underperforms the index over the five years to March 2030.
PHI also spent £73.6m buying back 7.8m shares during the year, equivalent to 9.1% of its opening share capital. The shares were repurchased at an average 10% discount and added an estimated 0.9% to NAV per share.
Alongside the results, the board announced a simplified management fee. From 1 August, Baillie Gifford will receive 0.65% on the first £500m of net assets and 0.50% above that level, replacing the previous three-tier structure.
PHI has also amended its investment policy in response to the increasing concentration of its benchmark. TSMC, Samsung Electronics and SK Hynix alone represented 32.5% of the index at the year end.
The maximum investment in an individual listed company will now be the greater of 15% of assets or its benchmark weighting plus 2.5 percentage points, subject to an absolute ceiling of 20%. The board said the change should prevent the previous 15% limit from forcing PHI into large underweight positions where the managers remain positive on a stock.
Shareholders will also vote on PHI’s five-yearly continuation resolution at November’s AGM. The board is unanimously recommending continuation.
Our view
QuotedData’s Richard Williams said: “A remarkable year for Pacific Horizon and a powerful demonstration of what its high-conviction growth approach can deliver when markets move in its favour. The managers’ positioning around the Asian AI supply chain was the key differentiator, with semiconductor holdings such as SK Square and Samsung producing exceptional gains. Importantly, they have been taking profits and recycling capital rather than simply allowing those winners to dominate the portfolio. The widening discount despite such strong performance is disappointing, although substantial buybacks have allowed shareholders to benefit by adding an estimated 0.9% to NAV.”
