Artemis UK Select 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 grow capital over a five-year period.
Review
It was a frenetic quarter. In early February, sharp falls in the share prices of a range of businesses, particularly software companies, reflected a fear that a new generation of artificial intelligence (AI) tools might threaten their profitability1. The other side of this coin was a surge of enthusiasm for companies deemed to be less vulnerable to AI, such as infrastructure, mining, energy and industrial companies2.
At the start of March, however, the market's attention abruptly shifted away from AI and towards the conflict in the Middle East and its implications for the global economy. As energy prices soared, there was a rapid re-appraisal of the outlook for inflation and interest rates. In response, share prices in the UK fell from record highs3.
Performance
During the quarter, the Artemis UK Select Fund fell by 6.9%4. Over the same period its first benchmark, the FTSE All‑Share index5, rose by 2.4%, while its second benchmark, the IA UK All Companies6 peer group average, fell by 2.1%.
Discrete calendar-year performance
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| Artemis UK Select Fund | 28.3% | 25.3% | 19.1% | -9.8% | 19.0% |
| FTSE All-Share TR | 24.0% | 9.5% | 7.9% | 0.3% | 18.3% |
| IA UK All Companies NR | 14.7% | 7.9% | 7.2% | -9.3% | 17.1% |
Past performance is not a guide to the future.
Source: Artemis/Lipper Limited, class I accumulation GBP 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 in response to disappointing sales in France and the announcement of a pilot project in the US, which created fears that the new venture would add costs and, potentially, distract its managers from its core business in Europe7. Memories of Tesco's unsuccessful attempt to expand in the US continue to linger. Equally, there are examples of European retailers such as Primark, Inditex, Ikea and Lidl finding success in the US and we see the costs of this expansion as reasonable given the potential size of the market.
An announcement from housebuilder Vistry that Greg Fitzgerald, its chief executive and chairman, would give up his role as chair and stand down as chief executive once a successor can be found was poorly received8. He oversaw its merger with Countryside and re-focused it on partnerships with housing associations and local authorities. This new business model, however, has yet to be proven. After their recent falls, shares in housebuilding companies are, on some measures, as cheap as they were during the Global Financial Crisis.
The launch of an AI-powered app for financial advisers in the US was seen as a threat to wealth managers such as St James’s Place, whose share price fell along with those of other 'AI losers', such as software providers9. The picture painted by its results, however, was rosier, suggesting that its rehabilitation under its new management team continues.
Contributors
Oxford Instruments performed well as it confirmed it was on track to deliver higher profits as orders recovered from the disruption caused by 2025's trade tariffs10. This company is a leader in many of the technologies needed to build the next generation of compound semiconductor chips. When we visited its new, state-of-the-art facility outside Bristol in January, we came away feeling that the biggest challenge it faces is to keep up with demand.
Avoiding two of the quarter's big fallers, Unilever and Reckitt Benckiser, made a positive contribution to the fund's returns relative to the FTSE All-Share. Sales of some of the branded consumer goods these companies produce continue to disappoint. In addition, Unilever's plan to offload its food business was poorly received by its shareholders, who now face the prospect of receiving shares in McCormick, a slow-growing US food company11.
Activity
We bought shares in Relx in February when they fell along with those of other supposed ‘AI losers’. We had followed Relx for a long time, having been an admirer of its transformation from a slow-growing, old media company into a high-returning, fast-growing data business. We believe that, far from harming Relx, AI is helping its growth. The company demonstrated its confidence by announcing a plan to buy back shares to the value of £2.25bn12.
We bought newly issued shares in Rosebank Industries. It will use the proceeds to fund its acquisition of two industrial businesses in the US. The strategy of Rosebank's managers should be familiar to anyone who followed their work at Melrose Industries. They will restructure these businesses and invest in them, improving their growth and increasing their margins before selling them on.
We added to the holding in International Consolidated Airlines Group (IAG). The war in Iran triggered worries of a sharp spike in the price of aviation fuel and fears of potential shortages. In our view, IAG is better placed to cope with the uncertainties facing the airline industry than its peers thanks to its cautious approach to hedging its fuel costs and the high returns that its airlines – BA, Iberia, Vueling and Aer Lingus – produce.
With some reluctance, we sold the position in International Personal Finance (IPF) which agreed to be bought by BasePoint Capital in the US towards the end of 202513. We made it clear that we believed the initial offer was too low and BasePoint returned with a slightly improved offer. We continue to believe the bid was too low, but the scale of the moves in share prices in the UK market meant we could see better opportunities elsewhere.
Outlook
We expect higher energy prices and inflation to lead to slower economic growth. With wage pressures easing, we see interest rates as likely being closer to 3% at the end of 2027 than the 4% level the market is currently anticipating. As such, we see the sharp falls in the shares of real estate companies and housebuilders as representing an opportunity to investors whose time horizons are longer than three months.
The Middle East remains the primary focus for investors, with news from the White House and Mar-a-Lago determining short-term movements in markets. This makes for a volatile backdrop. Our response is to do what we always do at times of increased volatility. We are sticking to our process and to our three-year investing horizon. We believe the companies this fund invests in are highly attractive both in absolute terms and relative to the wider UK market.
Notes and references
2. Bloomberg, 24 February, 2026 Goldman Team Says Asset-Heavy Stocks Outperform on AI Fears.
3. Financial Times, 3 March, 2026 FirstFT: Stocks and bonds tumble as Middle East war spreads.
4. Artemis/Lipper Limited, class I accumulation GBP to 31 March 2026.
5. FTSE All-Share Index TR: A widely used indicator of the performance of the UK 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.
6. IA UK All Companies NR: A group of other asset managers’ funds that invest in similar asset types as this fund, collated by the Investment Association. Management of the fund is not restricted by this benchmark.
7. Bloomberg 26 March 2026 Buyout Firm 3i Drops as Bad Weather, France Weighs Down Action.
8. Financial Times, 4 March 2026, Vistry shares plunge 25% as UK housebuilder warns of lower margins.
9. Financial Times, 11 February 2026, Shares in UK wealth managers hit as AI contagion spreads.
10. Oxford Instruments – Interim trading update,15 January 2026.
11. Bloomberg 18 March 2026 Unilever Chases Consumers by Focusing on Beauty Rather Than Food.
12. Relx – Results for the year to 31 December 2025.
Risks specific to Artemis UK Select 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.
- Derivatives risk The fund 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 fund value could reduce.
- Leverage risk The fund 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 fund's capital, distributable income may be increased at the expense of capital, which may constrain or erode capital growth.
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.
