Shares magazine 22 May 2025

IS APPLE EX-GROWTH?

WHAT AN END TO EXPANSION COULD MEAN FOR THE SHARES

Three important things in this week’s magazine

Is Apple ex-growth?

Looking at whether the days of rapid expansion are over for the consumer electronics giant and what that would mean.

Emerging markets

After tariff turmoil where do stocks in the developing world stand and what does the long-term opportunity look like?

Nvidia – the biggest earnings show in town Can first-quarter earnings sustain the recent recovery rally in Nvidia shares over the last month?

Visit our website for more articles

Did you know that we publish daily news stories on our website as bonus content? These articles do not appear in the magazine so make sure you keep abreast of market activities by visiting our website on a regular basis.

Over the past week we’ve written a variety of news stories online that do not appear in this magazine, including:

Cranswick scales new high after record year of profit

Diploma shares jump to all-time high on raised outlook

Diageo in demand as organic growth accelerates, drinks giant flags potential disposals

The argument for gold prices to move yet higher

One fund manager thinks $5,000 per ounce by the end of the decade is ‘frankly conservative’

In a recent edition of Shares we posited the idea that gold might move towards $4,000 per ounce. Initially, the precious metal continued its year-to-date charge in the wake of this article and reached the $3,500 mark but a fragile recovery in risk appetite has put gold back around the $3,200 level.

In a recent research paper Jim Luke, lead manager of the Schroder ISF Global Gold Fund (BZ01VB5), argued that gold at $5,000 per ounce by the end of the decade ‘did not feel an outlandish scenario 12 months ago,’ adding that it ‘feels frankly conservative now’.

Obviously Luke has skin in the game here, given he invests in gold mining equities, but we were interested to get his take on why he sees prices moving higher from this point.

He tells Shares: ‘The sentiment on gold in the West right now is very much “Why would I buy now we’re at the real, inflation-adjusted all-time high from 1980, how much further can it really go?”.

outright selling, but still very light compared to 2020 or even 2016 and a shadow of the quantum of demand we saw in the last bull market.’

Luke says sitting in London it doesn’t feel like there’s a bull market in gold – noting his fund has not been flooded with inflows despite very strong performance. He thinks this could change pretty rapidly.

‘Can we go higher? Absolutely. Our conviction is why couldn’t you see a simultaneous global bid for gold, a global run on the metal.

‘A situation where the Chinese are still buying, broader emerging market central banks continue to add and Western participation finally picks up – that’s a scenario where gold prices would need to move a lot higher in order to destroy jewelery demand and tease-out more recycling supply. To be honest, that’s exactly the scenario I personally think is very, very likely to occur over the balance of the decade.’

He adds: ‘The underpinnings of that view were in place long before Trump came back to the White House. They are based on long-cycle fiscal and geopolitical trends. The world was already moving towards great power rivalry and moving away from US unipolarity. At the same time, very high debt burdens and fiscal deficits were already becoming problematic in developed economies.’

‘The clearest conclusion we have is that the dominant driver of gold prices this year has been China. More broadly since 2022 the dominant demand drivers have been a combination of emerging-market central bank buying plus physical demand from Asia and the Middle East.

‘Developed-market investor participation has been very light. It’s higher this year than in 2023 and 2024, when Western investors were actually

Luke believes the Trump administration is accelerating these trends and believes the need for China to diversify out of dollar assets ‘is very easy to understand’.

Yet Luke also notes gold equity valuations are low by historical standards, adding: ‘You have record cash flows driven by record gold prices and yet depressed valuations. We think that will change. That valuation gap, when it closes, will close violently.

‘Many things can catalyse an improvement in western participation but I think one of the really large catalysts will be when or if the Federal Reserve is again required to intervene in treasury markets to stabilise the long-end of the yield curve.’

Moody’s cuts US credit rating

US and global bond yields rise after US sovereign debt downgraded

The downgrade of US creditworthiness from its pristine ‘triple A’ status by Moody’s (MCO:NYSE) comes at a fragile time for investors trying to gauge the impact from tariffs amid a ballooning government budget deficit.

Given that fellow credit rating agencies Fitch and Standard and S&P Global (SPGI:NYSE) had already downgraded US sovereign debt in 2023 and 2011, respectively, in more ‘normal’ times Moody’s move might have been seen as largely symbolic.

Not this time around. On 16 May S&P futures dropped over 1% while Asian and European stocks fell in early trading on Monday (19 May), while US 30-year bond yields breached the psychologically important 5% level and gold jumped over 1%. US markets did eventually recover some poise but sentiment remains fragile.

In foreign exchange markets the euro rose more than 1% against the greenback, leading gains against the world’s reserve currency.

US since 1917 but warned in 2023 that it was at risk of a downgrade.

In a statement Moody’s said the downgrade ‘reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.’

The US budget deficit of $1.8 trillion is more than 6% of gross domestic product. Trump’s bill to extend his 2017 tax cuts won approval from a congressional committee to advance towards passage in the House of Representatives.

The US dollar has lost more than a tenth of its value against a basket of currencies since the start of 2025 reflecting a dimming of enthusiasm for US assets as investors reallocate to Europe and emerging markets.

Moody’s had held its highest credit rating on the

As Ed Monk, associate director at Fidelity International explains: ‘Economists worry that when a rise in yields coincides with increased borrowing, interest payments on the debt can grow significantly.

‘The latest tax cuts are expected to widen the US budget deficit, as they are not matched by spending cuts.’

US stocks have largely ignored rising bond yields and sit within striking distance of all-time highs reached in February, following a huge rally.

Notably, despite their higher interest rate sensitivity, technology stocks have led the market’s advance with the Nasdaq Composite index surging around 25% since the lows of the liberation dayinduced sell-off in early April.

One datapoint which may prove decisive is that the yield on 10-year treasuries has moved above the earnings yield (the inverse of the price earnings ratio) for the first time since the pandemic. [MG]

These are the stocks ‘guru’ investors have been buying and selling this year

Warren Buffett adds another ‘mystery stock’ to Berkshire’s portfolio

He may be retiring in December, but the ‘Sage of Omaha’ still has one or two more tricks up his sleeve and investors are still curious to know which shares Berkshire Hathaway (BRK.B:NYSE) has been buying and selling this year.

In the group’s latest SEC filing, Berkshire was a net seller of US stocks to the tune of $1.5 billion in the first quarter, unloading $4.7 billion-worth of shares in three financial stocks, Bank of America (BAC:NYSE), Capital One (COF:NYSE) and Citigroup (C:NYSE), where it now no longer has a position.

Berkshire also reduced its holdings in dialysis firm DaVita (DVA:NYSE) and media business Formula One Group (FWONK:NASDAQ) and sold out of Brazilian digital banking services provider Nu Holdings (NU:NYSE)

On the other side of the ledger, the group bought $3.2 billion-worth of shares, more than doubling its stakes in alcoholic beverages firm Constellation Brands (STZ:NYSE) and leisure products firm Pool Corp (POOL:NASDAQ) and adding $2 billion of shares in ‘one or more holding(s) for which it is requesting confidential treatment’.

The new holding is listed as ‘commercial, industrial and other’, triggering a great deal of speculation as to its identity.

Another legendary investor whose every move is watched, Howard Marks, founder and co-chair of Oaktree Capital Management, made several changes to his portfolios in the first quarter.

Pershing Square

Source: LSEG

first quarter by selling his entire stake in footwear and athleisure brand Nike (NKE:NYSE) and opening a major position in mobility services group Uber Technologies (UBER:NYSE) instead.

Marks increased his bet on precious metals, raising his holdings in Barrick Gold (GOLD:NYSE) and Freeport-McMoRan (FCX:NYSE), and cut his China exposure including NetEase (9999:HKG) and Yum China Holdings (YUMC:NYSE).

Bill Ackman, founder and manager of hedge fund Pershing Square Holdings (PSH), made waves in the

Ackman also raised his holding in Hertz Global (HTZ:NASDAQ) while reducing his directto-consumer exposure by selling down shares in Chipotle Mexican Grill (CMG:NYSE) and Hilton Hotels (HLT:NYSE).

Seth Klarman, billionaire chief executive of Baupost Group and a true exponent of value investing, added to his holdings in Alphabet (GOOG:NASDAQ), Eagle Materials (EXP:NYSE) and Wesco (WCC:NYSE), and opened new positions in Elevance Health (ELV:NYSE) and Fidelity National Information Services (FIS:NYSE)

At the same time, Klarman reduced his holdings in telecoms firm Liberty Global (LBTYA:NASDAQ), satellite communications company Viasat (VSAT:NASDAQ) and insurance broker and asset manager Willis Towers Watson (WTW:NASDAQ). [IC]

What tender offer means for Polar Capital Global Financials Trust investors

Comprehensive and shareholder-friendly set of proposals, claims analyst

Investment trust Polar Capital Global Financials Trust (PCFT) is offering shareholders an easy exit at a premium to the current share price, cutting fees and boosting its commitment to future dividends in sweeping changes.

The investment trust has launched a tender offer of its issued share capital (excluding treasury shares), providing investors with an opportunity to fully exit at a price close to NAV (net asset value). The proposal, which follows through on a commitment in the trust’s articles of association, is conditional on shareholder approval and meeting continuation thresholds aimed at ensuring ongoing viability.

The tender offer, managed by Stifel, will allow all qualifying shareholders to tender some or all of their holdings at a price equal to NAV minus costs (capped at 1%). This would have worked out at 211.74p per share, based on NAV of 213.88p on 15 May, a 2.3% premium to the mid-market price of 207p at that time.

To minimise disruption, the board will also conduct a secondary placing of tendered shares to institutional investors at a premium to the tender price, although not more than 3% above or below the prevailing NAV. Any shares not placed will be repurchased by the trust and held in treasury for potential reissue should the shares trade at a NAV premium in the future.

The offer is conditional on no more than 67% of shares being tendered, implying a minimum posttender NAV of around £200 million, according to calculations by Quoted Data analysts, and that at least 10% of the trust’s shares remaining in public hands. If these conditions are not met, the trust could consider winding itself up.

A general meeting will be held on 18 June 2025 to seek approval for the tender and the related secondary placing. If passed, the tender price will be announced on 20 June, with proceeds expected to be distributed by 1 July.

‘This is a comprehensive and shareholderfriendly set of proposals,’ said Quoted Data’s senior analyst Matthew Read.

‘The tender offer gives investors optional liquidity at close to NAV, while those who remain will benefit from lower ongoing fees and a clear commitment to dividend growth. The enhanced buyback policy should also help reduce discount volatility over time.

The proposals appear aimed at those investors who believe the trust has underperformed in recent years. It’s five-year total return of 152.5% has lagged major UK bank stocks like Lloyds (LLOY), NatWest (NWG) and Barclays (BARC), although it is probably unfair to compare the share price performance of a fund with a portfolio of 126 stocks with the performance of individual stocks.

The trust has outperformed its’ Investment Trusts Financials & Financial Innovation benchmark (55.9%) considerably since 2020. [SF]

Capital Global Financials Trust plc

Banking on a brighter future

It’s business as usual for contractor Costain as shares hit five-year high

New orders give the firm ‘increasing visibility’ on revenue and earnings

It has been a good 2025 so far for construction and infrastructure firm Costain (COST), with the shares gaining 15% to a five-year peak of 122p.

In March, the company posted an 18% jump in profit for 2024, despite a dip in revenue, and a record 38% increase in its forward work position to £5.4 billion from £3.9 billion the previous year.

Chief executive Alex Vaughan said the new order book, together with growth on existing frameworks, gave Costain ‘increasing visibility on future revenue and margins’.

On 15 May, ahead of its annual general meeting, the company reported trading year-to-date was in line with expectations, with new contract wins at Urenco’s uranium enrichment facility in Cheshire and at Sizewell C in East Suffolk, and confirmed it would meet both its adjusted operating margin target and

Victorian Plumbing shares hit new low as group plans MFI comeback

Chief executive plots re-entry to £20 billion UK homewares market

Its first-half results announcement should have been a moment for celebration, but investors thought otherwise and sent shares in Victorian Plumbing (VIC:AIM) spiralling down the plughole to a 12-month low.

The firm reported an increase in sales and market share, with strong growth in the second quarter to the end of March following the completion of its warehouse transformation in December last year.

‘Having invested significantly in preparing the business for future growth last year, I am pleased with the group’s strategic progress in the first half,’ said a proud chief executive,

Mark Radcliffe.

Radcliffe also unveiled plans to relaunch MFI, the famed furniture brand which went into bankruptcy almost two decades ago and was part of the assets acquired from administration last year along with the bathroom retailer Victoria Plum. It is this shift in strategy which seems to have alarmed the market.

‘I am very excited about the upcoming re-invention of MFI,

its net cash target.

While it was ‘mindful’ of the economic backdrop, the firm said due to the critical nature of its work and the continued improvement in its portfolio of contracts it was ‘confident in the group’s strategy and growth prospects’. [IC]

allowing us to tap in to more of the £20 billion UK Homewares market’, said the chief executive.

‘Our dedicated and ambitious team, decades of e-commerce knowledge and best-in-class proprietary software, together with the recognisable MFI brand, will help to deliver our strategic ambition over the medium-term.’ [IC]

B&M’s new boss needs to restore confidence in discounter’s growth story

Can new CEO Jegen arrest curious slowdown at the cut-price groceries-to-general merchandise seller?

Business at value-focused shopkeeper

B&M European Value Retail (BME) should be booming when households are watching every penny, so the fact the company isn’t on a growth tear suggests tweaks to the strategy and customer proposition could be needed under new broom Tjeerd Jegen.

The recently appointed CEO will provide an experienced hand at the tiller for the variety goods retailer, whose full-year results on 4 June will be pored over for trends in the core UK business, the performance in France, an update on the new stores pipeline and B&M’s EBITDA outlook.

Jegen’s predecessor Alex Russo was supposed to take B&M on to greater things following his 2022 appointment but after just two-and-a-half years in the hot seat he was given the boot, having consistently over-promised on profit delivery.

Former Tesco (TSCO) and Ahold Delhaize (AD:VIE) executive Jegen takes the baton from interim CEO Mike Schmidt on 16 June. He will need to return B&M to like-for-like sales growth, no easy task given an increasingly price-competitive UK groceries market, as well as improve communication with analysts and shareholders irked by recent unexplained sales weakness.

In a post-close trading update (15 April), B&M reported a 3.7% rise in group revenue to £5.6 billion for the year to 29 March 2025, with positive like-for-like sales in France offsetting negative like-for-like performance in

B&M UK and Heron Foods. Disappointingly, B&M UK’s samestore sales were down 1.8% in the fourth quarter to 22 March 2025, although the retailer is lapping easier current year comparatives.

Jegen insists he is ‘passionate about working with the team to drive growth through great products, operational excellence, and a strong customer focus’ and looks forward to ‘working with the team to build on the company’s strong foundations and take it to the next level.’ [JC]

What the market expects of B&M

What the market expects of B&M

What the market expects of B&M

Source:

Source: Stockopedia. Yearend 29 March.

Source: Stockopedia. Yearend 29 March.

Nvidia: Markets brace for the biggest earnings show in town

Investors across the globe will tune in to chip maker's first quarter 2026 results

AI (artificial intelligence) chips leader Nvidia (NVDA:NASDAQ) has quietened many of its critics in recent weeks following announcements of plans for next-generation data centres, a series of innovation partnerships and orders for $7 billion worth of its advanced GPUs (graphics processing units) from Humain, the Saudi government-backed AI venture.

In the space of a month the company’s market valuation has soared back over $3 trillion as the share priced rallied 40%. The stock closed at $135.57 on 19 May, putting the market cap at $3.3 trillion.

As Nvidia’s first quarter 2026 earnings close in, Wall Street is predicting another strong set of figures. Koyfin consensus anticipates roughly 75% and 42% year-on-year growth in quarterly revenues and EPS (earnings per share), implying $0.87 EPS on approximately $43.1 billion of sales.

Guidance for Q2 2026 is also expected to be strong, with $1.00 EPS on revenue of $46.1 billion predicted by analysts.

The question facing investors in the short-term is, will this be enough to drive Nvidia’s stock towards all-time highs of $149 and beyond?

‘The stock appears ‘attractive but

What the market expects of

What the market expects of Nvidia

What the market expects of Nvidia

US UPDATES OVER THE NEXT 7 DAYS

QUARTERLY RESULTS

28 May: HP, Nordson, Nvidia, Salesforce, Synopsys

Source: Koyfin

Source: Koyfin

Source: Koyfin

volatile’, said analysts at Trefis, who highlighted Nvidia’s very strong operating performance and financial condition’.

That volatility warning is crucial for investors to understand, and the share price has traded a wide range this year thanks to uncertainty surrounding the Trump administration’s economic policies. The easing of some restrictions around Nvidia’s ability to sell chips in China, and the 90-day hiatus of some tariffs, have been major reasons for Nvidia’s recent share price recovery, which has played out right across the broader tech industry.

Nvidia's market valuation has been supported by the increasing demand for highperformance GPUs, which are essential for powering advanced AI systems and cloud computing infrastructure.

Nvidia CEO Jensen Huang recently criticised US export restrictions on AI chips, warning that they will cause the US to lose its technology lead. Jensen estimated that the restrictions have

29 May: Cooper, Crowdstrike, Dell Tech, Hormel Foods, Lululemon Athletica, Marvell, NetApp, Ulta Beauty, Zscaler

resulted in Nvidia missing out on $15 billion of sales, plus $5.5 billion in inventory write-downs.

Nvidia’s partnership with Saudi Arabia’s Humain, announced on 13 May, has been another significant catalyst for the stock’s rally. The company announced a deal to supply several hundred thousand AI chips to Humain, valued at $7 billion, as part of the Kingdom’s broader plans for AI innovation and strengthen its own cloud computing infrastructure with foreign investment. [SF]

Source: LSEG

Buy into chemicals company

Victrex at an attractive valuation

FTSE 250 company has a leading position in its market niche

Victrex (VCT) 796p

Market cap: £697.3 million

In our view chemicals firm Victrex’ (VCT) current valuation is attractive and a great opportunity for investors to snap up the shares.

Over the past 30 years the FTSE 250 company has delivered solid earnings growth on a long-term view. The shares are trading a long way below their 30year average price to earnings ratio suggesting there is considerable scope for upside.

WHAT IS VICTREX?

Victrex is a world leader in the manufacturer of PEEK (polyether ether ketone) and PAEK-based polymer solutions (polyaryletherketones) with a 60% market share.

PEEK is a thermoplastic (a tough, temperatureresistant engineering plastic) used in a broad range of markets including automotive, aerospace, electronics, energy, industrial and medicine.

Victrex was the first company to commercialise thermoplastic since its invention over 40 years ago – it is used as a metal replacement in transport, industry, electronics, and medical devices. The company plays a key role helping clients at every stage of component development from concept to

Source: LSEG

commercialisation and helps support supply chains in the industries it serves.

The FTSE 250 company produces medical components, pipes, films, fibres, aerospace parts. It is also a pioneer in new grades of polymer like LMPAEK for composites and additive manufacturing or 3D printing. The company has growth opportunities in the energy sector where it has thermoplastic alternatives to steel pipes for subsea usage and in the medical sphere where it is moving into knee implants.

Victrex hopes more than 30% of group revenue

Victrex financials

Source: Stockopedia. Year end 30 September.

will be from medical by 2032 up from 18% in full year 2024.

WHY HAVE THE SHARES BEEN UNDER PRESSSURE?

Even for a company with a specialist focus like Victrex, this industry has ups and downs as it is typically highly dependent on changes within the global economy and is reliant on the cost of basic commodities.

It therefore comes as no surprise that Victrex is prone to fluctuations in profitability and share price movements.

The company has seen its shares tumble 40% over the past year. It reported a 5% year-on-year fall in full year 2024 revenue to £291 million (albeit in line with company-compiled consensus) due to foreign exchange headwinds. The company has struggled with inflating costs in its supply chain, an extended period of heavy investment and capacity problems.

The knock-on effect of president Donald Trump’s tariffs on Victrex has yet to be seen but reassuringly the company has been working to get ahead of any issues – having been affected by Trump’s trade policy during his first term.

WHAT NEXT?

In a first-half results on 12 May the company reported a 5% rise in group revenue to £145.9 million for the six months ending 31 March.

Group sales volume of 2,018 tonnes was up 16% compared to 1,737 tonnes to last year and the company upgraded its full year 2025 volume guidance.

These results show that the company is navigating uncertainty, and management has a plan in place to tackle foreign exchange headwinds – hedging some of its foreign currency exposure. Management has cost controls in place which are keeping underlying operating overheads broadly flat excluding wage inflation.

Cash generated from operations was ahead of the prior year at £34.6 million, the company said, ‘as a result, and with lower capital expenditure, underlying operating cash conversion was 128%’. The company is coming off a period of pretty heavy capital spending which has included building out its capabilities in China to strengthen in-country supply chains.

With this capex programme rolling off, and the company enjoying a strong balance sheet with modest net debt of £40.7 million, cash flow can be returned to shareholders and the shares offer a generous yield of nearly 7.5% based on current forecasts.

POTENTIAL RISKS

There are risks involved in investing in Victrex. As previously discussed, the group’s exposure to cyclical sectors such as aerospace and automotive—known for their volatility—could present challenges in forecasting sales growth over the medium term. Additionally, competition may intensify due to unexpectedly aggressive pricing strategies by competitors or the introduction of more costeffective alternatives to PEEK.

Medical volumes may fail to realise their longterm growth potential, which would affect Victrex’ business model and hinder its ability to generate shareholder value. [SG]

Why you can count on JPMorgan Claverhouse as it dials up the income

UK equity income trust has over half a century of unbroken payout hikes under its belt and has upped exposure to dividend growth stocks

JPMorgan Claverhouse Investment Trust (JCH) 760p

Market cap: £419.9 million

Investors seeking to inflation-proof portfolios and tap into the re-rating potential of the undervalued UK equity market, with further Bank of England rate cuts among the catalysts, should consider putting to money to work with JPMorgan Claverhouse (JCH). This UK Equity Income sector mainstay boasts a 52-year track record of uninterrupted dividend growth and there is every reason to believe the company can sustain that run for another half century and more, since JPMorgan Claverhouse’s new managers have increased their focus on sustainable dividend growers across the

JPMorgan Claverhouse

Source: LSEG

market cap spectrum.

A 6.3% discount to NAV (net asset value) shows there is value on offer at this quality-infused trust whose annualised NAV returns have beaten the FTSE All-Share benchmark over three, five and 10 years. Quarterly dividend-paying, JPMorgan Claverhouse offers investors an attractive 4.6% yield, while ongoing charges are a reasonable 0.63%.

QUALITY & RESILIENCE

Following the departure of veteran manager Will Meadon in 2024, JPMorgan Claverhouse is now steered by Callum Abbot, who had been comanager since 2018, alongside Anthony Lynch and Katen Patel.

New to JPMorgan Claverhouse they may be, but Lynch and Patel are both experienced members of JPMorgan’s UK asset management team and boast strong track records of investing across the UK market cap spectrum. Claverhouse’s investment approach is ‘a combination of value, quality and momentum’, Lynch informs Shares, ‘a common process that we have across all of our (JPMorgan

Annualised returns (%) - as of 30 April 2025

Asset Management’s) UK strategies. We are looking for companies that are cheaper than the market, higher quality than the market and where things are getting better, they’ve got better momentum than the market.’

The focus is on selecting high-quality, resilient companies that can invest capital at high returns to drive strong and sustainable earnings growth, but the new managers have made slight tweaks to the investment approach, with more of an emphasis on dividend growth which is expected to result in lower turnover going forward.

The portfolio is broadly considered under three categories – high yielders, earnings compounders and high dividend growth companies. This has resulted in reduced exposure to higher-yielding sectors such as utilities and miners, and increased exposure to opportunities further down the market cap spectrum.

‘By bringing in that broader coverage of the UK equity market, we think we can do a pretty good job not just of looking for yield in the traditional areas, but actually find companies that have equivalent yields but better growth propositions, or perhaps are less capital intensive,’ adds Lynch.

He stresses Claverhouse is still very much an all-cap strategy with the bulk of the exposure in the FTSE 100 – top 10 holdings include NatWest (NWG), oil and gas multinational Shell (SHEL), pharmaceuticals giant AstraZeneca (AZN) and global bank HSBC (HSBA). Outside of the top 10, the managers topped up the position in Tesco (TSCO) following the recent market shakeout and the trust also offers exposure to blue-chip beverages behemoth Coca-Cola HBC (CCH).

‘But just at the margin we have tweaked it so that we are replacing some of those business that have less obvious long-term growth opportunities with slightly more exciting companies,’ explains Lynch.

DIVIDEND HERO

In order to maintain the dividend growth record for ‘another 52 years’, Lynch, Patel and Abbott want to invest in companies that ‘don’t just have high yields today, but also growing yields into the future. So we’ve introduced compounders, businesses where the growth is quite consistent and which are often quite capital light, and that feeds through to good free cash flow that can be returned to shareholders.’

Examples include XPS Pensions (XPS), the consulting and administration business that has grown the dividend at a 10% CAGR (compound annual growth rate) in recent years. Prospective investors are also buying exposure to the likes of promotional merchandise supplier 4imprint (FOUR), ‘a really high growth company’ whose shares are ‘incredibly good value’, according to Lynch.

The board seeks to increase the total dividend each year, at or close to the rate of inflation and for calendar year 2024, dividends totalled 35.4p, up 2.6% year-on-year, slightly higher than inflation and supported by the trust’s revenue reserves. [JC]

Time to cash out at H&T after takeover approach

We highlighted the potential for a breakout at H&T (HAT:AIM) on 10 October 2024, arguing a share price dip at the UK’s biggest pawnbroker presented a buying opportunity at 376.7p.

Shares posited that a single digit PE (price to earnings) ratio underrated the long-term prospects of a pawnbroker and jeweller benefiting from costof-living pressures and an elevated gold price alike.

We also flagged H&T’s multiple long-term growth levers including significant store base expansion, and argued the company looked wellplaced to deliver steady earnings progression and dividend increases in the years ahead.

WHAT HAS HAPPENED SINCE WE SAID TO BUY?

H&T’s shares rocketed higher on news (14 May) the

company had unanimously recommended a £297 million takeover offer from Texas-headquartered pawn operator FirstCash (FCFS:NASDAQ) pitched at 661p per share, or a 44% premium to the undisturbed share price. The deal will see shareholders receive 650p in cash as well as the 11p final dividend, due to be paid on 27 June.

H&T said it had received and rejected multiple proposals from FirstCash since December last year, eventually engaging in talks with its suitor after a fourth offer arrived at a ‘meaningful’ increase in value. The board argues the takeover provides shareholders with the opportunity to realise the value of their holdings in cash at ‘a significant premium to the prevailing share price’ and ‘at a higher level than the H&T shares have ever traded on AIM’.

WHAT

SHOULD INVESTORS DO NOW?

While the board remains confident in H&T’s ability to continue to grow, it acknowledged the risks of proceeding as a standalone and insisted ‘the support and backing of a large, well-resourced and well-capitalised, international platform significantly improves the strategic positioning of H&T in its marketplace.’

Readers who want to avoid the risk the bid falls apart and swiftly allocate capital elsewhere could sell in the open market, locking in a 71.5% profit at current levels – the shares are trading below the bid price which implies this is a done deal and a bidding war is unlikely.

Source: LSEG

Otherwise, they can accept the cash bid, pitched 75.5% above our original entry price, pat themselves on the back and await the proceeds. [JC]

IS APPLE EX-GROWTH?

WHAT AN END TO EXPANSION COULD MEAN FOR THE SHARES

IBy Steven Frazer News Editor

s it now time to start thinking the unthinkable – that while undoubtedly still an exceptional company, Apple (AAPL:NASDAQ) is no longer an exceptional stock?

For example, most investors would probably view British American Tobacco (BAT) or Nike (NKE:NYSE) as high quality companies, yet their respective total returns (share price plus dividends) performances annualised over the past decade are dismal, both at 3.4%. A FTSE 100 tracker would

have nearly doubled that, at 6.1%, while the S&P 500’s 12.8% is roughly three-and-a-half times that. Apple has been a very different story. It goes down as one of the great investments in a generation. Over the past 20 years, the stock has produced total returns of 17,700%. That’s a difficult number to get your head around, so let’s put it another way… the share price has surged from $1.45 to the current $212.33, adjusted for stock splits.

British American Tobacco and Nike, incidentally, have put up 484% and 685% respectively over two decades.

Yet, as the world turns, what worked in the past might not work so in the future, and the world has, metaphorically speaking, never turned as quickly as now, and the rotation is getting faster.

Which brings us back to Apple. The stock currently trades on a rolling 12-month PE (price to earnings) multiple of 28.2, according to Stockopedia data, a 34% premium to the S&P 500’s 18.4 12-month PE.

We all know that stock markets tend to reward companies it believes have strong future growth potential with premium valuations. The question is, can Apple’s future growth justify investors’ high expectations? The raw data suggests it may be time to think of Apple as something other than a growth stock.

HAS IPHONE HAD ITS DAY?

Apple is known for innovation, brand power, high margins, and a large cash reserve. All of these observations are valid. The iPhone, launched in 2007, has been Apple’s moat, and the ecosystem that has captured billions of users, many of them loyal. The business model relies on premium pricing, exceptional user experience, and an integrated ecosystem that increases switching costs.

Apple is already the number one handset manufacturer in the world, with an estimated 27.4% market share. Only Samsung comes

close (22.9%), the rest trail miles behind. Apple stopped publishing handset numbers years ago, but hardware revenues have been slowing in recent years. iPad revenues peaked in 2021, Mac and iPhone the following year, all three device lines have been flat or in decline since.

This means device revenues as a percentage of total income have fallen sharply since peaking at around 63% in 2018 to 51.5% in 2024 (to end September).

Apple has for years been desperately trying to think up that killer next device to full the iPhone

growth gap – car, VR headset, watches – some real, some mere speculation, but it has failed.

The real growth driver in recent years has been the Services business – the App Store, Apple Music, Apple TV etc. This revenue line has nearly doubled since 2017 and last year was worth about a quarter of the firm’s $391 billion revenue.

Services revenues hit $26.6 billion in Q2 2025, up about 12%, making them worth a fraction off 28% of Apple’s near $95.4 billion total.

Apple’s March-quarter revenue rose 5% year-on-year, with iPhone revenue rising 2% to $46.8 billion. Gross margin rose 50 basis points year-on-year to 47.1%. ‘Results and revenue guidance were positive to us,’ wrote Morningstar analysts, but margin guidance

was weak, resulting from an estimated $900 million impact from US tariffs. ‘Primarily, we see material risk for Apple from tariffs, both on profitability and longer-term demand.’

Where those tariffs end up matters enormously to Apple and its shareholders. Apple’s core devices are currently exempt from US tariffs, and the June quarter impact is primarily from accessories. Nonetheless, Apple remains at risk of a policy change by the capricious Trump government.

Positively, most US iPhone units are imported from India, which faces a lower current tariff rate than China (10% vs 145%), and Apple continues to shift device manufacturing from China to India, a process that started a few years ago but may have been accelerated thanks to the Trump administration.

Even so, the current lack of any sort of certainty over US economic policy right now represents a huge risk to Apple. Morningstar estimates a 25% gross downside risk to earnings and Apple’s intrinsic valuation if it were to lose its exemption and face the full brunt of tariffs, and although Apple could mitigate some of the potential damage by upping prices, that would surely tighten the screw on consumers, for some, to breaking point, impacting volumes.

There are other risks to consider too, such as its $20 billion a year search deal with Google. Right now, Apple just keeps Google as the default and watches as the money rolls in.

Apple sells more handsets than anyone else globally

Apple sells more handsets than anyone else globally

Source: Statscounter

Google runs that search business and does as efficiently as only a behemoth can.

If the deal goes south, Apple loses $20 billion a year for which it does virtually nothing. It would also have to replace or at least supplant Google search, which is where the talk of using AI tools, such as Perplexity comes in, although Morgan Stanley suggests that Apple would not be able to monetise AI-based search remotely well enough to get it the revenues it currently has. Watch this space.

Elsewhere, regulators will eventually force Apple to compete with other services on its own platforms. If things like its Siri ‘assistant’ remain relatively comparable with alternatives, many Apple users will continue to use them.

One factor that could support Apple’s premium valuation would be a successful pivot to AI (artificial intelligence) as a growth driver. The company has been rolling out its Apple Intelligence features, which it hopes will drive iPhone upgrades and strengthen its ecosystem advantage.

But there’s no guarantee this thesis will play out, and things haven’t been going smoothly.

Apple’s cautious approach to its AI rollout could cause demand for the latest iPhone models to be lower than expected. Some features were initially available only in certain markets and languages, and other key features have reportedly been delayed, such as its souped-up Siri, apparently until 2026.

HIGH VALUATION, LOW RETURNS?

To justify a near 30 PE, investors typically expect one of two things:

• Rapid and sustainable growth, or

• Strong yields — via dividends, buybacks and cash flows.

According to analysts at Trefis, Apple offers neither. You might start to see their point when you look at revenue growth over the last three years, which has contracted by more than $3 billion, and over the past 10 quarters, has averaged 0.8%. Earnings growth has averaged a little over 6% a year.

Looking ahead, the picture doesn’t get any better. According to Koyfin consensus, revenue and earnings are expected to grow an average

What the market expects

FY to 30

September Revenue (bn) EPS Dividend

Source: Koyfin consensus

5.6% and 10% out to 2027.

‘That’s not a growth stock, it’s a mature business sporting a growth multiple,’ argues Trefis. Albeit these are likely to be very reliable revenues and profits.

What about dividends and buybacks? Apple paid shareholders $15.2 billion in ordinary dividends last year, and nearly $88 billion over the past five fiscal years. But don’t get too excited, that averages annual growth of 5.4%, below the average growth of earnings or free cash flow per share.

The payout ratio (how much of earnings are paid in dividends) over the past five years averages 16%, versus 35% of the S&P 500. Based on current data, the dividend yield is a paltry 0.5%, or thereabouts.

Share buybacks have dwarfed dividends, totalling $475 billion over the past five years. While buybacks have long been seen as an efficient way to return value to shareholders by propping up earnings, a snag has emerged since the Inflation Reduction Act (IRA) was signed into law in August 2022.

upped shareholder dividends and avoided the tax charge.

IN CONCLUSION

Returning to Apple’s 17,700% total return over 20 years we mentioned at the start of this feature. That ranks Apple as the fourth best total return performance among current S&P 500 members, behind just Nvidia (NVDA:NASDAQ), Netflix (NFLX:NASDAQ) and Booking Holdings (BKNG:NASDAQ). Run the same data over 10 years, and Apple’s 584% ranks it 47th, or 134th over the past five years (182%), although it’s unclear if this is a leading indicator.

For example, annualised 10and five-year total returns remain well above S&P 500 and Nasdaq Composite averages at 21% and 23%. Even so, as Blue Whale Growth’s (BD6PG78) Stephen Yiu says: ‘What works today may not work tomorrow. Passive ownership of stocks may deliver comfort, but it won’t deliver outperformance.’

Among other things, it imposes a 1% excise tax on share repurchases in a tax year that are made by certain publicly traded corporations, including Apple, and makes buybacks a far less cost-effective way of returning value. Major Apple investor Warren Buffett, via Berkshire Hathaway (BRK.B:NYSE), complained that last year’s buybacks meant Apple handed the US government a tidy sum for nothing, when it could have significantly

Let’s be clear, Apple remains an excellent business, but there are more questions now about how good an investment it is than in years. Given its market cap of $3.17 trillion, and grip on US and global indices, exposure to Apple is almost inescapable.

But it may be time for investors to reassess their view of what kind of investment Apple is, and what kind of future returns it is likely to generate.

The author of this article (Steven Frazer) owns a personal stake in Blue Whale Growth.

Should investors be looking to emerging markets after Liberation Day?

Examining the fall-out from tariffs news and the wider pros and cons of investing in companies from the developing world

On 2 April the new Trump administration effectively threw a lot of balls in the air with its tariffs announcement in the Rose Garden and markets are still working out exactly where everything will land. Emerging markets such as China, Vietnam, Taiwan and Indonesia and others were viewed the ‘worst offenders’ in president Trump’s eyes and, as a result, were hit the hardest while other developing economies like Brazil escaped with a 10% baseline tariff. These and reciprocal tariffs were meant to come into effect on 9 April. However, Trump decided on a 90-day reprieve which is due to end on 8 July.

Since then, Trump has given China its own 90-day reprieve (as of 12 May) and reduced China tariffs from 145% to 30% for this period. In response China has cut their US tariffs from 125% to 10% for 90-days

Emerging markets most affected by reciprocal tariffs

to allow for further discussions. The 90-day reduction in US and China tariffs is due to end on 10 August. With all these moving parts it is hard to get a sense of where emerging markets sit and whether they are still a worthwhile point of diversification in an investor’s portfolio. In this article we look at some of the long-run advantages enjoyed by emerging markets, what fund managers are seeing right now and the risks of investing in this area.

WHY EMERGING MARKETS?

Source: Morningstar, The White House, US, Reuters, as of 3 April 2025

Despite ongoing uncertainty there are still reasons people might be drawn to investing in emerging markets. From taking advantage of a potentially weaker dollar, long-term growth potential and cheaper valuations than developed markets. According to Morningstar there have been €760 million net inflows into global emerging markets equity funds in March and €888 million in April this year and €35.1 million and €192.6 million net inflows into global emerging markets ex-China in March and

April this year among European investors.

‘[It would be fair to say] that the current situation is dynamic and fluid,’ says Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income Trust (JEMI).

‘But emerging markets have long-term growth potential. If we look at some of our top 10 holdings we have been investing in companies from emerging markets countries Mexico, Indonesia and South Korea. Sectors we are overweight in within emerging markets include financials and technology.’

Dina Ting, head of global index portfolio management at Franklin Templeton ETFs believes the diversification provided by emerging markets is as relevant as ever. She says: ‘Increasing portfolio diversification appears more critical given ongoing uncertainty around the scope and implementation of US trade policy.’

Ting adds: ‘With a greater emphasis on global trade negotiations, investors are shifting toward more tactical, country-specific strategies to amplify exposure in economies better able to weather tariff upheaval.’

A few emerging markets such as Brazil have seen minimal direct costs of Trump’s recent tariffs policy. The Latin America region in general sits at the low end of the tariff spectrum with all countries at 10% rate. While Brazil still faces the challenge of taming its high public debt, its economy was strong and unemployment low throughout 2024 says Ting.

Soybeans remain a pivotal crop in Brazil’s agricultural expansion, driving the country’s rise as a leading global supplier of farm products, but a recent shift has seen Brazil’s cotton exports surpass those of the US.

A problem for investors who might want to take

Net flows in and out of global emerging market and ex-China funds and ETFs over one year

Source: Morningstar Direct, 15 May 2025

Geographic breakdown of JP Morgan Global Emerging Markets Income

Trust

Source: Association of Investment Companies (AIC) as of 30 April 2025

a selective approach to emerging markets is there are only a handful of products available which offer exposure to individual countries and the lack of diversification might be an issue. However, it could be an argument for considering active management when it comes to any emerging markets holdings in your portfolio rather than passive products which simply track a broad-based emerging markets index.

DOLLAR WEAKNESS IS HELPFUL

A weaker US dollar can attract more inflows to emerging markets as investors look for higher returns in a depreciating-dollar environment. Emerging markets debt repayments are often denominated in dollars so they can benefit when the US dollar is weaker.

Craig Martin, chair of Dynam Capital, the manager of the Vietnam Holding Investment Trust (VNH), said in recent weeks and months there has been talk of weaker US dollar, and an intent to lower interest rates in developed markets, adding ‘this would bode well for emerging market

currencies, and equity markets.

‘The advantages of investing in markets such as Vietnam, or other emerging markets is of course a diversification from the US, and the growth these emerging markets offer. As the world grapples with the changing globalisation trends, some countries are looking to diversify their economies and trading partners.

‘Some, such as Vietnam, are looking to invest in domestic infrastructure to enhance their economic growth. Vietnam has already been growing at around 6.5% per annum over the past 30 years, and the country hopes to accelerate this further.’

A DEMOGRAPHIC DIVIDEND AND ATTRACTIVE VALUATIONS

Another benefit of investing in emerging markets is their younger populations compared to developed markets. By 2050, almost 28% of the population in developed markets will be over 65 years old compared to only 15% in emerging markets, according to GAM investment management. This dynamic, when combined with urbanisation

Emerging markets total returns

behind the recent political turbulence in the country, Ng believes the country will be heading in the right direction with its corporate value up programme.

DISADVANTAGES OF EMERGING MARKETS INVESTING

There are some general disadvantages of investing in emerging markets like currency volatility, political instability, and weaker corporate governance.

China also makes up a large proportion of the MSCI Emerging Markets index at nearly 30% (29.57% as of 30 April) overshadowing other emerging markets countries. While Chinese shares may have some value appeal there are concerns about governance and about geopolitical risks.

Source: Bloomberg, as of May 13, 2025; FTSE Ric Capped Net Tax Index (for single countries), FTSE Emerging Index, S&P 500

and a burgeoning middle class can also support consumption and growth.

From a valuation perspective emerging markets are trading at a wide discount to their developed market counterparts. The chart showing the 12-month forecast price to earnings ratios for the MSCI World versus MSCI Emerging Markets – demonstrates this. According to Shares analysis of the underlying data, the average discount MSCI Emerging Markets has endured relative to the MSCI World over the last 35 years is 22.1% compared with 34.5% today.

In terms of specific markets, according to Chris Tennant, portfolio manager at Fidelity Emerging Markets Limited (FEML): ‘Mexico has derated considerably over the last few years around fears of US protectionism and more recently a weak US economy, but I think a lot of those fears are unjustified if you take a longer-term view, offering up interesting opportunities from a valuation perspective.’

South Korea is another emerging market country which looks attractive according to Pauline Ng, manager at JPMorgan Asia Growth & Income (JAGI) along with Robert Lloyd.

The trust has a 12.2% allocation to South Korea and has been one of the worst performing markets for a while now making its valuation extremely attractive says Ng.

After the presidential election on 3 June putting

Jorry Nøddekær, manager at Polar Capital Emerging Market Stars (BFMFDG4) maintains an underweight position in China (26% versus 30%) and is highly selective with his exposure.

Finally, China’s population growth was, for decades restricted through a one-child policy which was later relaxed in 2015 and in 2021. This means it does not have the same demographic advantages as other developing countries and has a population which is ageing in much the same way as in Western countries.

Emerging markets PE chart

MSCI World - 12-month forward PE MSCI Emerging Markets - 12-month forward PE

PE=price to earnings ratio

Source: LSEG

By Sabuhi Gard Investment Writer

Unpicking what the new Mansion House Accord means for pension savers

Whether this is the right time to buy private assets is a matter of debate

Although it was overshadowed by president Trump’s latest tariff climbdown, the recent updated Mansion House Accord – backed by the PLSA (Pension and Lifetime Savings Association), the ABI (Association of British Insurers) and the City of London Corporation – was a key moment for UK financial markets and pension savers.

No fewer than 17 of the UK’s largest pension funds voluntarily agreed to invest at least £50 billion of assets in private markets by the end of this decade, with half of that targeted at the UK.

Chancellor Rachel Reeves welcomed the deal, which she said would ‘unlock billions for major infrastructure, clean energy and exciting start-ups, delivering growth, boosting pension pots and giving working people greater security in retirement’.

Overall, the government wants funds to invest as much as 10% of defined contribution default funds in private assets and says it will pass a bill later this year giving ministers the power to force funds to comply if its targets aren’t being met.

So, why are pension funds being ‘encouraged’ to invest in private assets, and why now?

A BOOST TO INVESTMENT AND RETURNS

The treasury argues pension funds are underdelivering for their stakeholders, and to generate better returns it wants them to inject up to £25 billion into the UK economy by 2030.

In a joint announcement, the PLSA, the ABI and City of London said the accord was aimed at generating ‘better financial outcomes for DC savers through the higher potential net returns available in private markets as well as boosting investment in the UK’.

‘Barriers to invest in private assets have reduced in recent years thanks to legislative and regulatory reform, as well as operational improvements, however further progress is needed,’ the announcement goes on.

The government claims its model shows that by investing in private markets, funds could improve their performance by 200 basis points or 2% per year

over a period of 30 years.

That investment could be in infrastructure, property, private equity or private debt, and the treasury hopes that by making pension funds commit to backing UK projects it will attract international capital from sovereign wealth funds, particularly those from the Middle East and Asia.

Alistair King, Lord Mayor of the City of London, put it bluntly: ‘Here is a real opportunity to pump a number of local lead investors into projects which will allow sovereign wealth funds to crowd in behind.’

However, the accord notes allocations to the UK will depend on ‘a sufficient supply of suitable investible assets’ and on the implementation of ‘critical enablers’ by the government and regulators.

Yvonne Braun, ABI director of policy, long-term savings, health and protection, said the government needed to ‘support the industry’s ambition by facilitating a pipeline of suitable investment opportunities, tackling barriers to investments, and delivering wider pension reforms effectively’.

According to the Pension Investment Review, published by the government last November, Australian pensions schemes invest three times more in infrastructure and 10 times more in private equity compared to UK defined contribution schemes, and by copying their model UK schemes could deliver up to £80 billion of investment into ‘exciting new businesses and critical infrastructure while boosting savers’ pension pots’.

Andy Briggs, chief executive of Phoenix Group (PHNX), one of the 17 signatories of the accord, echoed these claims, saying the deal would ‘unlock investment in UK private markets while helping deliver better long-term returns and retirements for millions of pension savers’.

WHY NOW?

private companies, by default.

Investors in the FTSE 250 have a whole gamut of private equity, private credit, infrastructure and property funds to choose from. Commentators regularly extol the benefit of having a ‘diversified’ portfolio, preferably one including a sprinkling of private assets, property, precious metals and in some cases less regulated investments such as cryptocurrencies.

There is also a trend among US private equity managers to sign deals with retail platforms to offer a select group of their customers access to private debt and equity, with KKR (KKR:NYSE) teaming up with Capital Group, Blackstone (BX:NYSE) tying up with Vanguard and Wellington and Apollo (APO:NYSE) linking with State Street (STT:NYSE).

For the buyout firms, access to wealthy individual investors means they can syndicate their risk more easily, while for the traditional asset managers – who have been hammered by the rise of index funds and ETFs – it is a way to offer their customers the promise of higher returns from less liquid assets.

KKR and Capital are charging fees of 0.8% to 0.9%, which is less than some traditional funds, and are hoping to garner around $100 billion of retail assets using this strategy.

However, there are some who question whether this is the right time to be taking on less liquid assets such as private debt and equity, while others are warning this is exactly the wrong time to be doing so.

The lines between publicly-quoted assets and private equity, private debt, infrastructure and other ‘alternative’ investments have become increasingly blurred over time.

Pension investors can already access private assets through listed vehicles like funds and investment trusts – indeed, anyone who owns a FTSE 100 ETF or tracker fund already owns a share in private equity giant 3i (III) and global growth trust Scottish Mortgage (SMT), with its sizeable allocation to

REASONS TO BE CAUTIOUS

High borrowing costs, demanding US public stock valuations and a weaker economic outlook in theory all make for a hostile investment landscape and point to weaker returns.

Taking these one at a time, the US federal funds rate is 4.25% to 4.5% and is likely to remain at these levels until the central bank has a clear view of the impact of president Trump’s trade policy on inflation and employment.

The markets have priced in at least 50 basis points or 0.5% of rate cuts this year, but some observers –including Lazard’s chief market strategist Ron Temple – believe the Fed won’t be able to cut rates at all this year due to sticky inflation.

Next, the S&P 500 is trading on 25 times trailing 12-month earnings, a 40% premium to its post-

war average of 18 times and a 20% premium to the average of the last decade, so there are clear downside valuation risks.

Meanwhile, US consumer confidence readings – which are a good lead indicator for private consumption – are at their lowest level in years with ‘expectations’ at their lowest since 2011.

Add to that the policy uncertainty of Trump’s first 100 days in office and the stock market volatility that has caused, and this is probably not the time to be taking risks.

That applies equally to buyers of private assets, who tend to sit on their hands when volatility spikes as volatility is bad for valuations.

Observers will point to the $1 trillion of supposed ‘dry powder’ which the private equity industry is sitting on, but part of that amount relies on distributions from existing funds, which in turn rely on realisations, or the sale of assets.

‘EXITS ARE TOUGH’

According to consultants Pitchbook, there are more than 12,000 US portfolio companies owned by private equity, which equates to seven to eight years of inventory at the current rate of exits, well above the historic average.

company’s share price.

A prime example of the difficulty of exits is Reckitt Benckiser’s (RB.) struggle to sell its cleaning products business, which includes the AirWick, Cillit Bang and Dettol brands, with the firm warning in its firstquarter update that volatile markets meant the sale could be delayed until the end of the year.

The UK company had been in talks with US buyout firms Apollo and Lone Star, with analysts estimating the unit could fetch a price of between $4 billion and $5 billion, but Apollo withdrew from the race and Reckitt was forced to admit market conditions could still impact the year-end timeframe.

Perhaps the most negative view to date has come from billionaire industrialist Nassef Sawiris, who not only buys and sells assets but also has stakes in large buyout firms.

In an interview with the Financial Times, Sawiris argues the private equity industry is past its peak and faces massive challenges in selling off trillions of dollars of assets.

‘Private equity has seen its best days…They can’t exit. Exits are so tough.’

Meanwhile, an analysis of Prequin data by S&P Market Intelligence shows global private equity exits slumped to their lowest in two years in the first quarter of 2025 as uncertainty over tariffs, which were yet to be announced, rattled markets.

‘Fund managers who entered the year optimistic about an uptick in divestments are facing new and unexpected headwinds as buyer and seller views on value diverge,’ says Jeremy Swan, a managing partner at CohnReznick who works in the advisory’s financial sponsors and financial services industry group.

Some UK private equity firms have already flagged that selling assets has become more challenging, with Literacy Capital (BOOK) noting in April 2025 buyers were being ‘more cautious before deploying capital’ and many investors being ‘very tentative and slow moving given the changeable political and market environment’.

3i’s chief executive Simon Borrows said on 15 May he expected activity across the private market ‘to be slower over the near term given the increased macro-economic and geopolitical uncertainty’, a comment which contributed to a sharp fall in the

Investors in private equity firms are growing increasingly frustrated at the lack of distributions in recent years, says Sawiris, with managers using ‘continuation funds’ to recycle capital by moving assets into a new vehicle rather than finding a buyer or listing them publicly.

Continuation funds, which have increased sharply in number in recent years, are ‘the biggest scam ever because you say “I cannot sell the business, I’m going to lever it again”,’ says Sawiris.

If buyout managers can’t sell assets, they can’t raise cash for new investments and will struggle to raise funds from their traditional backers.

Whether this is the right time for the UK government to be encouraging pension funds to plough savers’ money into private equity, therefore, only time will tell.

Disclaimer: The author (Ian Conway) owns shares in Phoenix Group.

By Ian Conway Deputy Editor

Schroder AsiaPacific Fund plc –why Asia makes sense for early birds

A stock-pickers portfolio with a focus on highquality businesses that can be bought at sensible valuations

There was much media coverage of the importance of making maximum use of your £20,000 ISA allowance in the countdown to the tax year-end. But canny investors with spare cash can improve long-term returns simply by utilising their new tax wrapper early in the new tax year, rather than waiting until the end.

To give that some substance, let’s look at research by platform provider AJ Bell, which calculates the value of a £5,000 annual ISA investment into a typical global equity fund over 26 years, from 1999 to 2025. The platform compares returns for one investor, Early Bird, who invests each year on 6 April – the first day of the new tax year – with those for another, Last Minute, who leaves it until the following 5 April.

Both have contributed a total £130,000 over those 26 years, but Early Bird’s pot is worth almost £408,600, against Last Minute’s less than £390,000 – a difference

of over £19,000. That may not sound a lot, but as a famous UK supermarket constantly reminds us, every little helps. That additional growth is purely a reflection of the small but significant amount of additional time in the market for Early Bird’s money each year.

So where should would-be ISA early birds seek to feather their nests this year, particularly given the extreme uncertainties of the current geopolitical climate?

An effective diversifier

After a couple of years when US technology megastocks far outpaced every other part of the market, the US market has underperformed other major regional indices this year.

That includes Asia, despite the chaos precipitated by President Trump’s ad hoc approach to regional tariffs, and his general unpredictability: indeed, the MSCI AC Asia ex Japan index has largely recovered from earlier volatility this year in sterling terms (as at 7 May).

The argument is therefore strengthening for global diversification as a means of optimising returns and managing risk. Against that backdrop, Asia is a great choice as an effective diversifier for a balanced global portfolio, as Abbas Barkhordar, co-manager of the Schroder AsiaPacific Fund (SDP), explains.

The case for Asia

It’s a very diverse part of the world in many respects, he says, and markets are similarly heterogenous.

“Thus, while some markets are highly exposed to the global economic cycle, notably Korea and Taiwan, others such as India are much more domestically driven.”

The SDP portfolio has many holdings that provide exposure to Asia Pacific’s growing domestic and regional demand, Barkhordar adds. These include banks and insurers, which are growing as the expanding financial services industry reaches new customers in emerging markets such as India, the Philippines and Indonesia. Rising domestic consumerism is also driving demand for consumer goods, domestic travel, healthcare and digital services.

Beyond the potential offered by the region’s steadily developing and urbanising economies, there may also be a macroeconomic rationale for allocating a chunk of your 2025/26 ISA to Asia, argues Barkhordar.

“Historically, a weaker US dollar and lower US interest rates have been a supportive backdrop for Asian equities, though admittedly at present it is hard to know how US economic policy is likely to play out, or for how long,” he says.

A broad range of countries

As stock-pickers with a focus on high-quality businesses that can be bought at sensible valuations, the SDP managers are inevitably more bullish on

some Asia Pacific markets than others.

As Barkhordar outlines: “We are overweight Hong Kong, for a number of reasons: valuations are reasonable, there’s a broad selection of high-quality companies with good standards of governance, and it’s a practical way to gain exposure to a potential economic recovery in China.”

Singapore is another overweight, with attractive, sensibly priced businesses focused on shareholder returns and rational capital allocation, plus growth opportunities from those companies’ regional footprints.

The portfolio also provides off-benchmark exposure to Vietnam, where, despite current US tariff disruption, the long-term global and domestic structural growth story is an appealing one. “Not only is the market becoming increasingly important in global manufacturing supply chains, including for more complex/high-value goods, but rising household incomes are driving more domestic consumption,” Barkhordar observes.

Although SDP’s allocation to China is the largest in the portfolio, it is lower than the benchmark. This reflects the managers’ concerns around the country’s various structural issues, including rising trade barriers and demographics. India is also an underweight, on the grounds of current high valuations, as is Korea, with uncertainties around corporate governance and widespread low returns.

Technology is unsurprisingly a key element of the portfolio, but there is huge scope for further portfolio diversification in the broad range of industries available across the region.

Not only tech, but financials and healthcare

Barkhordar picks out financials as a focal point for SDP. That overweight is partly because of the

relatively high interest rate environment, which tends to favour banks; but it’s also a reflection of strong structural growth in markets with relatively low financial services penetration such as India, plus the focus on high shareholder returns from financial companies in more mature economies like Singapore and Hong Kong.

Healthcare is another focus for the managers: “Strong demand is being driven by generally low penetration across Asia, supported by ageing populations in many countries,” he notes.

So there is clearly a compelling story for ISA exposure to the region. However, Asian markets are relatively poorly researched compared with those of developed countries. Schroders’ team of more than 40 analysts based across Asia therefore plays a crucial part, supporting the managers by sifting through that huge universe of stocks to whittle it down to the very best of the bunch - the highest-quality businesses with the most promising futures, at genuinely attractive prices.

The strengths of this rigorous approach are

increasingly being recognised. For instance, the investment specialists at AJ Bell have analysed the investment trust market, looking at factors including price, performance and size, and created a list of selected investment trusts that includes Schroder AsiaPacific.

Schroder AsiaPacific – capturing Asia’s future growth

As a rigorously managed long-term core holding that capitalises on the continuing rotation away from US dominance and broadens the base of your overall portfolio, SDP could be a robust choice for this tax year’s ISA.

We recommend you seek financial advice from an Independent Adviser before making an investment decision. If you don’t already have an Adviser, you can find one at www.unbiased.co.uk or www.vouchedfor.co.uk. Before investing in an Investment Trust, refer to the prospectus, the latest Key Information Document (KID) and Key Features Document (KFD) at www.schroders.com/sdp. For help in understanding any terms used, please visit address https://www.schroders.com/en-gb/uk/individual/glossary/

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Investors alert to new twists and turns in the weight-loss drug revolution

Attention is shifting from market leaders to who might thrive when generic copycat products arrive

There have been two major pieces of news regarding weight-loss drugs in recent weeks, adding further evidence that we’re seeing one of the biggest healthcare revolutions in decades. It’s also feeding into the investment world with more stocks being drawn into the conversation.

A new study concluded that weight-loss drugs could halve the risk of obesity-related cancers. Cancer experts said the findings published in The Lancet’s eClinicalMedicine were significant and could herald a ‘whole new era of preventive cancer medicine’.

We also had results from the first comprehensive head-to-head study of two popular weight lossdrugs which showed that Eli Lilly’s (LLY:NYSE) Zepbound is more effective than Novo-Nordisk’s (NOVO-B:CPH) Wegovy treatment. The study, published in the New England Journal of Medicine found Zepbound led to 20.2% weight reduction after 72 weeks of treatment among 750 obese people, versus 13.7% from Wegovy.

The latter study confirms what investors already thought was the case – namely that Eli Lilly is winning the weight-loss drug race, with its share price having also outperformed Novo Nordisk’s.

The Danish company has been running trials for the next generation of its weight-loss treatments and made the grave mistake of being too optimistic with guidance to investors.

NOVO-NORDISK’S BIG MISTAKE

Last November, Novo-Nordisk’s then-chief executive Lars Fruergaard Jørgensen told the Financial Times that he was confident late-stage data for its CagriSema weight-loss treatment would show the drug cuts weight by 25% in just over a year – versus 16% for Wegovy and up to 22.5% for Eli Lilly’s Mounjaro drug when administered alongside lifestyle interventions such as improved diet, exercise and sleep.

Company bosses need to under-promise and over-deliver to keep the market on side, and the opposite happened with Novo-Nordisk. The CagriSema trial showed ‘only’ 22.7% of bodyweight loss and that news wiped approximately €90 billion off the company’s market value.

ROOM FOR MORE THAN ONE WINNER?

One might have thought the market opportunity is so large that there’s plenty of room for multiple companies to prosper. That might still be the case, yet the fact that Novo-Nordisk’s shares in April hit their lowest level since November 2022 would suggest that a majority of investors are backing Eli Lilly as the ultimate champion.

Part of that decision will have been influenced by disappointing news flow from Novo-Nordisk.

In March, Novo-Nordisk disappointed once again with drug trial results, this time in patients who were obese or overweight and with type 2 diabetes where CagriSema failed to show a clear superiority to Eli Lilly’s Zepbound drug.

Investors may not be surprised to learn that Fruergaard Jørgensen’s mistakes cost him his job, with the company saying on 16 May that he was stepping down.

ENTERING THE MAINSTREAM

Against a backdrop of market rivalry, there’s been an important structural shift in the market (particularly in the UK) whereby the use of weightloss drugs is no longer the preserve of celebrities and politicians. It’s truly gone mainstream, with growing use among the general public as individuals seek to shed weight without having to resort to fad diets. These drugs suppress the appetite and users naturally eat less. The

ELI Lilly winning out

Rebased to 100

Source: LSEG Hikma

treatments have even been attributed to the downfall of slimming club Weight Watchers which recently filed for bankruptcy.

With demand going through the roof for weightloss drugs, why is it that Eli Lilly’s shares have lost momentum since autumn 2025 and NovoNordisk’s shares have remained weak, even after recent drug trial setbacks were priced in?

There are two possible answers. First is that the pharmaceutical sector is in Donald Trump’s firing line – he’s already announced plans to cut US drug pricing and at the time of writing, tariffs were expected to be placed on the industry. Second is that Eli Lilly and Novo-Nordisk face competition from multiple angles. Other pharma giants like AstraZeneca (AZN) and Roche (ROG:SWX) are developing treatments in this area, but equally important from an investment perspective is the threat of generic ‘copycat’ rivals on the horizon.

PATENT CLIFF

The active ingredient in Mounjaro and Zepbound, called tirzepatide, expires in 2036 and after that date rivals can produce their own versions. That’s not such a worry for investors, but the same cannot be said for Wegovy (or Ozempic as it is sometimes known). It uses an active ingredient called semaglutide and Novo Nordisk’s patent runs out next year in Brazil, Canada, China and India, meaning we’re on the cusp of yet another major milestone in the weight loss drug revolution as generics hit the market.

Generic drugs typically sell at a much lower price than ones with patent protection. On the plus side, a drop in price for weight loss drugs could

2,000

1,500

Pharmaceuticals

Source: LSEG

lead to greater usage as the treatment becomes more affordable. Generic producers will be hoping for high sales volumes and that includes FTSE 100 stock Hikma Pharmaceuticals (HIK) which is reportedly in talks with partners to capitalise on the opportunity as soon as possible. Expect to hear more people talk about Hikma in the coming months as the market wakes up to what’s going on. US-listed Waters Corp (WAT:NYSE) makes medical equipment used in clinical testing and is also seen to be a potential beneficiary of the generic weight loss drug movement. Comments in a recent Reuters article say it has seen a ‘spurt in demand’ from drug makers in India racing to develop generic versions of Novo-Nordisk’s Wegovy and Ozempic.

NOT A PASSING FAD

There is clearly a lot of moving parts to this segment of the healthcare sector, yet the fundamental drivers are clear. Investors would be wise to keep abreast of developments as this doesn’t look like a passing fad like the Atkins or Keto diets. It’s changing people’s lives and the applications stretch beyond weight loss which makes it even more powerful.

Studies have shown weight-loss treatments could also lower the risk of heart attacks and potentially lead to fewer cases of dementia, among other benefits. That said, investing is never that straightforward and there are key risks to consider, even in ‘hot’ areas of the market. The benefits of these drugs are still being explored, and so too are the downsides given they could involve more worrying side effects than a feeling of nausea. It means this sector must not be seen as a no-brainer cure for all investment portfolios.

Novo-Nordisk Eli Lilly

Small companies, big opportunities

Investing in UK smaller companies presents a compelling opportunity for investors seeking long-term growth and diversification. These companies are typically more agile and innovative than their larger counterparts. Their smaller scale allows them to pivot quickly, seize emerging opportunities, and capitalise on niche areas within key sectors, such as technology, finance, professional services and healthcare, which are helping to drive the economy.

One of the key advantages of investing in smaller companies is their potential for higher returns. Historically, smaller companies have outperformed larger ones over the long term, benefiting from their ability to grow revenues and earnings at a faster pace. While they are perceived to carry higher risks due to factors like market volatility and limited resources, these risks can be mitigated through careful

stock selection, active engagement and diversification.

The UK market offers a particularly fertile ground for smaller companies due to its entrepreneurial culture, robust regulatory framework, and access to global markets. Despite recent challenges many have leveraged their innovative capabilities to address new market demands, ranging from digital transformation to sustainable business practices.

Our WS Gresham House UK Smaller Companies Fund is well-placed to benefit from structural growth themes across various sectors.

Managed by Ken Wotton and Cassie Herlihy, and our specialist UK equity team, they look across the small cap market and target companies with high-quality financial metrics at what they consider to be attractive valuations. By focusing on companies whose long-term earnings growth and cash generation are largely independent of external economic forces, the Fund aims to provide returns less correlated to broader market or economic developments. Negative sentiment has widened the disconnect between share prices and underlying business fundamentals. This means that many well-run businesses are now trading at low prices providing attractive opportunities for managers to deploy capital.

WS Gresham House UK Smaller Companies Fund is a high-conviction, concentrated fund that looks to grow capital over the long term (in excess of five years).

PAST PERFORMANCE IS NOT A GUIDE TO FUTURE RETURNS

I’ve maxed out my ISA: now what?

Looking at alternatives for anyone who has hit the tax wrapper’s annual limit

It’s a nice problem to have. Somehow, you’ve ended up with more money than you know what to do with.

If you’ve been promoted at work, this might now be a yearly occurrence, or it could be a once-in-a-lifetime event. But what to do with that money once you have it to avoid forfeiting a chunk to tax can be a complex task.

For most people’s excess funds, ISAs offer a very nice solution. You can invest up to £20,000 each year, and this money will not be subject to tax. But if you have suddenly found yourself with enough to invest to exceed this limit, your strategy may start to become more layered.

STAYING UNDER YOUR CAPITAL GAINS TAX LIMIT

Money invested outside of an ISA, such as through a dealing account, is at risk of CGT (capital gains tax). CGT is the amount you pay on realised gains from an investment.

You can currently make up to £3,000 on your investments without getting taxed. But once you pass that limit, 18% of your gains would be paid in tax for those in the basic income rate and 24% would be paid for those in the higher income bracket. Note that this limit has been reduced dramatically in recent years, so it’s important to keep an eye on any changes.

To give a ballpark figure, if you invested £60,000 and made a 5% return in one year after fees, you would reach the £3,000 gains cap.

If your new chunk of change is a one-time occurrence, this can be a very helpful starting point. This would mean you could get around £80,000 of your money invested tax free for that first year. Although, because you don’t know exactly what return you would make on your investment, it’s impossible to know the maximum amount you could invest outside an ISA and avoid tax.

But if you were able to stay under that CGT limit, that means that in the next tax year, you could move another £20,000 of that out of your dealing account and into your ISA. Generally, the faster you can move funds into an ISA, the better, because as your money continues to grow outside an ISA, more and more will become subject to tax.

This strategy does not work as well for recurring large amounts of money, such as from a significant salary increase, because then you will have an expanding problem each year with no extra room in your ISA allowance.

SHARING YOUR SAVINGS

If you have a partner, you also have the option to gift your money. Because your partner has a

£20,000 ISA allowance as well and a CGT limit of £3,000 to reach, this essentially doubles the amount of money that is protected from tax. Any money given as a gift is not subject to tax if the person making the gift lives for seven years following the exchange, and the money is not put into a trust. But it is important to be aware that the money is then legally theirs and there is no obligation to give it back to you in the case of separation.

This is not a practice that is necessarily limited to a partner. If you have children, you can pay into their Junior ISAs, which have a limit of £9,000 per year. These accounts can only be withdrawn by the child that owns it and once they become an adult. You can also gift the money to another family member or friend, but keep in mind that any money gifted is no longer technically yours.

CONSIDERING TAX-FREE ALTERNATIVES

Once you have maxed out your allowances and need to invest outside a tax-free wrapper, you may want to consider investments that are exempt from tax. Bonds are one of the simplest ways to do this.

Government bonds, also known as gilts, are not subject to capital gains tax. These are not necessarily the highestearning investments but can be one way to continue to earn on your investments without dealing with the tax implications.

If you want to look outside government bonds, you can still avoid CGT by investing in ‘qualifying corporate bonds’ listed by the HMRC. Note that the payments you receive from the bonds will still be taxed as income and count as part of your income allowance, it is just the CGT that will not apply.

If you invest in bonds as well as equities, it can

also be important to pay attention to how your money is allocated in each wrapper. For example, if you expect your equity investments to have a higher return than your bonds, it may be worth using your ISA allowance for these investments.

That way, the money you are forced to hold in an account that is subject to CGT will hopefully be making a smaller gain than whatever is inside the tax-free wrapper.

USING OTHER INVESTMENTS

If you’re happy to put your money away for a while, another strategy can be investing more heavily in your pension. Generally, the annual maximum contribution for a pension is £60,000, but this changes when you reach income levels above £200,000.

Note that if you are inheriting money, or have received the money as a gift, those assets don’t count as your income. But if those assets are invested and start earning, those earnings could start counting as income.

Pensions are still subject to tax when you withdraw from them, apart from the 25% that you receive tax free. But they do bring additional benefits for investors, such as workplace contributions in some cases and tax relief from the government.

Hannah Williford AJ Bell Content Writer

WATCH RECENT PRESENTATIONS

Strategic Equity Capital (SEC)

Ken Wotton, Fund Manager

Strategic Equity Capital is a specialist alternative equity trust. Actively managed by Ken Wotton and the Gresham House UK equity team, it maintains a highly-concentrated portfolio of 15-25 high-quality, dynamic, UK smaller companies, each operating in a niche market offering structural growth opportunities.

Seplat Energy PLC (SEPL)

James Thompson, Head of Investor Relations

Seplat Energy is Nigeria’s leading indigenous energy company. Following the acquisition of Mobil Producing Nigeria Unlimited, Seplat Energy’s enlarged portfolio consists of eleven oil and gas blocks in onshore and shallow water locations in the prolific Niger Delta region of Nigeria, which the company operate with partners including the Nigerian Government and other oil producers.

Target Healthcare REIT (THRL)

Kenneth MacKenzie, Chief Executive

Target Healthcare REIT is the leading listed investor in UK care home real estate. We are a responsible investor in modern, ESG-compliant, purpose-built care homes which are commensurate with modern living and care standards.

What is the 4% rule and how does it work?

Explaining a potential way of making your pension pot last in retirement

I am thinking of starting to withdraw an income from my SIPP later this year. I have heard something about a 4% rule I should apply when working out how much to take from my SIPP. What is this, and is it something I should be following?

Kamal

ORachel Vahey, AJ Bell Head of Public Policy, says:

ver our working life, our focus is on building up our savings and investments so that we can have the money to enjoy our financial later life.

Once we reach that magical point when we decide we want to flip the focus and start taking money then we encounter what has been called the ‘nastiest hardest problem in finance’ – decumulation. This is just a jargon word for working out how much money to take from which investment or saving, at what rate, and when.

You can access your pension pot from the age of 55 (rising to age 57 from 2028). You can take up to 25% of the amount you take as tax-free cash and then take the remainder as a taxed lump sum, use it to buy an annuity (a guaranteed income for life), or move it into drawdown.

DRAWDOWN OPTIONS

If you decide on drawdown, you can set the income you take from the pot. This is completely flexible. You can decide on any figure you want, and you have the flexibility to change it at any time. You don’t have to take a regular income – it could be ad-hoc, or you could decide to stop or start at any time.

Often people decide they want to use their pension pot to give them an income to last a particular amount of time, sometimes up to their death. The challenge then is deciding on the right rate to make sure the pot doesn’t run out of money before you reach the ‘end date’.

The ‘4% rule’ is one theory people have adopted to achieve this. It suggests people can withdraw up to 4% of their drawdown pot each year, adjusted for inflation, and still expect their money to last 30 years.

This is a simple and easy rule to understand to estimate how much income you may want to take from your retirement savings. But of course, it’s not guaranteed to work, and landing on the right answer to the tricky question of how much money should I take is far more complicated.

OTHER CONSIDERATIONS

As a starter, here are a few other things to consider. The first thing to work out is how much money

Ask Rachel: Your retirement questions answered you need from your pension. This will depend on the other assets you have built up – such as ISAs and other savings, and when you plan on taking an income from them. It will also depend upon how much money you need in retirement and when. For example, you may anticipate a child’s wedding or helping them onto the property ladder.

But it’s not just about setting an amount. Inflation will erode the real value of your income over time so factor in increases over time.

You also have to work out how long you need your money to last, and that will depend on your general health, life expectancy, and whether you want to leave any of your pot to pass onto other people, such as a partner or adult children.

You can also factor in market volatility. There are various tools around that can help you test what would happen to your savings if there were a market event – such as a significant fall.

A final thought. Whatever strategy and final figure you decide on, don’t ‘set and forget’. Instead, you will need to review this on a regular basis to

take account of not only market changes to your remaining savings and investments, but also factors changing your income needs such as inflation and changes in personal circumstances.

As you can see there are many things to consider. A regulated financial adviser can help you understand your choices and can put together a financial plan for you based on cash-flow modelling to work out the best way to take your money over retirement.

DO YOU HAVE A QUESTION ON RETIREMENT ISSUES?

Send an email to askrachel@ajbell.co.uk with the words ‘Retirement question’ in the subject line. We’ll do our best to respond in a future edition of Shares Please note, we only provide information and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.

4 JUNE 2025 RADISSON

Registration and coffee: 17.15

Presentations: 18.00

During the event and afterwards over drinks, investors will have the chance to:

• Discover new investment opportunities

• Get to know the companies better

• Talk with the company directors and other investors

COMPANIES PRESENTING

ABRDN EQUITY INCOME TRUST (AEI)

The aim of the abrdn Equity Income Trust is to deliver equity income using an index-agnostic approach focusing on best ideas from the full UK market cap spectrum. Evaluate changing corporate situations and identify insights that are not fully recognised by the market.

ANEXO GROUP (ANX)

A specialist integrated credit hire and legal services group focused on providing replacement vehicles and associated legal services to customers who have been involved in a non-fault accident.

CUSTODIAN PROPERTY INCOME REIT (CREI)

CPIR aims to be the REIT of choice for private and institutional investors seeking high and stable dividends from well diversified UK real estate.

SMITHSON INVESTMENT TRUST (SSON)

Smithson aims to deliver strong, long-term capital growth by creating a concentrated portfolio of the world’s best small and mid-sized companies.

WHO WE ARE

EDITOR: Tom Sieber @SharesMagTom

DEPUTY EDITOR: Ian Conway @SharesMagIan

NEWS EDITOR: Steven Frazer @SharesMagSteve

FUNDS AND INVESTMENT

TRUSTS EDITOR: James Crux @SharesMagJames

EDUCATION EDITOR: Martin Gamble @Chilligg

INVESTMENT WRITER: Sabuhi Gard @sharesmagsabuhi

CONTRIBUTORS:

Dan Coatsworth

Danni Hewson

Laith Khalaf

Russ Mould

Laura Suter

Rachel Vahey

Hannah Williford

Shares magazine is published weekly every Thursday (50 times per year) by AJ Bell Media Limited, 49 Southwark Bridge Road, London, SE1 9HH. Company Registration No: 3733852.

All Shares material is copyright. Reproduction in whole or part is not permitted without written permission from the editor.

Shares publishes information and ideas which are of interest to investors. It does not provide advice in relation to investments or any other financial matters. Comments published in Shares must not be relied upon by readers when they make their investment decisions. Investors who require advice should consult a properly qualified independent adviser. Shares, its staff and AJ Bell Media Limited do not, under any circumstances, accept liability for losses suffered by readers as a result of their investment decisions.

Members of staff of Shares may hold shares in companies mentioned in the magazine. This could create a conflict of interests. Where such a conflict exists it will be disclosed. Shares adheres to a strict code of conduct for reporters, as set out below.

1. In keeping with the existing practice, reporters who intend to write about any securities, derivatives or positions with spread betting organisations that they have an interest in should first clear their writing with the editor. If the editor agrees that the

reporter can write about the interest, it should be disclosed to readers at the end of the story. Holdings by third parties including families, trusts, selfselect pension funds, self select ISAs and PEPs and nominee accounts are included in such interests.

2. Reporters will inform the editor on any occasion that they transact shares, derivatives or spread betting positions. This will overcome situations when the interests they are considering might conflict with reports by other writers in the magazine. This notification should be confirmed by e-mail.

3. Reporters are required to hold a full personal interest register. The whereabouts of this register should be revealed to the editor.

4. A reporter should not have made a transaction of shares, derivatives or spread betting positions for 30 days before the publication of an article that mentions such interest. Reporters who have an interest in a company they have written about should not transact the shares within 30 days after the on-sale date of the magazine.