Artemis Strategic Assets Fund
Q4 2025 update

Review of the quarter to 31 December2025

Policy and growth support global risk assets

Global markets performed strongly in Q4 2025 as the extension of the US-China trade truce reduced near-term geopolitical risks and supported global growth expectations. Emerging market equities benefited in particular, while optimism around AI investment and resilient economic activity helped global equities finish the quarter higher despite intermittent volatility.

Monetary policy volatility and bond market divergence

Central bank policy remained the key driver of markets. US bonds experienced volatility as the Federal Reserve delivered a rate cut but signalled caution on further easing, prompting swings in risk sentiment. For global bonds, performance diverged in the final quarter, with US yields broadly stable while Japanese and some European yields rose significantly on fiscal sustainability concerns. 

Notable sector and regional differentiation 

Equity performance diverged across sectors and regions. AI-related stocks experienced increased volatility amid competitive concerns, while European equities outperformed, supported by easing political risk and fiscal developments. Japanese equities initially rallied on expectations of fiscal stimulus following political change, though bond yields rose sharply and the yen weakened.

Fiscal expansion, inflation concerns and currency moves

Fiscal policy became more prominent late in the year, notably Germany's expansionary spending plans, which drove a sharp repricing in bund yields. Rising concerns over long-term inflation and currency debasement supported strong gains in silver and gold. The dollar weakened materially, posting its worst annual performance since 2017, despite solid US asset returns in local currency terms.  

Quarterly market returns

Source: FactSet

Performance

Artemis Strategic Assets contains two ‘buckets’: a Directional (Trends) Strategy that aims to take advantage of market trends; and a Non-Directional Strategy, which endeavours to generate returns that are uncorrelated to market movements by taking long and short positions whose exposures offset each other. For both strategies, the fund invests in financial derivatives that provide exposure to a diversified range of asset classes, including equities, bonds and currencies.

The Directional (Trends) Strategy appreciated during the quarter, driven largely by currency positions including shorts in the Japanese yen (JPY) and longs in the Mexican peso (MXN). The Non-Directional Strategy was marginally negative, with drags from currencies and rates. 

In total the fund returned 0.8% over the quarter, ahead of the 0.4% made by its CPI +3% benchmark but behind the 3.5% made by its IA Flexible Investment sector. 

Past performance is not a guide to the future. Source: Lipper Limited to 31 December 2025 for class I Acc 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

Directional (Trends) Strategy

• Equities: Exposure peaked at around 43% in early October, before a sharp one-day sell-off prompted a broad-based de-risking. This lasted until late November, when volatility fell and we increased equity exposure to just over 30% by quarter end. Throughout the period we retained a preference for long positions in emerging Asian equity markets and US utilities – an indirect beneficiary of technology spend on data centres. 
• Bonds: We increased duration to eight years in October, driven by weak economic data in Switzerland and New Zealand. As US data came in stronger than expected over the quarter, culminating in a hawkish rate cut from the Federal Reserve in late December, bond yields moved higher and the portfolio shifted from long to short duration. 
• FTSE China: The expectation of fiscal and monetary stimulus from Chinese authorities and an easing in the tariff war with the US has supported emerging Asia. 
• STOXX Europe 600 Banks long: After a series of interest rate cuts, the ECB has completed what it deemed necessary to support the economy, which is being reflected in a more stable backdrop.

Non-Directional Strategy

• Long GBP short CAD: The Canadian dollar has relatively low yields and is suffering from outflows and negative sentiment. 
• Long GBP short JPY: There have been significant outflows from the yen after the newly appointed prime minister announced fiscal expansion. Meanwhile, carry remains unattractive and economic sentiment has deteriorated.
• Short GBP long USD: Significant short investor positioning argued for a long holding in the dollar, but we returned to a short position late in the quarter.

Total portfolio risk contribution

Source: Artemis

Since the change in manager, the fund has shown a somewhat low correlation to equities, bonds and commodities, while delivering a high correlation to the cross-asset trend peer group index (BTOP50) that it is trying to capture.

*BTOP50 Index replicates the overall composition of the managed futures industry (trend funds), by selecting the largest investable trading advisor programs by AUM. The index components represent at least 50% of the Barclays CTA Universe by AUM.

Outlook

Trade policy: Calm for now, but headline risk persists

Global risk sentiment should remain supported by the absence of major trade escalations, particularly between the US and China. However, trade policy is likely to remain a tactical tool for the US administration, leaving markets exposed to episodic volatility. While a sustained trade shock is not the base case, investors should expect periodic headline-driven swings in risk assets. Donald Trump's most recent actions in Venezuela illustrate that US foreign policy actions are becoming more aggressive and unpredictable.

US monetary policy: Cautious easing with growing governance risk

The Federal Reserve is expected to proceed cautiously with further easing as it balances labour market uncertainty with somewhat persistent inflation. Policy is likely to remain data-dependent, limiting the pace of cuts. Attention will turn to Fed governance in 2026, where a more politically aligned leadership could introduce longer-term risks to bond market credibility and inflation expectations.

Europe: Fiscal support offsets structural constraints

European growth prospects should benefit from a gradual shift towards fiscal expansion, particularly in Germany, which may help stabilise activity into 2026. However, the ECB is likely to remain conservative, constrained by persistent services inflation. While political risks have eased, structural challenges — including energy costs, weak productivity growth and external competition — continue to cap Europe’s medium-term upside.

China: Stabilisation likely, but recovery remains uneven

China’s outlook points to gradual stabilisation rather than a sharp rebound. Targeted support for the property sector and selective easing measures should help limit downside risks, but policymakers appear reluctant to deploy broad-based stimulus. As a result, growth is likely to remain uneven, with domestic demand recovering slowly and external conditions remaining a key uncertainty.