Artemis UK Special Situations Fund
Q4 2025 update
Source for all information: Artemis as at 31 December 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.
Performance
The final quarter of 2025 was dominated by the Budget. We felt the 12-week lead-up, with a steady flow of leaks and speculation, was unhelpful and the prolonged uncertainty weighed on confidence for both consumers and businesses alike. Despite that uncertainty, the UK stockmarket continued to make progress.
Artemis UK Special Situations made 4.0% in the final quarter of the year, compared with 6.4% from its first benchmark, the FTSE All-Share1 index, and 3.8% from its second benchmark, the IA UK All Companies sector average2.
For full five-year discrete performance, please see below.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Artemis UK Special Situations | 21.7% | 13.0% | 13.6% | -9.3% | 14.1% |
| FTSE All-Share TR | 24.0% | 9.5% | 7.9% | 0.3% | 18.3% |
| IA UK All Companies sector average | 14.7% | 7.9% | 7.2% | -9.3% | 17.1% |
Past performance is not a guide to the future.
Source: Lipper Limited/Artemis to 31 December 2025 for class I distribution units, 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 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.
Detractors
Two casualties of the Budget hurt performance in the quarter, one more expected than the other. We took profits in bookmaker Entain in July in anticipation of further tax rises on the gambling industry and indeed online gaming duty rose from 21% to 40%3.
Restaurant and hotel operator Whitbread was more surprising. We expected business-rate (taxes on non-residential buildings) reform to target large online retailers rather than a hospitality industry still reeling from the impact of last year’s Budget. While the level of hikes is under consultation4 and may be challenged, in the absence of any changes Whitbread expects a substantial fall in profits5.
Discount retail store B&M cut its profit forecasts, but new chief executive Tjeerd Jegen plans to turn the company around, improving like-for-like sales by reducing prices and increasing availability6.
Contributors
Banks Standard Chartered and Barclays, two of our largest holdings, continue to perform well. Both reported profits ahead of expectations7 and upgraded full year profit expectations8.
Fears that IG Group, the online trading portal, would be hit by the Budget were unfounded as spread betting (bets on whether a share rises or falls) avoided higher taxes9.
Shares in luxury retailer Watches of Switzerland rebounded as the 39% tariff rate applied by the US to Swiss goods was lowered to 15%10.
Activity
We added one new holding in the quarter: YouGov, a global research and data-analysis company best known for its public opinion polls. We believe YouGov's key differentiator is its large online consumer panel, which allows it to conduct surveys and interviews quickly and consistently to track consumer attitudes and behaviours.
Its shares have underperformed due to a recent slowdown in growth but we think a solution lies in employing artificial intelligence (AI) to provide detail not just on what consumers think, but why they think as they do.
We first invested in package holiday operator Jet2 during Covid when planes were grounded, but began reducing our position in May 2025 and fully exited in December.
We sold our position in bus and rail operator FirstGroup. Government policies of rail nationalisation11 and bus franchising12 remain significant hurdles.
Outlook
Despite the gloomy headlines, the UK stockmarket performed strongly in 2025, driven by a handful of large, internationally focused FTSE 100 companies13.
Our philosophy and investment process focus on the recovery potential of unloved stocks and we have increased our allocation to the UK mid-cap sector where we see selective attractive opportunities.
We continue to invest with discipline in this area of the market as we recycle gains from successful investments made a few years ago. This gives us confidence in the potential for further gains in the year ahead.
Notes and references
1. FTSE 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.
2. IA 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.
4. https://www.pem.co.uk/article/business-rates-reform-and-what-it-means/
6. https://www.insightdiy.co.uk/news/bm-profits-drop-as-turnaround-plan-progresses/15766.htm
7. https://www.sc.com/en/press-release/q3-2025-financial-results/
8. https://home.barclays/investor-relations/reports-and-events/financial-results/
9. https://sbcnews.co.uk/featurednews/2025/07/30/uk-betting-tax-hikes/
10. https://www.bbc.co.uk/news/articles/ce8zkrplpdyo
13. https://www.trustnet.com/news/13466721/six-charts-that-show-what-powered-markets-in-2025
Risks specific to Artemis UK Special Situations 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.
- Special situations risk The fund invests in companies that are in recovery, need re-financing or are suffering from lack of market attention (special situations). These companies are subject to higher-than-average risk of capital loss.
- Specialist investment objective risk The fund will only invest in companies which have a positive environmental and/or social impact. It is also prevented from investing in companies which conduct certain types of activities. The universe of potential investments available to the fund will therefore be smaller than if no such restrictions were applied. If a company in which the fund invests no longer meets the criteria for investment and/or is not making sufficient progress on improving its operational performance, the manager will seek to sell the investment. The price which may be obtained for selling an investment in these circumstances might be lower than that which could have been obtained had the sale not been required.
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.
