Strategy Performance
Most strategies experienced modest negative returns ranging from -0.2% to -1.3% for the highest risk option, as US, Japanese, and emerging market equities surrendered a portion of their previous gains. Additionally, the appreciation of the pound acted as a headwind. Conversely, UK and European equities delivered positive returns, with further support provided by alternative investments and fixed interest holdings. As a result, clients with the lowest risk profiles - those without international equity exposure - achieved small positive returns.
Relative performance was mixed across the allocations – US tech exposure lagged, with weakness from names such as chipmaker AMD – giving back some of its blistering returns in recent months – and cybersecurity stock Palo Alto Networks weighing on performance. UK and European Financials exposure outperformed on a relative basis, led by several of the asset management and insurance names. European Industrials struggled, while UK Real Estate and Utilities did well. With a pull-back also seen from several of the strategies’ Japanese, Asian and emerging markets managers, all in all, it was an interesting period, marked by a partial reversal in the market leadership seen in recent months.
Activity
In the UK, we trimmed HSBC to add to Standard Chartered, which continues to offer attractive value given its growth and capital return characteristics. The stock is one of two active overweight positions across the UK bank holdings, alongside Barclays, another solid performer in November.
Across Healthcare and Consumer Staples, we trimmed the positions in GSK, Diageo, and Unilever, adding to British American Tobacco, which continues to offer an attractive yield and buyback programme, and reintroducing Haleon. As a brief reminder, Haleon is the consumer healthcare business that demerged from GSK in 2022. The company possesses strong brands and market position – think Sensodyne in Oral Health, Centrum in Vitamins and Panadol in Pain Relief. We previously worried that major shareholders GSK and Pfizer were capping the share price by selling stock. Now that both have exited, and with Haleon continuing to perform well in the structurally attractive consumer health category, we reinitiated exposure.
Across the US allocation, we took profits on Netflix, while trimming Mondelez following the company’s disappointing earnings. The capital was used to build a stake in the US multi-industrial business Honeywell, as well as to reduce our underweight exposure to Alphabet, acknowledging the company’s strong Q3, the potential demonstrated by its Gemini artificial intelligence model, and impressive innovation across the business. It is important to highlight that our active overweight positions within Communication Services continue to focus on Netflix and Meta. More broadly, our exposure to the "Mag 7" remains at a neutral weighting, with selectivity applied at the individual company level. Overall technology exposure also remains neutral, guided by an investment philosophy that prioritizes growth at a reasonable price rather than at any price .
Outlook
Despite concerns over an AI bubble and the general economic malaise in the UK, globally the economic backdrop looks positive: GDP growth is expected to be 2.5-3% in real terms next year, with low- to mid-teen corporate earnings growth expected across most major equity regions providing a strong backdrop for equity investing. We are avoiding the most expensive parts of the US market, only buying those stocks with higher multiples where there is a strong case for sustained high rates of growth and a track-record of delivering it. For lower-risk investors, yields are still relatively high, which gives plenty of cushion to ride out uncertainty for the year ahead – our low-risk portfolios defended well against the equity market volatility this year, justifying our more cautious positioning in those portfolios. Generally, there’s plenty to be optimistic about in 2026. November’s brief market shake-out out should provide a more solid foundation for further equity gains going forward – we could see a Santa rally into year end!
Approver: Quilter Cheviot Limited, 10 December 2025
