Artemis SmartGARP UK Equity Fund update

Source for all information: Artemis as at 30 June 2025, unless otherwise stated.

Fund objective

The fund’s objective is to grow capital over a five-year period.  

Performance

The Artemis SmartGARP UK Equity Fund had a good quarter – up 12.5% in the three months to 30 June 2025 compared with 4.4% from its first benchmark, the FTSE All-Share¹, index, and 7.5% from its second benchmark, the IA UK All Companies sector average². 

This represents a continuation of a long-term trend of outperformance. In the past decade, the fund has returned 10.4% per annum after fees – some way ahead of the 6.8% figure from the FTSE All-Share. 

This outperformance contrasts with most UK unit trusts, which have lagged the market: the IA UK All Companies sector’s average return is 5.4% per annum for the past 10 years³.

The SmartGARP software and investment process is designed to find shares that are cheaper than the broader stockmarket but that are delivering faster profit growth. We believe our performance over the years reflects this.

For the past five calendar years of performance, please see the table below.
Please remember that past performance is not a guide to the future. 

Contributors/detractors   

The fund’s biggest sector tilt is to banks at 23.3%, compared with only 13.5% from the FTSE All-Share⁴. Indeed, banks have been among the biggest contributors to performance in the past few months, although this has primarily been due to us owning Lion Finance and Barclays rather than the sector in general. This is typical of our fund; the bulk of our outperformance usually tends to come from stockpicking rather than sector allocation. 

As an illustration, HSBC and Barclays are the two largest companies in the UK banking sector. Over the past decade we have tended to own either one or the other, but rarely both at the same time. For example, we had nothing in Barclays from July 2022 to February 2024 and an average of 7.5% of the fund in HSBC. Since then, we have averaged 6.8% in Barclays and 0.8% in HSBC. 

We switched the positions around because our SmartGARP software tool changed its relative preference. The trigger came on the back of company results⁵ and subsequent revisions to profit forecasts⁶.

There were few major detractors during the period. Our holdings in oil & gas companies Equinor and TGS worked against us as energy prices fell. 

Activity 

As ever, we adjust the constituents of the fund as new information becomes available. In the past few months, we have sold our holdings in Tesco and J Sainsbury because price competition⁷ led to downgrades⁸. We also reduced our exposure to Marks & Spencer⁹ and Shell – again, following downgrades¹⁰. 

We made purchases in water provider United Utilities, online trading specialist IG Group, savings and investment firm M&G and the banks NatWest and Lloyds. This kept our exposure to undervalued shares more or less unchanged, but ensured we remained focused on companies experiencing earnings upgrades. In doing this, we aim to increase the probability that our companies’ profits continue to outpace those of the broader stockmarket.

Outlook

Despite our emphasis on owning companies that are growing faster than the market, we have also ended up with the cheapest portfolio of any fund in the IA UK All Companies sector, according to Morningstar’s data as at 30 April 2025. Our exposure to value shares – those that are cheaper than the market – is higher than other funds in our peer group and it is also high compared with our own historical levels. These shares currently look extremely cheap in our view so it is perfectly rational to skew our portfolio towards them.