Artemis UK
Future Leaders plc
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.
Objective
The investment company aims to achieve long-term total returns for shareholders, primarily by actively investing in a broad cross-section of small to medium-sized UK quoted companies.
Review
Takeovers continued to drive performance in the third quarter: Alpha Group, a business-to-business provider of foreign currency services and our largest holding at the time, agreed to a bid from US payments company Corpay1, while FirstCash acquired pawnbroker H&T2. Together with the large number of companies buying back their own shares3, we view these deals as evidence that company management teams see the UK small-cap (smaller companies) market as good value.
Performance
Artemis Future Leaders plc (AFL) has had a challenging third quarter from a relative performance perspective. Its net asset value (NAV) fell by 1.8% while the share price was down 2.4% in a rising market.
Our overweight (a higher-than-average position compared with the benchmark) in domestically focused companies has been unhelpful. Although this has acted as a drag on recent returns, we believe the lower valuations of these shares today create a compelling opportunity for the future.
Household income is rising4, but UK consumers are deferring spending, choosing to save instead5. Once confidence improves and spending picks up, we believe our holdings have the potential to make substantial returns.
The trust was trading at a discount to NAV of 14% at the start of the quarter, which widened to 16% in August6. We took this opportunity to add to our personal investment in it. September saw some recovery: the trust's NAV rose by 1.3% in the month and the discount narrowed back to 14%7.
| 2024 | 2023 | 2022 | 2021 | 2020 | |
|---|---|---|---|---|---|
| Artemis UK Future Leaders plc (NAV) | -1.2% | 0.2% | -25.9% | 27.8% | -5.3% |
| Artemis UK Future Leaders plc (Share Price) | -7.1% | 7.6% | -28.5% | 23.7% | -15.3% |
| Deutsche Numis SC plus AIM Excluding Inv Com TR | 5.0% | 3.2% | -21.9% | 20.0% | 4.9% |
Artemis assumed management of the trust on 10 March 2025.
Past performance is not a guide to the future.
Source: Lipper Limited, priced at midday, data to 31 December 2024 in GBP. 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 trust. Returns may vary as a result of currency fluctuations if the investor's currency is different to that of the class.
Negatives
Cosmetics company Warpaint London was the most significant detractor during the quarter, citing lower US revenues due to tariffs (taxes on imports) and a reduced order from a large Scandinavian customer8.
Hilton Food, the meat and fish packager, warned that its full year results would be towards the bottom of the range on reduced demand for white fish9.
Package holiday provider On the Beach cut its profit forecast due to later customer booking and the closure of its small business-to-business division10.
Positives
Alpha Group's share price soared11 in July when it agreed to be acquired by Corpay. We sold out in August, pending the takeover.
Secure Trust Bank was another strong performer, on the back of positive results in the first half of the year12 and increasing confidence that it will deliver on its near-term targets.
Corporate services and fund solutions provider JTC also rose following takeover approaches from Permira13 in August and Warburg Pincus in September14. JTC and Permira agreed to a deal in November15.
Purchases
We initiated new positions in food retailer Greggs, subsea equipment rental firm Ashtead Technology and consultancy Science Group during the review period.
In addition, we took part in a placing of new shares in footwear thread manufacturer Coats and added to holdings such as landowner and developer Harworth, bathroom and kitchen products supplier Norcros and financial planning software specialist IntegraFin.
Sales
We took profits from Secure Trust Bank following strong performance and trimmed government services provider Serco, wealth manager Brooks Macdonald and security and defence contractor QinetiQ for similar reasons.
To enable the purchase of Greggs without materially increasing our significant exposure to consumer-facing holdings, we trimmed positions in Dunelm, Wickes and J D Wetherspoon.
We sold out of Alpha and Bakkavor ahead of the completion of their recommended takeover offers.
Outlook
We believe negative headlines about the Autumn Budget could affect confidence and therefore consumer spending in the short term. But ultimately the signs are positive: household debt (as a percentage of gross disposable income) is at its lowest since the late 1990s16, while the savings ratio of about 11% is more than twice its pre-Covid level17.
In our view, if employment doesn’t collapse, consumer confidence and spending should slowly increase, pushing up economic growth in the UK.
If the UK’s low valuation compared with the US prompted a modest switch in capital flows towards the domestic stockmarket, we anticipate that small-cap returns would be turbo-charged.
If this doesn’t happen, the status quo would continue: a rather moribund economy where, even though investors don’t return to UK smaller companies, low valuations would mean takeovers and share buybacks continue to drive returns as they have done over the past decade18.
We believe our portfolio would remain resilient in either environment.
Notes and references
3. Artemis, Bloomberg as at 30 June 2025. Instead of paying dividends, an alternative way for a company to return money to shareholders is to buy back shares. 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.
4. Lazarus Economics as at 31 May 2025
5. Lazarus Economics as at 31 May 2025
6. Artemis as at 3 September 2025
7. Artemis as at 6 October 2025
8. https://www.investments.halifax.co.uk/research-centre/news-centre/article/?id=20031968&type=bsm
9. https://www.independent.co.uk/news/business/cambridgeshire-hilton-ireland-europe-b2819111.html
10. https://www.independent.co.uk/news/business/cambridgeshire-hilton-ireland-europe-b2819111.html
13. https://pe-insights.com/jtc-rebuffs-2bn-permira-bid-as-shares-surge-to-record-high/
16. https://commonslibrary.parliament.uk/research-briefings/sn02885/
18. Investment Association as at 31 December 2024, Bloomberg, class I accumulation units in GBP from 1 January 2015 to 31 December 2024
Risks specific to Artemis UK Future Leaders plc
- Market volatility risk The net asset value of the trust, and the income it receives from its investments, can rise and fall 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 trust’s assets may be priced in currencies other than the trust base currency. Changes in currency exchange rates can therefore affect the trust's value.
- Derivatives risk The trust 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 trust value could reduce.
- Leverage risk The trust 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 trust's capital, distributable income may be increased at the expense of capital, which may constrain or erode capital growth.
- Smaller companies risk Investing in small companies can involve more risk than investing in larger, more established companies. Shares in smaller companies may not be as easy to sell, which can cause difficulty in valuing those shares.
- 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.
