Artemis UK Select Fund
Q3 2025 update
Source for all information: Artemis as at 29 September 2025, unless otherwise stated.
CAPITAL AT RISK. All financial investments involve taking risk and the value of your investment may go down as well as up. This means your investment is not guaranteed and you may not get back as much as you put in. Any income from the investment is also likely to vary and cannot be guaranteed.
This is a marketing communication. Before making any final investment decisions, and to understand the investment risks involved, refer to the fund prospectus (or in the case of investment trusts, Investor Disclosure Document and Articles of Association), available in English, and KIID/KID, available in English and in your local language depending on local country registration, available in the literature library.
Fund objective
The fund’s objective is to grow capital over a five-year period.
Review
Global equity markets performed well throughout the quarter1 as fears over the impact of US tariffs (a tax on imports) abated and expectations rose that the Federal Reserve (the US’s central bank) would cut interest rates more aggressively through the second half of 20252.
In terms of industries, the strongest performance globally was seen in US technology, while financials, aerospace and defence also did well3. In the UK, pharmaceuticals, consumer staples (items people buy every day) and tobacco outperformed while housebuilders and domestic consumer cyclicals (companies with a high sensitivity to the economy) struggled4.
UK borrowing costs reached a 20-year high during the middle of the quarter5, while the upcoming Budget cast an increasingly long shadow, with talk of a £50bn blackhole and speculation around changes to taxes6. However, the UK market rallied towards quarter-end7.
Performance
Despite all of this turmoil, the Artemis UK Select Fund made 5.6% during the quarter, compared with 6.9% from its FTSE All-Share index8 benchmark and 3.0% from its IA UK All Companies9 peer group benchmark.
Discrete calendar-year performance
| 2024 | 2023 | 2022 | 2021 | 2020 | |
|---|---|---|---|---|---|
| Artemis UK Select Fund I Acc GBP | 25.3% | 19.1% | -9.8% | 19.0% | 5.7% |
| FTSE All-Share TR | 9.5% | 7.9% | 0.3% | 18.3% | -9.8% |
| IA UK All Companies NR | 7.9% | 7.2% | -9.3% | 17.1% | -6.3% |
Past performance is not a guide to the future.
Source: Artemis/Lipper Limited, class I accumulation GBP to 30 September 2025. All figures show total returns with dividends and/or income reinvested, net of all charges. Performance does not take account of any costs incurred when investors buy or sell the fund. Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class. This class may have charges or a hedging approach different from those in the IA sector benchmark.
Contributors
Banking shares continued to perform well for the portfolio. The fund's largest holding Standard Chartered announced strong results10 which supported a further extension of its buyback programme11.
Closer to home, Barclays upgraded expectations for its full-year profits by about 5%12. Despite the strong performance, we believe the bank remains one of the cheapest in Europe13.
International Airlines Group (IAG) had a good summer, reporting profits that were significantly ahead of expectations14. Despite heavy investment into the business, debt continues to fall, leaving IAG well placed to add to its €1bn buyback programme later this year15.
From a relative point of view, we benefited from avoiding London Stock Exchange Group, RELX, Unilever and Haleon, all of which underperformed our FTSE All Share benchmark16.
Detractors
WH Smith fell after it turned out it had overstated US profits from accrued supplier income (payments from suppliers for in-store promotions)17. We await the results from Deloitte's audit into the US operation to get a better understanding of the future return potential of that side of the business. In the meantime, we believe WH Smith’s current valuation is reasonable.
Airline and package holiday operator Jet2 saw weak 'late' bookings, while the addition of new bases at Luton, Bournemouth and Liverpool forced the company to discount seat-only fares to clear inventory18. While this is disappointing in the short term, we expect the company to return to growth in 2026.
Delays in new site openings saw homebuilder Barratt Redrow downgrade sales expectations for the year to June 202619. It also increased its safety provision fund which will remove an additional £400m of cash out of the business over the next two years as it remediates historic buildings20. We continue to believe the business remains well placed to benefit from more supportive government policy around planning and, in time, lower interest rates.
From a relative point of view, not owning AstraZeneca, British American Tobacco and Rio Tinto acted as a drag on performance as they outperformed the FTSE All-Share21.
Activity
We continued to add to retailer Marks & Spencer, as evidence builds that it is recovering well from the recent cyber-attack22. Elsewhere, we continued to add to positions in companies that we expect to benefit from lower interest rates, namely housebuilders Bellway and Vistry and property developer Shaftesbury.
Sustainable packaging company Smurfit Westrock responded to falling paper prices by announcing significant capacity cuts23. We believe this will mark the bottom of the pricing cycle so added to our position.
In mining, we added to Anglo American, following its merger with Teck, and Weir, which we believe should benefit indirectly from the rally in copper and precious metals24.
We funded the additions above by taking profits from Barclays and Rolls-Royce to keep overall position sizes in proportion following strong performance.
Outlook
The focus in the UK remains on the forthcoming Budget. We believe that staying within borrowing limits is not an insurmountable challenge for Chancellor Rachel Reeves, although we expect a combination of tax rises and spending restraint.
With the government so far having little to show for its ‘growth, growth, growth’ mandate, we believe there is an outside chance of Reeves announcing stimulative policies for housing and business.
Notes and references
1Bloomberg to 30 September 2025
2https://www.barrons.com/articles/fed-interest-rates-markets-2026-20217763
3https://www.ii.co.uk/analysis-commentary/ii-investment-performance-review-q3-2025-ii536890
4https://www.ii.co.uk/analysis-commentary/ii-investment-performance-review-q3-2025-ii536890
5https://www.bbc.co.uk/news/articles/clyry4rg9wyo
6https://www.bbc.co.uk/news/articles/cx27nm2mn5po
7Bloomberg to 30 September 2025
8FTSE All-Share Index TR: A widely-used indicator of the performance of the UK stockmarket, in which the fund invests. It acts as a ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark.
9IA UK All Companies NR: A group of other asset managers’ funds that invest in similar asset types as this fund, collated by the Investment Association. Management of the fund is not restricted by this benchmark.
10https://www.sc.com/en/uploads/sites/66/content/docs/standard-chartered-plc-hy-2025-report.pdf
11Buybacks refer to the reacquisition by a company of its own shares. Instead of paying dividends, it is an alternative way for a company to return money to shareholders. In most countries, a company is able to repurchase its shares by paying cash to existing shareholders in exchange for a reduction in the number of shares outstanding.
13Bloomberg to 30 September 2025
14https://www.iairgroup.com/investors-and-shareholders/financial-reporting/quarterly-reporting/
15https://www.iairgroup.com/investors-and-shareholders/financial-reporting/quarterly-reporting/
16Factset to 30 September 2025
21Factset to 30 September 2025
24https://think.ing.com/articles/lme-week-key-takeaways-metals-find-their-footing/
Risks specific to Artemis UK Select Fund
- Market volatility risk The value of the fund and any income from it can fall or rise because of movements in stockmarkets, currencies and interest rates, each of which can move irrationally and be affected unpredictably by diverse factors, including political and economic events.
- Currency risk The fund’s assets may be priced in currencies other than the fund base currency. Changes in currency exchange rates can therefore affect the fund's value.
- Derivatives risk The fund may invest in derivatives with the aim of profiting from falling (‘shorting’) as well as rising prices. Should the asset’s value vary in an unexpected way, the fund value could reduce.
- Leverage risk The fund may operate with a significant amount of leverage. Leverage occurs when the economic exposure created by the use of derivatives is greater than the amount invested. A leveraged portfolio may result in large fluctuations in its value and therefore entails a high degree of risk including the risk that losses may be substantial.
- Charges from capital risk Where charges are taken wholly or partly out of a fund's capital, distributable income may be increased at the expense of capital, which may constrain or erode capital growth.
Important information
The intention of Artemis’ ‘investment insights’ articles is to present objective news, information, data and guidance on finance topics drawn from a diverse collection of sources. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by Artemis or any third-party. Potential investors should consider the need for independent financial advice. Any research or analysis has been procured by Artemis for its own use and may be acted on in that connection. The contents of articles are based on sources of information believed to be reliable; however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation is given as to its accuracy or completeness. Any forward-looking statements are based on Artemis’ current opinions, expectations and projections. Articles are provided to you only incidentally, and any opinions expressed are subject to change without notice. The source for all data is Artemis, unless stated otherwise. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested.
