Artemis UK Future Leaders plc
Q4 2025 update
Source for all information: Artemis as at 18 February 2026, 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
The share prices of small UK companies rose much more slowly than larger ones last year1. We think this disparity was mainly due to a lack of investor confidence in the domestic economy. Roughly 60% of small companies’ revenues are earned in this country, whereas it’s only 20% for the UK’s largest 1002. Yet we see this as an opportunity to invest in market-leading brands, such as Dunelm, DFS, Moonpig, Greggs and Halfords, whose share prices we perceive to be cheap.
Performance
During the fourth quarter, the trust's net asset value (NAV) fell -1.3% and its share price rose 0.7%3. Its benchmark, the Deutsche Numis Smaller Companies plus AIM excluding Investment Companies4 index, gained 1.6%5. As at 31 December 2025, the trust’s share price was trading at a 13.2% discount to its NAV6.
This time last year, we were optimistic about the prospects for UK small caps7. So far, we’ve been wrong. We feel that investor confidence in the sector remains lacking, while politics has been a headwind. Frequent policy changes and the delayed Budget sapped confidence8. Yet despite the tricky politics and dismal investor sentiment, the companies we hold remain resilient, which we believe bodes well for the future.
| Calendar year performance (%)* | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| Artemis UK Future Leaders plc (NAV) | -3.4 | -1.2 | 0.2 | -25.9 | 27.8 |
| Artemis UK Future Leaders plc (Share Price) | 0.0 | -7.1 | 7.6 | -28.5 | 23.7 |
| Deutsche Numis Smaller Companies plus AIM (-InvTrust) TR | 11.8 | 5.0 | 3.2 | -21.9 | 20.0 |
Past performance is not a guide to the future.
Source: Lipper Limited, priced at midday, data to 31 December 2025 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.
*Artemis assumed management of the trust on 10 March 2025.
Negatives
Our worst share during Q4 was Telecom Plus (a utility) which reported lower interim profits (as expected) due to issues with metering and energy-related costs9. There was also speculation it would acquire fellow energy provider Ovo10.
Future (specialist media) and Hilton Foods (food packager) also underperformed. Future's profit estimates were unchanged but its share price fell11. For Hilton Foods, challenges included high white fish prices12 and delays in getting one of its facilities signed off13, having previously discovered traces of listeria14.
Positives
Norcros (bathroom and kitchen products), GB Group (fraud prevention) and Mears Group (housing) all performed well during the fourth quarter.
Norcros saw profit upgrades despite a continued tough bathroom market. Profit margins benefited from previous warehouse consolidation, as well as an acquisition of a wall-board manufacturer in Norway15.
For GB Group, first-half results16 were merely in line with expectations, yet this was enough to prompt a modest rally, because, in our view, the share price was incredibly cheap.
Mears' share price made a partial recovery from weakness earlier in the year17 as it (yet again) increased its profit expectations18.
Purchases
We recently added Bloomsbury Publishing to the trust, which we believe is becoming a more stable business due to growth in its academic publishing division and because its backlist now accounts for a higher proportion of sales: Harry Potter continues to be a bestseller 28 years after the first book was published19 and we expect the franchise to benefit from the new HBO series in 2027. Meanwhile, Disney has acquired the film rights for Katherine Rundell's novel Impossible Creatures.
We also added DiscoverIE, which designs and manufactures specialist electrical components.
Outlook
We are, if anything, even more excited about the prospects for UK smaller companies than we were this time last year. The underlying businesses of the companies we invest in have performed solidly, if unspectacularly, but we think their share prices sit well below their true worth. Management teams appear to agree with us because companies have been buying back their own shares20 at a level we have never seen before during our careers21.
Notes and references
1 Source: Lipper Limited, Artemis as at 31 December 2025
2 https://www.lseg.com/en/insights/ftse-russell/the-uks-very-global-country-index
3 Source: Lipper Limited, Artemis as at 31 December 2025
4 The Deutsche Numis Smaller Companies plus AIM Ex Investment Companies index is a widely used indicator of the performance of the UK smaller companies 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.
5 Source: Lipper Limited, Artemis as at 31 December 2025
6 Source: Artemis at 31 December 2025
7 Market capitalisation (sometimes referred to as 'market cap') is the total value of a company, calculated by multiplying the number of shares in issue by the current price of the shares. Companies are often referred to as being 'mega-cap', 'large-cap', 'mid-cap' and 'small-cap', reflecting their relative total value (although small-cap can still mean companies with values in the hundreds of millions or even low billions). Different markets attach different values when seeking to define the differences between these categorisations.
9 https://www.telecomplus.co.uk/investor-information/results-reports-presentations
11 Source: Bloomberg
15 https://www.norcros.com/media/jzuhex2f/norcros-interim-results-presentation-2025.pdf
16 https://www.gbgplc.com/investors/resources/reports-and-presentations/
17 Source: Bloomberg
18 https://www.mearsgroup.co.uk/investors
19 https://www.bloomsbury-ir.co.uk/financial/f_latest.asp
20 Share buybacks refer to the reacquisition by a company of its own shares. Instead of (or as well as) 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.
21 Source: Artemis, Bloomberg as at 31 December 2025.
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.
