June

Monthly | Investment companies 

Winners and losers in May 2025

A number of sectors made good progress over May as markets continued their recovery from April’s tariff-related sell-off. Leading the charge in May was the Financials & Financial Innovation sector, where Augmentum Fintech’s discount narrowed from an overly wide level.

Technology & Technology Innovation was not far behind, underpinned by a resurgence in investor appetite for AI, semiconductors, and platform technologies. Late May strength in the Nasdaq, driven by Nvidia and Microsoft, filtered through to tech-heavy trusts like Polar Capital Technology and Manchester & London, which lean heavily into AI leaders.

Best performing sectors in May 2025 by total price return

That resurgence in the AI story benefitted power producers too (AI consumes a lot of power). The two infrastructure securities trusts outperformed benchmarks over May as they recovered somewhat from the DeepSeek-related sell-off earlier in the year.

The Country Specialist sector saw a recovery likely driven by markets such as South Korea, where structural reforms to improve shareholder returns have reignited foreign investor interest. Vietnam’s market bounced too, perhaps as Trump-family projects in the country raise the prospect of a more lenient tariff regime.

Meanwhile, UK All Companies posted healthy returns, showing a rebound in domestic equities, particularly in value-oriented and cyclically sensitive stocks. The FTSE 250, which has lagged global indices over the past year, appears to be catching up as economic data hints at a shallow landing rather than recession. Trusts exposed to smaller companies have been among the beneficiaries.

Looking at the fallers, the Biotechnology & Healthcare sector continues to face headwinds. An executive order from Trump on drug pricing unveiled on 12 May was unhelpful. There has also been a slowdown in M&A, likely related to heightened economic uncertainty. Sentiment towards long-duration, cash-burning biotech firms remains tepid. Syncona and Biotech Growth Trust have the highest exposure to these types of companies. They both saw significant drawdowns, reflecting investor concern around pipeline delays and funding runway.

All four of the other worst-performing sectors invest in property. The Property – Rest of World sector remains deeply out of favour, with the widest average discount. This is indicative of illiquidity and widespread uncertainty around the valuation of international assets. Country specific political uncertainties are also a contributing factor, with the deterioration of the already poor Cuba and US relationship affecting Ceiba Investments’ returns, for example.

Of the others, the share price falls were negligible, with Property – UK Commercial actually eking out a small share price gain.

Worst performing sectors in May 2025 by total price return

Best performing investment companies

Manchester & London enjoyed a strong month across both NAV and share price returns, helped by its highly concentrated tech exposure which aligned well with the late May rally in US large cap stocks. Polar Capital Technology and Allianz Technology also benefitted from this upswing. On the share price side, Seraphim Space led the way as a result of a growing recognition of the strategic value of space-tech assets in a defence focused world, with investors responding to both external geopolitical catalysts and internal updates around funding strength and operational traction across the portfolio.

Best performing trusts in total NAV (LHS) and share price (RHS) terms over May 2025

As investors’ appetite for risk has improved since April, HydrogenOne Capital Growth’s discount has been narrowing but it remains very wide – it was a similar story for US Solar Fund, although not quite so dramatic. Elsewhere in the renewables sector, VH Global Energy Infrastructure announced plans to pursue an asset realisation strategy and Aquila Energy Efficiency’s discount narrowed as its shareholders received a distribution in connection with its managed winddown.

There was no news of note from Augmentum Fintech, but its discount narrowed as investors’ confidence improved. The Korean market continued to recover from the tariff-related shock of April, benefitting Weiss Korea Opportunity. An election was underway over May that ultimately saw a victory by opposition leader Lee Jae Myung. Geiger Counter will have ridden on the coattails of an improving uranium price, but that has a long way to go to recover last-year’s highs. UK smaller companies funds registered impressive rebounds, including Odyssean, Aberforth Geared Value & Income, Onward Opportunities, and Rights and Issues. This suggests growing confidence in a domestic small-cap recovery. Meanwhile, Pershing Square’s NAV uplift reflects continued strength in its concentrated US portfolio. It concluded its deal with Howard Hughes Holdings during the month. Schiehallion’s share price bounce marks tentative reengagement with growth private equity strategies following major dips in recent months.

Worst performing investment companies

In terms of the worst performers, Livermore Investments is a thinly-traded and volatile stock and regularly features in these tables. The same is true of JPMorgan Emerging EMEA. It announced another delay to the Russian court case it is involved in.

Worst performing trusts in total NAV (LHS) and share price (RHS) terms over May 2025

Biotech and healthcare names were weak for the reasons highlighted above, most notably Trump’s executive order on pricing. International Biotechnology’s position in Cytokinetics was affected by an FDA delay to a new drug approval.

Indian mid-caps and China A shares sold off over May, knocking Fidelity Asian Values and Fidelity China.

abrdn Property Income has just one asset left – its forestry estate in the Cairngorms, it may be that investors are frustrated by a lack of progress in its sale.

Third Point Investors announced the result of its strategy review. Its decision to become an insurance company did not go down well with some shareholders, notably AVI, which bemoaned the lack of an exit opportunity at NAV given such a radical change of direction.

Warehouse REIT fell as Blackstone reopened negotiations on its takeover price, disputing the valuations of some assets.

SDCL Efficiency Income’s discount widened, possibly because it has more exposure to the US (and so Trump’s anti-environment policies) than many peers.

Moves in discounts and premiums

More expensive (LHS) and cheaper (RHS) relative to NAV over May 2025

Seraphim Space’s discount narrowing discount was driven by renewed interest in defence-linked tech amid rising geopolitical tensions. VH Global Energy Infrastructure’s decision to adopt a managed wind down policy helped narrow its discount. Augmentum Fintech rebounded as confidence in later stage fintech improved, Schiehallion Fund gained ground as investors reengaged with less mature private equity assets.

JPMorgan Emerging EMEA may have been knocked by the lack of progress in Russia/Ukraine peace talks as well as the ongoing court case. Majedie Investments returned to trading on a discount after a brief period of trading on a premium. That might reflect a shift in investors’ attention from defensively positioned trusts to those offering greater risk/reward. Third Point Investors’ strategic review outcome failed to inspire confidence.

Money raised and returned

Money raised (LHS) and returned (RHS) over May 2025 in £m

Capital raising in May was modest and narrowly concentrated in income focused trusts, particularly those in the Debt – Loans and Bonds sector benefitting from higher interest rates. These inflows suggest that investor attention is still skewed toward dependable yield, especially in light of central banks signalling peak interest rates and the potential for easing later in the year.

In terms of money returned, European Smaller Companies Trust concluded its 42.5% tender offer. As usual, Scottish Mortgage returned a substantial amount. Bellevue Healthcare’s outflows illustrate the problems of running a discount control mechanism in an out of favour sector.

Major news stories and QuotedData views over May 2025

Property news

QuotedData views

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Seraphim Space Investment Trust (SSIT) provides investors with focused exposure to the commercial space sector – one that is increasingly intertwined with defence. Around 78% of the trust’s portfolio has applications in defence, and key holdings such as ICEYE and ALL.SPACE are already embedded in the operational infrastructure of European and US militaries. Despite the potential of that strategic positioning, and a 130.4% uplift in the value of its private investments since launch, the trust continues to trade on a steep 47% discount to net asset value (NAV).

This valuation disconnect may not persist. Rising geopolitical tensions and renewed commitment to military spending – exemplified by the EU’s €800bn ReArm initiative and the UK’s increasing defence budget – are driving structural demand for space(enabled defence capabilities. Many of SSIT’s portfolio companies are already demonstrating strong financial resilience, with healthy cash runways (i.e. the amount of time a company can operate before needing to raise more capital) and growing commercial traction. As defence spending continues to rise and macro headwinds such as interest rates begin to ease, a re(rating of SSIT’s holdings closer to those of their peers in the broader aerospace and defence sector would be justified in our view.

Temple Bar Investment Trust (TMPL) is continuing to deliver for its shareholders. Over each of the past three years, both its NAV and share price total return have been ahead of the UK market and global equities, as well as the closest index comparator, the MSCI UK Value Index.

This marked outperformance has been achieved by the managers, Ian Lance and Nick Purves, staying true to their core investment philosophy. While this is rooted in a deep belief in value investing, more importantly it means identifying companies that have a credible path to recovery, rather than just simplistically targeting beaten(up stocks in the hope that they will eventually return to long(term average valuations. There is clear potential for this trend of outperformance to continue. Absolute valuations across the market remain low, but more importantly, Ian and Nick still see numerous opportunities to invest in individual companies.

We welcome TMPL’s adoption of a new dividend policy that reflects the increasingly important role of share buybacks in companies’ returns. TMPL’s future dividends will be enhanced to reflect a portion of the buybacks of those companies held by the trust.

The financials sector is too big to ignore, yet too complex for most investors to cover effectively. Fortunately, Polar Capital Global Financials Trust (PCFT) makes an ideal subcontract. Its attractions are amplified by its structure, which provides shareholders with regular exit opportunities (chances for investors to redeem their shares at or close to NAV), one of which is on the table now. It is a chance for institutional investors to buy stock in size too, and we think there are good reasons to do so.

The financials sector is in good shape, having had a run of good performance (outperforming the broader market in four of the last five years). Importantly, those returns have been driven by earnings growth rather than valuation multiple expansion (generating more profit rather than just trading at higher prices), which means that the sector still looks cheap relative to history and the wider market.

Uncertainty levels have increased across global markets, with Trump’s tariffs throwing up an additional source of risk. RIT Capital Partners’ (RIT’s) diversified portfolio (spread across asset classes, sectors and geographies) and stringent risk controls put it in a unique position to weather the storm. Leveraging off its manager’s investment skillset and unparalleled access to specialist fund managers, the trust’s portfolio has been constructed with the aim of performing well across market cycles.

Rising interest rates, a fixation on mega(cap AI stocks, and the election of a US administration that would rather “drill, baby, drill” than address the increasingly obvious and damaging effects of climate change have all combined to turn sentiment against the environmental sector.

However, as Impax Environmental Market’s (IEM’s) board and managers emphasise, the pressing need to address environmental issues – and the willingness of most countries (and even many US states) to do so – means that, from an economic perspective, IEM’s investment case still holds. The shift of investor focus away from the US technology sector and towards Europe is positive for the portfolio, and the companies that IEM is invested in continue to grow sales and profits, but are getting cheaper. At some point, that value will be recognised.

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Appendix 1 – median performance by sector, ranked by 2025 year to date price total return

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