Artemis SmartGARP UK Equity Fund
Q1 2026 update
Source for all information: Artemis as at 30 March 2026, unless otherwise stated.
Performance
The fund has had a good 12 months but gave up some ground in the past quarter, rising by 0.3% while the market returned 2.4%. The main cause of our relative underperformance was being light in oil stocks at a time when these rose sharply. We acted to neutralise the oil sector bet by buying Shell and BP. Our position in Lion Finance also detracted from returns.
On the other hand, Repsol and IG Group contributed to performance, while our underweight exposure to Unilever – which fell sharply in March – worked in our favour.
The fund is firmly at the value end of the spectrum and, as ever, we are focusing on stocks with upgrades to profit forecasts. Over the years, this has proven to be a sensible and profitable strategy, and we see no reason to doubt it now.
| Three months | Six months | One year | Three years | Five years | |
|---|---|---|---|---|---|
| Artemis SmartGARP UK Equity Fund | 0.3% | 9.8% | 35.0% | 82.2% | 122.9% |
| FTSE All-Share TR | 2.4% | 8.9% | 21.5% | 45.6% | 69.3% |
| IA UK All Companies average | -2.1% | 1.6% | 12.4% | 26.7% | 30.5% |
Past performance is not a guide to the future. Source: Lipper Limited/Artemis to 31 March 2026 for class I accumulation 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. Classes may have charges or a hedging approach different from those in the IA sector benchmark.
Outlook
We do not think the UK market offers particularly good value at present. Granted, the UK is cheaper than most other markets, but after strong performance in 2025, it is not undervalued compared with its own history.
By contrast, our fund’s p/e is quite low and, as a result, I am more optimistic about our companies achieving their earnings per share (EPS) forecasts than about the market in general. We suspect the stocks we own will do well because they have been delivering good news and this is not yet priced in.
Directors of UK-listed companies have been buying more shares on the back of the recent price pull-back. In March, 139 directors bought shares in their companies and only 51 sold. The ratio of buys to sells was thus 2.7x – above 1.7x at the start of the year, but close to average. It is nowhere near the 5.6x it reached after the 1987 crash, the 21x seen in November 1998, 37x in October 2002 or 23x in November 2008. When it gets to these levels, the insiders are telling us there are opportunities aplenty. But we’re not there today.
Activity and turnover
It might be helpful to use HSBC as a topical example of how we invest. HSBC is the second biggest stock in the UK market and, until recently, we held no shares in the portfolio. We liked banks but preferred others such as Barclays, Lloyds, NatWest, Lion Finance and Standard Chartered.
However, in February HSBC announced strong results and analysts raised their 2026 profit forecasts by over 6%. At about the same time, Barclays (which was a 5% position in the fund) delivered good results, but forecasts only crept up marginally and were subsequently downgraded as analysts factored in the developing private credit issues.
Since HSBC is under-owned and lower risk than Barclays, we cut the Barclays position by about 3% and raised our HSBC position by 4%. We also trimmed Standard Chartered.
Over the years we have switched between HSBC and Barclays, depending on which one we expect to outperform. We owned HSBC from March 2022 until March 2024, then moved into Barclays for the next two years. Now we consider ourselves to be fans of HSBC once again.
We may sometimes miss the turning points, but our objective is to pick up on the broad trends of outperformance or underperformance. We like banks in general but our preferences within the sector are constantly shifting.
By continually adjusting the portfolio and making trades such as this, we end up owning attractive stocks. As a result, our turnover is higher than most of our competitors (about 1x per year) and we have even been accused of renting stocks rather than owning them.
Since launch, our fund has outperformed the benchmark (after fees) by 2 percentage points per annum and other UK equity unit trusts by almost 3 percentage points per annum. If we can continue to achieve this going forward, I will be happy to take a few more insults in exchange for demonstrating what active management can look like.
FOR PROFESSIONAL INVESTORS AND/OR QUALIFIED INVESTORS AND/OR FINANCIAL INTERMEDIARIES ONLY. NOT FOR USE WITH OR BY PRIVATE INVESTORS.
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.
Risks specific to Artemis SmartGARP UK Equity 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.
- 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.
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.
