Nish Patel’s June Market Update remarks on a strong month for equities

May was another strong month for equity markets. Enthusiasm around artificial intelligence and growing optimism that negotiations between the US and Iran could lead to the reopening of the Strait of Hormuz provided tailwinds for equities. While gains were broad based by region, they were very concentrated by sector, with technology strongly outperforming the index and virtually every other sector lagging the benchmark. The Philadelphia Stock Exchange Semiconductor Index extended its remarkable run, surging a further 22% in May, following April’s 38% gain. Energy, utilities and consumer staples were the worst performers. Most economic data releases globally exceeded expectations, except in emerging markets. Concerns over fiscal deficits and the future path of inflation led to volatility in longer-dated bond yields. Kevin Warsh was sworn in as chairman of the Federal Reserve. SpaceX and Anthropic prepared for their upcoming IPOs.

The trust’s net asset value (NAV) and share price underperformed the benchmark in May. The discount to NAV narrowed during the month.

Positive contributors included MaxLinear, a manufacturer of digital connectivity products. Earnings forecasts for the company were increased, and it also received a positive broker initiation. A favourable Supreme Court ruling and optimism over higher trucking rates lifted US truckload carrier Knight-Swift Transportation. UK-based electronic component producer discoverIE announced an attractive acquisition. Amada, a manufacturer of metalworking machinery, reported healthy order growth and announced a sizeable share repurchase programme. A positive trading update lifted the shares of online broker IG Group. Results from industrial component manufacturer Niterra suggested continued market share gains. Oxford Instruments, a producer of advanced instrumentation equipment, showed commercial progress with its compound semiconductor- and quantum computing-related products. Speciality materials producer Nichias released earnings guidance that was above expectations. Contract research organisation ICON announced strong bookings growth. Membership club operator PriceSmart made further progress with its geographic expansion strategy.

Negative contributors included electronic component producer Advanced Energy Industries, where profits were taken after the company delivered better-than-expected results and raised its sales guidance. Shares of Ensign Group, a provider of nursing and rehabilitation services, were weak ahead of an index rebalance. Earnings guidance at technology reseller CDW suggested a slowdown in the second half of the calendar year. Higher earnings forecasts were not enough to offset valuation compression at engineering services company WSP Global, real estate services business Jones Lang LaSalle and post-secondary education provider Grand Canyon Education, as AI disintermediation worries persisted. A lower oil price hit tank barge operator Kirby. Higher depreciation expenses led the share price of oilfield services company Bristow Group to decline. Concerns over increased competition from Amazon weighed on the shares of contract logistics business GXO Logistics. Construction materials producer Martin Marietta Materials fell with the wider sector because of concerns over government funding for road construction projects.

In totality, the Rest of World fund holdings detracted from relative returns. This was driven by underperformance of the Scottish Oriental Smaller Companies Investment Trust, the Utilico Emerging Markets Investment Trust, the Templeton Asian Smaller Companies fund and the CIM Dividend Income fund. This was partially offset by a positive contribution from the Schroders Global Emerging Markets Smaller Companies fund.

As at 31 May 2026