Fund profile – classic value investing

You can access the trust’s website at: templebarinvestments.co.uk

TMPL aims to provide growth in income and capital to achieve a long-term total return greater than its benchmark (the FTSE All-Share Index), through investment primarily in UK securities. The company’s policy is to invest in a broad spread of securities with most holdings typically drawn from the FTSE 350. We have substituted the MSCI UK Index for the FTSE All-Share in this note.

TMPL’s AIFM is Frostrow Capital LLP, and it has delegated responsibility for portfolio management to RWC Asset Management LLC (Redwheel). Redwheel has been managing the trust since 1 November 2020. The lead managers are Nick Purves and Ian Lance (see page 16).

Looking for a disconnect between share prices and underling intrinsic value

Their investment approach is based on the principle that investors tend to overreact to news, becoming overly bullish or overly pessimistic about the prospects for companies and markets. This creates a disconnect between the intrinsic value of a company and its share price, which long-term, value-driven investors can take advantage of as sentiment swings back in their favour.

Avoiding value traps by favouring good quality companies

Care needs to be taken to avoid “value traps” – businesses which look cheap but are in structural decline. Instead, the managers target undervalued but good-quality companies (those with strong cash flows and robust balance sheets). These businesses are better able to withstand cyclical downturns and recover from short-term, company-specific issues. The approach recognises that aspects of ESG can have a profound impact on a company’s long-term success.

TMPL has given the managers the flexibility to invest up to 30% of the portfolio in overseas stocks. The chair noted in his most recent statement that the board and manager monitor the size of the investment universe, particularly as the UK market shrinks through takeovers and a lack of issuance. The board is monitoring the situation with a view, if necessary, to asking shareholders to increase that 30% limit.

Recent data published by Peel Hunt and E&Y highlighted that there were 28 proposed takeovers of UK companies with a total value of £59.7bn over H1 2026, which compares to seven listings raising £577m. However, for the moment, the managers believe that they have a large enough opportunity set within the UK to meet the objective.

Value works – just look at the past 100 years

100 years old on 24 June 2026

On 24 June 2026, TMPL was 100 years old. That means it has survived the Wall Street Crash, the second World War (and many others since), 70s inflation, 80s recession, the tech boom and bust, the 2008 financial crisis, and COVID and its aftermath. The trust has not always had a value focus – at launch it was “The Cable, Telephone and General Trust” – but whilst it did not adopt its current name until 1977, it already had a UK equity income focus by then. TMPL’s focus on dividend yield makes it a value investor.

At this year’s AGM and in a separate video on the subject, Redwheel took the opportunity to look at the long-term case for value investing.

Over almost a century, value outperformed in every decade bar one

Figure 1 is taken from the video and shows the annual returns of US equities, based on holding stocks that look cheaper than market averages on a book to price basis (the inverse of price to book, which is perhaps the more normal way of looking at this) and shorting the more expensive ones, over the 92 calendar years to the end of 2022. This value approach does not outperform every year, but it is a winning strategy over every decade bar the 2010s, when governments and central banks manipulated interest rates to unsustainably low levels.

Figure 1: Out/underperformance of US value by year

Figure 2: Long-run cumulative performance from low- and high-yielding stocks in the UK, 1900-2025

Figure 2 – which is based on the performance of UK value stocks, this time selected on the basis of their dividend yield – reinforces this message. The scale on the y-axis is logarithmic; consistently investing in high-yielding stocks and reinvesting your dividends meant that would have made 21x the return of a portfolio focused on low-yielding stocks over that 125-year period.

Compelling UK valuation opportunity

As Figure 3 shows, UK equities had a good run over 2025, but progress has stalled since the outbreak of war between the US, Israel, and Iran. Fears about the impact of higher energy costs on inflation compounded concerns about the fiscal profligacy of the Labour government, putting upward pressure on UK borrowing costs – as illustrated by UK 10-year gilt yields in Figure 4.

Figure 3: MSCI UK

Figure 4: UK 10-year gilt yields

The revolving door at 10 Downing Street may have had some impact on sentiment towards the UK market. However, economically things have been better than some expected. UK GDP growth was 0.6% in Q1 2026 and roughly flat over April and May. UK base rates are unchanged this year. UK inflation, as measured by CPI, came in at 2.6% for the 12 months to the end of June 2026, lower than some had forecasted.

Oil prices surged in March before easing over the next few months as both sides adopted a more conciliatory tone. That weighed on TMPL’s energy stocks, but the managers had taken some profits when share prices spiked following the outbreak of the Iran war.

More recently, renewed hostilities have pushed on oil and gas prices higher again, with stockpiles dwindling, the situation may now be more serious. EU gas prices are hitting new three-year highs, for example.

UK equities remain cheap on a range of valuation multiples

Nevertheless, UK equities remain cheap on a range of valuation multiples when compared to peers, as Figure 5 shows.

Figure 5: Valuation multiples across various markets

It is often claimed that the reason that UK equities look cheap is the relative absence of stocks in highly-rated sectors such as information technology. However, as Figure 6 shows, UK stocks are cheaper than global averages in almost every sector.

Figure 6: P/E (FY 26) ratios for UK versus global stocks

A wave of bids for UK companies underscores this sense that UK equities are undervalued. In 2026 we have seen takeover offers for Schroders, easyJet, Rotork, Tate & Lyle, UK Power Networks, Beazley, Intertek, Senior, Mitie, and SEGRO.

Portfolio

At the end of June 2026, there were 40 holdings in TMPL’s portfolio. The average yield on the portfolio at the end of June was 4.1%, which compares to 3.1% for its benchmark. The average current year P/E ratio on the portfolio was 9.7x, which compares to 12.7x for the index and the figures for price/book were 1.2x and 2.0x, respectively.

TMPL’s geographic and sector exposures are driven by the managers’ stock selection decisions and market movements.

Figure 7: TMPL geographic distribution as at 30 June 2026

Figure 8: TMPL change in geographic distribution since 30 November 2025

Since we last published, using data as at 30 November 2025, the portfolio has had more exposure to the US and consumer staples, and less exposure to cash and materials.

Figure 9: TMPL sector distribution as at 30 June 2026

Figure 10: TMPL change in sector distribution since 30 November 2025

Top 10 holdings

Since we last published using data as at 30 November 2025, Barclays and Smith & Nephew have both dropped out of the list of the 10 largest holdings, to be replaced by Marks & Spencer and GSK.

Figure 11: Top 10 equity holdings as at 30 June 2026

Looking at these and some other stocks in the portfolio:

Marks & Spencer

Figure 12: Marks & Spencer (GBp)

We have discussed Marks & Spencer in our previous notes (see page 19 for a list of these). Its share price has been volatile, but recent performance has moved it back into the list of the 10 largest holdings.

Last year’s damaging cyber-attack has been put behind it, the store refreshment programme is bearing fruit, and the food division is taking share from rivals. TMPL’s managers highlight 4.6% margins on food for the financial year to the end of March 2026 as particularly pleasing.

TMPL’s managers still see more upside in the share price, which they feel is not yet fully reflecting the evident turnaround in the company.

GSK

GSK has also moved into the top 10 following a recovery in its share price. This is not a fast-growing business, but it is delivering revenue growth of about 3% per annum, which is feeding through into double digit organic earnings growth. TMPL’s managers had felt that positive story was not reflected in its rating.

Figure 13: Barclays price/book (x)

TMPL’s financials exposure has been a big driver of its recent returns, and the managers have been taking profits from this area. The managers observe that almost everything has gone right for TMPL’s bank holdings, for example. Even a couple of years ago, these stocks were very lowly rated. However, rising interest rates opened up net interest margins, costs have been taken out – latterly with the help of AI (there is more to go for on this front), and loan losses have been kept under control.

However, another significant factor in the re-rating of financials stocks has been the considerable share buybacks that these companies have undertaken, which is feeding through into their EPS growth.

Diageo and other consumer staples

Figure 14: Diageo (GBp)

One sector that Redwheel has been adding to is consumer staples. The managers observe that this is an area that was once the highly-rated preserve of growth-style managers, but a severe de-rating has brought many of these companies into TMPL’s orbit. Stocks in the portfolio include Kraft Heinz, Carrefour, J.M. Smucker, and Diageo.

Diageo’s derating has been savage, with the shares more than 60% below their peak. New CEO, Sir Dave Lewis (ex-Tesco) joined at the start of 2026. One part of his turnaround plan for the company was to halve the dividend, conserving cash to invest in leading brands. He is also focused on cutting costs, decentralising the business to make it more dynamic, refreshing the leadership team, and selling off non-core assets.

Guinness (and Guiness Zero) is delivering sales growth, as is its emerging markets business. However, TMPL’s managers are unsure whether falling spirits sales in North America reflect a structural trend for the drinks industry rather than a stock specific or cyclical issue. That uncertainty is reflected in the position size.

BP

Figure 15: BP (GBp)

BP is another self-help story in the portfolio. Aside from the impetus given to the stock by the recent oil price increases, the main catalyst has been the shake-up led by its new CEO, Meg O’Neill, who took over on 1 April 2026. Meg was previously CEO of Woodside Petroleum and prior to that spent over 20 years at ExxonMobil. The TMPL managers have met her and were impressed.

TMPL’s managers believe that a key priority will be to unwind the low-return energy transition investments the company made under Bernard Looney (who was the CEO between 2020 and 2023). That process is already underway, and disposals will be used to reduce debt. There is also a need to stabilise the ship after a run of changes at the top of the company, including the recent dismissal of its chair.

ITV

In September 2020, when we wrote about ITV in our first note on TMPL, we commented that TMPL’s managers felt that all of the company’s market capitalisation could be accounted for by its studios business, and in their view, the broadcast business was “in for free”. On 6 July 2026, Sky announced that it would pay up to £1.6bn for ITV’s media and entertainment business. Surprisingly, ITV’s share price fell on the day and is currently lower than it was back in September 2020. It is hard to fathom why this might be, but TMPL’s managers suggest that investors might be unwilling to price in a deal that looks unlikely to complete before H2 2027. In the meantime, it may be that a soon-to-be standalone studios business attracts attention from another bidder; Netflix, for example.

Software and IT services

TMPL has very little exposure to the IT sector currently, but recent falls in the share prices of software and IT stocks have encouraged the managers to have a closer look at some of these companies.

For the moment, the software-as-a-service stocks that have seen sharp share price falls are still too highly-rated to be attractive to TMPL. However, amongst the IT services stocks, many are now on low double-digit or even single-digit earnings multiples. The analyst team is delving into some of these names in more detail.

Performance

Figure 16: Total return performance over periods ending 31 July 2026

TMPL’s three-year and five-year returns remain comfortably ahead of its benchmark and, as we discuss below, peer group averages.

TMPL’s returns relative to the MSCI UK Value Index are skewed by the high levels of concentration within that index. At 30 June 20216, HSBC was 19.1% of the index, Shell 12.8%, Unilever 7.7%, and BAT 7.3%, which limits its usefulness as a comparator. HSBC’s share price is up about 70% over the past 12 months.

TMPL’s impressive recent track record owes much to its financials exposure, which we discussed on page 9. Redwheel says that notable contributions to TMPL’s returns have come from stocks such as Standard Chartered, Barclays, NatWest, and Aberdeen Group.

Figure 17: Temple Bar NAV relative to MSCI UK (sterling total return) to 31 July 2026

WPP

Figure 18: WPP (GBp)

The only meaningful detractor from returns has been WPP; however, this is a stock that the managers feel has a lot of potential. Under Martin Sorrell, WPP was built – through a series of acquisitions – into one of the world’s largest advertising agencies and the leading media buyer. A market cap that peaked at around $30bn is now around $4bn. While other big global advertising agencies have been seeing modest top line growth, WPP has seen like-for-like revenue falls over the past couple of years and that is feeding through into declining EPS. TMPL’s managers see this as a sign that WPP’s problems are specific to it rather than a structural issue with the industry.

A new CEO – Cindy Rose, ex Microsoft – took on the job in September 2025. TMPL’s managers have met her and believe that she can turn WPP around. They think it may help that she has a background in technology. One obvious issue is that the individual businesses within WPP were not integrated and often ended up competing with each other for the same business. There is scope to take out complexity and cost from the business, which should help improve cost control.

It might be enough to simply stabilise the business. The managers say that the market is valuing WPP on about 5x earnings, whereas a rating of 10x might be ascribed to a stable business. If the new CEO can grow earnings on top of this – TMPL’s managers think organic revenue growth of 3% p.a. over the medium term, with an operating profit margin of 16~17% is achievable – then the potential for a rerating is considerable.

Redwheel is a significant shareholder in WPP, with about 10% of the company held across its range of funds and mandates, and is content to give the new CEO room to deliver on her planned transformation of the company.

Peer group

You can find up-to-date information on TMPL and its peers on our website

TMPL is one of the larger of the 16 funds in the AIC’s UK equity income sector, and its running costs are below the sector median. The shift to an enhanced dividend helped move TMPL’s yield closer to the sector median. TMPL’s strong long-term track record – which is evident in Figure 19 – is reflected in its rating and regular share issuance.

Figure 19: Snapshot of UK equity income sector as at 31 July 2026

TMPL’s long-term track record is good, ranking at the top end of the table over most time periods. That reflects the success of its value-driven approach. Many trusts drifted away from value investing over the period when the style was underperforming. Many of those that focused on “quality” instead were exposed to software stocks caught in the agentic AI sell off earlier this year (most notably Finsbury Growth & Income).

Those that have a bias to small-cap stocks have also been laggards in recent years.

Figure 20: Total return NAV performance over periods ending 31 July 2026

Enhanced dividend

TMPL pays dividends quarterly. Since the AGM in 2025, it has used reserves to top up the dividend that it would have paid from net revenue earnings by an additional 3p per annum (0.75p per quarter). This represents a contribution to payouts in lieu of the money that companies have been spending on buying back shares rather than maximising their dividend payout ratio. In the last annual report, the chair observed that according to Computershare’s UK Dividend Monitor, share buybacks represented 42.1% of the total distributions by UK listed companies in 2025.

That change in policy is reflected in the step change in the dividend for 2025 over 2024. The chair has cautioned that the pace of TMPL’s dividend growth going forward is unlikely to match the significant increases seen in the past few years.

The dividend target for the current financial year is 15.6p, payable in four instalments of 3.9p. This represents a 4% increase on the dividend for 2025.

Figure 21: TMPL’s recent dividend record

Premium/(discount)

Figure 22: TMPL discount over five years ended 31 July 2026

As investors became more convinced of TMPL’s ability to outperform over the long term and memories of the extended period of underperformance from value strategies faded, the shares re-rated over the course of 2025. Over the 12-month period that ended on 31 July 2026, TMPL’s shares have traded between a discount of 10.7% and a premium of 1.8%, averaging a discount of 4.6%. As of publishing, the company was trading on a premium of 1.3%.

The board is committed to an active policy to manage TMPL’s share price relative to its NAV

The board is committed to an active policy to manage TMPL’s share price relative to its NAV. That includes both issuing shares at a premium as well as buying back shares at a discount. Both have the effect of enhancing the NAV for ongoing shareholders. At the AGM on 5 May 2026, shareholders authorised the directors to issue up to 20% and buy back up to 14.99% of the then shares in issue.

Over the past 12 months, thanks to strong demand, particularly from retail investors, no shares have been repurchased, and 21.13m shares have been reissued from treasury.

Figure 23: Shares issued and repurchased

Structure

Fees and costs

As AIFM, Frostrow Capital LLP is paid 0.125% of TMPL’s market capitalisation up to £250m and 0.1% of market capitalisation above £250m. As portfolio manager, Redwheel is paid a management fee equal to 0.325% per annum of the company’s total assets. There is no performance fee.

At 31 December 2025, TMPL’s ongoing charges were calculated at 0.59%, down from 0.61% a year earlier.

Capital structure

At 30 July 2026, TMPL had 334,363,285 shares in issue of which 28,629,447 were held in treasury. The number of shares with voting rights was 305,734,378.

Based on data published by the company as at 31 December 2025, retail investors owned 50.7% of TMPL’s shares, wealth managers and private banks 34.9%, and institutional investors 13.9%.

Gearing and hedging

TMPL has a £50m 4.05% private placement loan which is repayable on 3 September 2028, and a £25m 2.99% private placement loan which is repayable on 24 October 2047. The two loans are secured by a floating charge over the assets of the company. TMPL’s net gearing was 3.7% as of 31 May 2026.

TMPL does not currently hedge its currency exposure.

Financial calendar

The trust’s year-end is 31 December. The annual results are usually released in March (interims in September), and its AGMs are usually held in May of each year. TMPL pays quarterly dividends in April, June, September, December each year.

Management team

Nick Purves joined Redwheel in August 2010 from Schroders, where he was a senior portfolio manager with responsibility for both Institutional Specialist Value Funds and the Schroder Income Fund and Income Maximiser Fund, together with Ian Lance. He worked at Schroders for 16 years, having moved from KMPG, where he qualified as a chartered accountant.

Ian has over 30 years of experience in fund management and started working with Nick at Schroders in 2007 before joining Redwheel in August 2010. While at Schroders, he was a senior portfolio manager, managing the Institutional Specialist Value Funds, the Schroder Income Fund and Income Maximiser Fund, together with Nick. Previously, Ian was the head of European equities and director of research at Citigroup Asset Management and head of global research at Gartmore.

Board

TMPL’s board comprises five non-executive directors, all of whom are independent of the manager, and who do not sit together on other boards.

Charles Cade was appointed chairman of the board on 2 December 2025, succeeding Richard Wyatt, who stepped down from the board on that date after eight years as a director, including two as chair. The most recent recruits to the board were Nick Bannerman and Wendy Colquhoun, who were appointed in the summer of 2025.

Figure 24: Directors

Charles Cade

Charles has more than 30 years’ experience in the investment companies sector, and was ranked among the leading analysts throughout his career at Numis Securities, Winterflood Securities, HSBC and Merrill Lynch. He joined the City following an MBA, having previously worked for a consultancy firm and as an economist in the UK government. Charles is currently a non-executive director of Vietnam Enterprise Investments Ltd, a member of the Investment Committee of the Rank Foundation charity, and an independent consultant to interactive investor, the retail platform.

Shefaly Yogendra, PhD

Shefaly was recently the COO of Ditto AI, a symbolic AI startup. She built her career in the technology industry, followed by strategic advisory work on emerging technologies, and specialises in governance, growth, risk, and decision-making. Shefaly is a non-executive director of JPMorgan US Smaller Companies Investment Trust Plc. She was listed among the “100 Women To Watch” in the Female FTSE Board Report 2016.

Carolyn Sims

Carolyn is the CFO and COO of British International Investment plc (BII), the UK’s Development Finance Institution. Before joining BII in 2020, she was CFO of the Wealth Management Division of Schroders Plc and a member of its Group Management Committee. Prior to that, Carolyn was the CFO of Cazenove Capital Management Limited until its sale to Schroders in 2013. She started her career with Touche Ross & Co. where she qualified as a Chartered Accountant. Carolyn then joined Lazard, where her roles included COO for Global Capital Markets and UK finance director.

Nick Bannerman

Nick is a Chartered Accountant and was managing director of a number of Scottish luxury cashmere businesses. He is a non-executive director of JPMorgan China Growth and Income Trust Plc and also of The Global Smaller Companies Trust Plc, where he also acts as chair of its audit committee. Nick was formerly chair of the audit committee and chair of Baillie Gifford Japan Trust Plc.

Wendy Colquhoun

Wendy is a former senior corporate partner at international law firm CMS Cameron McKenna Nabarro Olswang LLP where she specialised in advising financial services companies including investment trusts. Wendy is a non-executive director and the senior independent director of Capital Gearing Trust Plc, Schroder UK Mid-Cap Fund Plc, and Murray International Trust Plc. She was formerly a non-executive director and chair of Henderson Opportunities Trust Plc and a non-executive director of Scottish Financial Enterprise.

SWOT and Bull versus bear analysis

Figure 25: SWOT analysis for TMPL

Figure 26: Bull versus bear analysis for TMPL

Previous publications

Readers interested in further information about TMPL may wish to read our previous notes. You can read the notes by clicking on them in Figure 27 or by visiting our website.

Figure 27: QuotedData’s previously published notes on TMPL

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