Artemis High Income 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 provide a combination of a high level of income and capital growth, before fees, over a rolling five-year period. The manager defines a high level of income as equal to, or in excess of, the average yield of the IA Sterling Strategic Bond sector1.
About the fund
The Artemis High Income Fund gives investors access to the income-generating potential of a blend of bonds and shares. It is actively managed.
Dividend-paying company shares – These are shares in companies that return a portion of their profits to their shareholders through regular cash payments (‘dividends’).
High-yield bonds – High-yield bonds are issued by companies that ratings agencies (such as S&P and Moody’s) deem to be at greater risk of defaulting on their debts. As their name suggests, they offer a higher ‘yield’ (rate of interest) to compensate for the higher level of risk.
Investment-grade corporate bonds – These are issued by companies with higher credit ratings. These are businesses that ratings agencies consider to be at relatively low risk of defaulting on their debts.
Government bonds – These are widely viewed as being among the safest bonds (governments in developed economies rarely default on their debts). The interest rate, or ‘yield’, available here is lower than it is on high-yield and investment-grade corporate bonds – but they can provide a useful counterweight to the fund’s holdings in more economically sensitive bonds and shares.
Performance
Artemis High Income made 2.3% over the quarter, compared with 1.6% from its IA Strategic Bond sector1. It is a top-quartile performer in its sector over one, three and five years.
| 2024 | 2023 | 2022 | 2021 | 2020 | |
| Artemis High Income I Inc GBP | 10.0% | 10.9% | -10.1% | 5.9% | 1.7% |
| IA £ Strategic Bond average | 4.4% | 7.9% | -12.0% | 0.9% | 6.4% |
Past performance is not a guide to the future.
Source: Lipper Limited, class I income units, 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
Oil & gas producer W&T Offshore and French fashion house Isabel Marant were two of our best performing bond positions during the quarter. While we have trimmed our holding in the former, our position in the latter remains unchanged.
Elsewhere, our holding in Norwegian oil & gas producer DNO also performed well following news that its holding in Kurdistan can now export oil to the Turkish coast2.
On the shares side, banks continued to contribute to performance thanks to the impact of higher interest rates on net interest margins (the difference between the interest they receive on loans and the interest they pay on customer deposits).
Detractors
Bonds in US recruitment technology platform ZipRecruiter fell in July but recovered in August3.
European transportation contractor Mobico underperformed following the (previously announced) resignation of its auditor4. We believe we are being well compensated for the uncertainty and expect the company to benefit from negotiations with the German government later this year5.
Turning to shares, bookmaker Entain fell after former prime minister Gordon Brown called for taxes on the sector in the UK to be more than doubled6. Such a move is in our view unrealistic as it would likely cause a sharp fall in government revenues from this source as betting moves offshore.
Activity
July was reasonably busy for new high-yield bond issues and we participated in deals for Flutter, a sports betting and online gaming company; Carnival, the global market leader in cruises; and Kioxia, a producer of solid-state memory which was spun out of Toshiba in 2017.
In August, we bought Lindblad Expeditions, which operates cruises to remote destinations such as Antarctica and the Galapagos Islands.
We also added Levi Strauss, the iconic US denim producer. In the words of the company itself, “quality never goes out of style”, and we think now is a good time to pay for it.
We exited US waste management company GFL, Shift4 Payments, European pharmaceutical Stada, French recycling company Paprec and US discount furnishings retailer At Home.
Outlook
During September, numerous stories emerged of underwriting failures in the private credit market7. We have long suspected this to be the case: a wave of cash has rushed into private credit in recent years and in our view, it is unlikely all of it has been allocated carefully8.
Unlike private credit, the high-yield market has not experienced a growth surge in recent years9. We are not overly worried about the credit quality of the broad high-yield market. However, we are ensuring we have the flexibility to invest in good opportunities during periods of volatility, in order to benefit from higher-income bonds and shares and when there are spates of buying or selling of either.
Notes and references
1 The IA Sterling Strategic Bond sector is a group of other asset managers’ funds that invest in similar asset types as this fund, collated by the Investment Association. It acts as a ‘target benchmark’ that the fund aims to outperform. Management of the fund is not restricted by this benchmark.
2. https://www.rudaw.net/english/business/26092025
3. Bloomberg to 30 September 2025
5. https://www.mobicogroup.com/media/vwxppxpy/mobico-group-half-year-results-2025-announcement.pdf
6. https://www.telegraph.co.uk/business/2025/08/08/gambling-shares-plunge-reeves-tax-raid/
7. https://www.ft.com/content/cd0e2790-7ac7-49cf-b3e3-9c506a7d0ba8
9. Bank of America, Merrill Lynch as at 31 October 2023
Risks specific to Artemis High Income 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.
- Bond liquidity risk The fund holds bonds which could prove difficult to sell. As a result, the fund may have to lower the selling price, sell other investments or forego more appealing investment opportunities.
- Credit risk Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.
- 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.
- Emerging markets risk Compared to more established economies, investments in emerging markets may be subject to greater volatility due to differences in generally accepted accounting principles, less governed standards or from economic or political instability. Under certain market conditions assets may be difficult to sell.
- Income risk The payment of income and its level is not guaranteed.
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.
