Artemis High Income 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 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 £ 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
The benefits of focusing on high income in our mandate shone through in 2025, we would argue; the fund delivered a total return of 10.1%, beating its benchmark, the IA £ Strategic Bond sector average1, which returned 7.2%. Over the three years since the end of 2022, the fund has returned 34.3%, while the average IA £ Strategic Bond fund has delivered 20.7%2.
Looking at the fourth quarter of 2025 in isolation, the fund returned 2.1% compared with 1.7% for the IA £ Strategic Bond sector.
Discrete calendar-year performance
| 2025 | 2024 | 2023 | 2022 | 2021 | |
| Artemis High Income I Inc GBP | 10.1% | 10.0% | 10.9% | -10.1% | 5.9% |
| IA £ Strategic Bond average | 7.2% | 4.4% | 7.9% | -12.0% | 0.9% |
Past performance is not a guide to the future.
Source: Lipper Limited, class I income units, to 31 December 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
During the fourth quarter (Q4), the strongest performers within our fixed income portfolio included bonds issued by Isabel Marant (the French fashion label), BlueNord ASA (European oil & gas), IG Group (online trading and investments), Hammerson (property) and TP ICAP (the broker).
Bonds from TotalEnergies, National Grid, British American Tobacco, BMW and Anglo American also contributed positively to the fund’s returns.
Among the shares we hold, UK banks (Barclays, NatWest and Lloyds) were the standout performers of Q4, as fears that the Budget would lead to a sell-off in UK government bonds and windfall taxes failed to materialise3.
Detractors
Bonds issued by INEOS Quattro (petrochemicals), Owens & Minor (the US healthcare distribution business), Ubisoft Entertainment (the French video game producer) and Tereos (the agro-industrial group) detracted from returns in Q4.
On the equity side, 3i Group (private equity), Entain (sports betting and gaming), Marks & Spencer (retail), Melrose Industries (aerospace) and Deutsche Telekom (telecommunications) all disappointed.
Activity
In October, bonds we held in US grocery chain Albertsons and UK-listed energy company Energean were refinanced4 and we participated in the new five-year bonds issued by both.
We also bought new issues from luggage producer Samsonite and Greek utility Public Power Corporation.
Meanwhile, we trimmed our holdings in some shares following strong recent performance, including NatWest and Barclays. We continue to be optimistic about these names and hold sizeable positions in each.
In November, we added new lines in Odfjell, an owner of offshore drilling rigs. We like the company’s strong market position in the Norwegian North Sea and long-term relationships with oil & gas companies.
We sold our position in CURRENTA, the owner of a large chemical production facility in northern Germany. While we are comfortable that the business model is solid – based around renting the site to chemical production companies, rather than attempting to produce chemicals itself – its bonds didn’t perform as we had hoped.
In December, we bought fresh positions in bonds issued by Maxam Prill, a provider of civil explosives. We also bought back into a position we had sold a few months ago – Cloud Software Group, a provider of enterprise software solutions – following its underperformance. Our only sale for the month involved trimming our holding in housebuilder Vistry, following a bounce in its bonds after the Budget.
Outlook
There are always risks in financial markets. In our view, the three main risks at present appear to be: the chance of an AI (artificial intelligence) overbuild and oversupply; a US economic shock; the US central bank, the Federal Reserve cutting interest rates by less than the market expects. Importantly, none of these risks appear to us to be all that threatening for the high-yield bond market and/or for our fund’s investment strategy.
Notes and references
1. The IA £ 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. Source: Lipper Limited, class I income units, to 31 December 2025
4. When corporate bonds are refinanced, the company issuing the debt repays (or ‘redeems’) the existing bond and replaces it by issuing new debt.
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.
