The month saw significant market rotation, as previous underperformers bounced back. Economic data points in the US, Europe and Japan were ahead of expectations (according to the Citi economic surprise index), whilst data from the UK and Emerging Markets were below forecasts, numbers from the US were still affected by the recent government shutdown. The US Federal Reserve cut interest rates by 0.25%, as anticipated, but the accompanying commentary was more hawkish than expected and produced a mid-month setback for markets. The US market underperformed other regions in the month. Government bond yields drifted up, led by further increases in German Bunds and Japanese government bonds. The Bank of Japan raised interest rates for the second time in 2025 to 0.75%, the highest level for 30 years.
The Trust’s net asset value (NAV) was down -0.5% in December, narrowly underperforming the benchmark’s move of -0.4%. However, the share price discount to NAV narrowed significantly in December, leading the share price to outperform the benchmark.
In North America, our portfolio underperformed the local index. Positive contributors included Wheaton Precious Metals, which received a broker upgrade and rose with the gold price. SharkNinja, the household appliances group, outperformed after receiving a positive initiation from a broker. Genpact, the AI-powered professional services company, continued to rise after good results the previous month. Negative contributors included CACI International, the US government technology services provider, which announced a large acquisition that will temporarily raise the company’s debt level. Apparel retailer Boot Barn Holdings and rehabilitative care provider Encompass Health both fell on profit taking.
The UK portfolio outperformed its benchmark. 1Spatial, the geospatial data management company, received a takeover bid from VertiGIS. SSP, the travel food concession operator, benefited from good results and announcement of a strategic review of some of the company’s businesses. Shawbrook, the UK specialist lender, was the subject of several positive sell-side analyst initiations. Negative contributors included Foresight Group, which saw pressure on its profit margin because of an outflow in its capital management business. Everplay, the video game publisher, saw its shares fall back on profit taking. GlobalData, the data analytics and consulting company, underperformed as earnings forecasts were lowered.
The European portfolio outperformed its benchmark. Outperformers in the portfolio included Storebrand, the Nordic savings and insurance group, which released long-term financial forecasts that were above expectations. FlatexDEGIRO, the European online securities broker, rose on the news of potential reforms of German private pension schemes. Banco Comercial Português outperformed on the back of a broker upgrade. Detractors to performance included CTS Eventim, the live entertainment business, where short interest in the company’s shares rose. Shares in GTT, the engineering group specialising in liquefied natural gas, drifted lower because of concerns over a potential slowdown in new orders. Challenging end markets hindered progress at Elis, which provides workwear, laundry and hygiene services.
The Japanese portfolio underperformed the MSCI Japan Small Cap index. Positive contributors included Nishi-Nippon Financial, the financial services group, which rose with higher Japanese bond yields. Nichias, the industrial building construction company, benefited from growing optimism over a demand recovery in the company’s main markets. Share repurchases helped lift Kinden, the engineering services group. In terms of detractors, Anycolor, the entertainment group, saw project delays lead to disappointing earnings. Nippon Television shares slipped on little news. Sankyo fell with the wider gaming sector.
In totality, the Rest of World fund holdings outperformed the MSCI AC Asia ex Japan Small Cap index. This was driven by the outperformance of the Schroders Global Emerging Markets Smaller Companies fund, the Utilico Emerging Markets Investment Trust and the Pinebridge Asia ex Japan Small Cap fund. Gains were partially offset by the underperformance of the Scottish Oriental Smaller Companies Investment Trust.
As at 31 December 2025
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