Artemis Monthly Distribution Fund
Q1 2026 update
Source for all information: Artemis as at 30 March 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.
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
Global stockmarkets surged forward in January and February 2026, while the US lagged international markets – continuing a trend that began last year. Businesses with physical assets that are hard to replicate and unlikely to be displaced by artificial intelligence (AI)1 outperformed software shares.
Stockmarkets reversed course in March. War in Iran and the closure of the Strait of Hormuz caused oil prices to shoot up. Amid worries of an inflation shock driven by higher energy prices, hopes of interest-rate cuts faded. As a result, government bond yields, which are inversely correlated to prices, moved higher.
Performance
With a return of 4.5% over the quarter, the portfolio significantly outperformed the -1.0% average return from its peer group and benchmark, the IA Mixed Investment 20-60% Shares sector2.
The fund's portfolio of shares, which accounted for 52% of its assets by the end of March, was responsible for most of its returns. Beneficiaries of tech companies’ colossal spending on AI performed particularly well. Memory chip maker Samsung Electronics was the biggest contributor over the quarter. Siemens Energy, whose gas-powered turbines are used to power AI data centres, also moved sharply higher.
Our holdings in gold miners (Kinross Gold and Agnico Eagle) and producers of industrial metals (Freeport-McMoRan and China Hongqiao) rallied along with other ‘halo’ companies (‘heavy assets, low obsolescence’). Although these holdings gave back a portion of their gains in March as investors sold them, they remained key positives over the quarter.
Inflation fell during the first two months of this year so longer-duration bonds, which are more sensitive to inflation, rallied and this helped our performance. In March however, bond prices fell and yields rose in response to the Iran war, reflecting concerns that a spike in energy prices would feed through to higher inflation.
Five-year discrete calendar-year performance
| 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.
Activity
The shape of the portfolio did not change materially over the quarter. We took profits in some of our better-performing shares, including beneficiaries of AI-related spending such as Mitsubishi Heavy Industries. We also pared back our exposure to European banks. We continued to reduce the fund's holdings in the insurance sector, which could be vulnerable to risks relating to private credit (non-bank lending).
Set against this, we added to holdings in energy companies (Chevron and Var Energi) and to energy-related names including Baker Hughes (oil field services) and Tenaris (steel pipelines). We also increased our exposure to ‘core income’ shares – companies we expect to pay a steady stream of dividends and which we see as lower risk.
Having sold some shares, we reinvested the proceeds into higher-quality, high-yield bonds.
In March, we also added to our holdings in government bonds as their prices fell and yields rose. Although we continue to believe the best returns on offer in fixed-income markets are to be found in higher-quality high-yield bonds, the rise in yields seen in March made an increased allocation to US government bonds appealing.
Outlook
Although the fund underperformed in March, it outperformed its peer group significantly in the first quarter as a whole. We believe this strong performance is testament to our approach of keeping things simple by holding a portfolio of bonds and shares that offer both value and income. Despite challenges relating to the Middle East crisis, we believe there are plenty of attractive opportunities for investors who look for income in areas that others tend to overlook.
Notes and references
2. 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.
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.
