Artemis Monthly Distribution 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
To generate monthly income, combined with some capital growth over a five-year period.
About the fund
The Artemis Monthly Distribution 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 worldwide 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.
Overview
Most stock markets performed well in 20251, with the MSCI AC World index2 clocking up a 13.9% gain3 in sterling terms. One of the most striking features of 2025 was how well non-US stockmarkets performed4.
We have been talking of ‘regime change’ in the global economy for a number of years and we felt this theme played out forcefully in 2025. Donald Trump’s clear messaging around NATO countries taking more responsibility for their own defence and security resulted in a raft of governmental pledges to increase defence spending5.
Meanwhile, the health of government balance sheets continued to deteriorate last year: the US national debt has reached $38.6tn6, while Germany committed to a colossal programme of spending on infrastructure and the military7. Concerns over government debt manifested in the best year of returns for precious metals since the late 1970s, with gold and silver prices rising by 65% and 144%, respectively, versus the dollar8.
Performance
Last year, the fund returned 23.1%, compared with 10.2% from its benchmark, the IA Mixed Investment 20-60% Shares sector average9.
Looking at the fourth quarter of 2025 specifically, the fund returned 4.0% compared with 2.7% for the peer group average10.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
| Artemis Monthly Distribution Fund | 23.1% | 15.7% | 7.0% | -5.6% | 14.1% |
| IA Mixed Investment 20-60% Shares NR | 10.2% | 6.2% | 6.9% | -9.8% | 7.6% |
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.
Contributors
Samsung made the most significant contribution to the fund’s performance during the fourth quarter, followed by Standard Chartered, Siemens Energy, Ping An Insurance Group, Societe Generale, Hyundai Motor and Kinross Gold.
Samsung is benefiting from a strong cycle in memory chips, as a surge in demand due to artificial intelligence meets a shortage of supply11. This has resulted in pricing power and healthy free cashflow12 (FCF) generation. Given Samsung’s policy of returning 50% of FCF to shareholders13, we expect this to result in higher cash returns.
Banks have been strong performers for us, with Capital One Financial, Banca MPS and Citigroup also delivering compelling returns in the fourth quarter. Rising profitability from higher interest rates has enabled banks to distribute substantial amounts of cash to shareholders through dividends and share buybacks14.
Another area of the portfolio that rewarded shareholders throughout 2025 was the companies that supply the vast energy needs of AI (artificial intelligence) data centres and tech companies. Siemens Energy and Mitsubishi Heavy – the two market leaders in gas turbines for power stations – have seen rapid growth in orders15.
Kinross Gold made the largest contribution of any share to our performance in 2025. A record gold price16 drove an acceleration in free cashflow and dividend growth for miners, while low oil prices reduced costs, boosting profits17.
Detractors
The shares that detracted most from performance in Q4 included Abu Dhabi Commercial Bank, Hanwha Aerospace, BAE Systems, Contemporary Amperex Technology and Rheinmetall. We sold out of Rheinmetall during Q4 to take profits.
Fixed Income
In fixed income, it was our allocation to shorter-dated18, high-quality high-yield bonds that continued to generate consistent income for the portfolio during the fourth quarter. We have found no shortage of bonds we believe to be mis-priced, many of which offer high single-digit yields and are backed by good quality, cash-generative companies.
Positioning
The shape of the portfolio has not changed materially over the past 12 months. Defence, gold producers and banks have been significant themes on the shares side of the portfolio for some time, as has a prominent allocation to short-dated high yield in fixed income.
We added pharmaceutical companies Pfizer and Bristol Myers Squibb to the portfolio in November. Prior to the fourth quarter, healthcare had been the worst performing sector globally last year, due to too much debt, tariffs (a tax on imports) and the threat of political interference in the US19. However, we felt that cheap share prices were discounting a lot of bad news.
Outlook
In our view, three decades of greater global integration since the fall of the Berlin Wall have given way to a new era of self-sufficiency. We believe that this volatile and unpredictable environment should lend itself to our approach of finding bonds and shares that offer good value and decent income, whatever country or sector they may reside in.
Notes and references
1. https://www.trustnet.com/news/13466721/six-charts-that-show-what-powered-markets-in-2025
2. The MSCI AC World (also known as the MSCI All Country World index or MSCI ACWI) is a widely-used indicator of the performance of global stockmarkets.
3. & 4. Source: Lipper Limited to 31 December 2025
5. https://www.bbc.co.uk/news/world-us-canada-68269354
6. https://www.usdebtclock.org/ as at 23 January 2026
7. https://www.bbc.co.uk/news/articles/c62z6gljv2yo
8. https://www.bullionvault.co.uk/gold-news/gold-price-news/gold-silver-2025-record-price-123120251
9. The IA Mixed Investment 20-60% Shares NR 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 ‘comparator benchmark’ against which the fund’s performance can be compared. Management of the fund is not restricted by this benchmark.
10. Source: Lipper Limited to 31 December 2025
12 Free cashflow represents the amount of cash available to a company after all liabilities have been met.
14. Share buybacks 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.
15 https://www.bloomberg.com/features/2025-bottlenecks-gas-turbines/
16. https://www.bullionvault.co.uk/gold-news/gold-price-news/gold-silver-2025-record-price-123120251
17. https://metalsandminers.substack.com/p/premium-the-golden-age-of-profitability
18. Short-dated bonds are less sensitive to interest rate risk than longer-dated bonds and tend to be less volatile.
19. https://www.lseg.com/en/insights/ftse-russell/health-care-woes
Risks specific to Artemis Monthly Distribution 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.
- Higher-yielding bonds risk The fund may invest in higher-yielding bonds, which may increase the risk to capital. Investing in these types of assets (which are also known as sub-investment grade bonds) can produce a higher yield but also brings an increased risk of default, which would affect the capital value of the fund.
- 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 Because one of the key objectives of the fund is to provide income, the fund charges are taken from capital. This may constrain capital growth or erode capital.
- 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.
