Artemis High Income Fund
Q1 2026 update
Source for all information: Artemis as at 30 March 2026, unless otherwise stated.
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.
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 sector.
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.
Review of the quarter to 31 March 2026
The first quarter of 2026 was, in many ways, a tale of two halves. Shares and corporate bonds were strong in January and, broadly speaking, in February. However, software shares and other companies perceived as threatened by artificial intelligence (AI) suffered.
Shares and bonds subsequently reversed course in March. Conflict in the Middle East pushed up oil prices, putting an end to hopes that interest rates would be cut. Shares in energy companies performed well but these gains were offset by weakness in property, banks and companies selling products to consumers.
Performance
Our exposure to dividend-paying shares in the UK and Europe enhanced performance at the start of the year but had the opposite effect in March.
Our bond portfolio is less sensitive to interest rates than average. This hurt our relative performance in February (when interest rate cuts were expected, which is usually interpreted as positive for bonds) but was helpful in March (when rising inflation due to higher oil prices changed the narrative).
Overall, the fund returned -1.7% during the first quarter versus -0.9% for our benchmark and peer group, the IA £ Strategic Bond sector1.
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.
Detractors
Shares in private equity group 3i fell. It owns a majority stake in discount retailer Action, which is planning a costly expansion into the US2. Other underperforming shares included Entain (sports betting), Vistry (construction), Melrose Industries (aerospace) and Aviva (insurance).
Our holdings in longer-duration government and investment-grade bonds, which are more sensitive to interest rates, hurt performance in March – although they are a small part of the fund’s portfolio.
Among the high-yield bonds we hold, French games producer Ubisoft Entertainment announced a major restructuring3, which includes culling some of its titles. We think the reorganisation will simplify the company and free up more resources for its blockbusters, but it will be costly. Ubisoft also got caught up in the stockmarket’s ‘shoot first’ attitude towards software companies. However, we view AI as an unambiguous positive for the company. Ubisoft has been using AI for years to reduce development costs and enhance in-game play4.
In a similar vein, US jobsite ZipRecruiter was weak due to AI fears. We think AI could be transformative for Zip, which has been integrating AI agents into its services5.
Contributors
Oil & gas companies – across shares (TotalEnergies) and bonds (W&T Offshore and BlueNord) – boosted returns as energy prices rose in March.
Bonds issued by French fashion house Isabel Marant and chemical company Ineos also performed well.
Activity
During the quarter, we bought bonds issued by:
- Cheplapharm (pharma)
- Keepmoat (housebuilder)
- Allwyn (lotteries)
- Ancestry.com (genealogy)
- Michaels (arts and crafts)
- RR Donnelley (packaging and printing)
In March, when financial markets were volatile due to the Middle East crisis, we made three types of trade. The first involved buying high-yield bonds issued by high-quality companies that will provide a steady stream of income. Second, we purchased 10- and 20-year US government bonds, as well as US dollar bonds issued by Royal Dutch Shell.
Finally, we sold bonds that had performed well and whose resilience surprised us, and added to underperformers. We sold bonds issued by Ineos (chemicals) Gatwick Airport, Ford and Millrose Properties (which helps homebuilders buy land). Then we added to Keepmoat, Panoro Energy (a West African oil & gas producer) and Heimstaden (a Swedish residential property company).
Outlook
During times of uncertainty, having an income focus provides a useful anchor, in our view. Across bonds and shares, we have a natural bias towards companies with physical assets that are hard to replicate and less likely to be displaced by AI. We are looking for investments that generate a high level of current income (as opposed to making long-term technological bets) and we think this gives our investors something tangible to hang onto when markets are choppy.
Notes and references
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.
- 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 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.
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.
