For Professional Clients Only
Macro & Market Update
Performance of equities in December was somewhat disappointing by historical standards as the traditional end-of-year exuberance largely failed to take hold among investors. This nonetheless capped a strong year for so-called risk assets (equities, bonds, commodities…), with global equities posting their third consecutive year of double-digit gains in 2025. December’s performance was also reflective of the league table for the year as a whole, with the US underperforming its developed and emerging markets peers by the widest margin since the Great Financial Crisis of 2009.
Data out of the US last month were mixed, partly explaining this underperformance. On the one hand, economic growth continued apace with third quarter figures the highest in 3.5 years, consistently supported by the strength of the artificial intelligence (AI) investments. On the other hand, unemployment rose to its highest level in four years, despite initial data indicating that the US population declined for the first time since the Spanish flu of 1918 due to voluntary emigration and the expulsion of illegal immigrants. While AI is likely, at least in the short-term, to lead to greater job losses, a reduction in the population should act as a counterbalance, although it is too early to determine where the equilibrium will settle. For now, inflation appears stable, albeit still above the central bank’s (the Federal Reserve’s, or the Fed’s) target of 2%. The concern is that inflation could re-emerge as an issue as the Fed cuts rates, as it did in December by 0.25%, to support the labour market at a time when the economy continues to grow strongly. With President Trump close to announcing his preferred candidate as the new Chair of the Fed, and with his approval ratings falling, investors fear that the central bank’s dual mandate of price stability (i.e. low and stable inflation) and employment may be disregarded in favour of short-term gains through aggressive rate cuts.
Another concern for investors, which has been brewing for several months and has weighed on US equity performance, is the acceleration of spending by technology companies on AI infrastructure, with limited visibility on future returns on investment and increasing reliance on debt to finance these projects. This has begun to lead to greater investor selectivity and diversification away from the most expensive names.
Elsewhere, the Bank of England (BoE) also cut rates by 0.25% but the domestic case is stronger than in the US as growth remains anaemic (-0.1% in October) and consumer spending is falling at the fastest pace in four years, while inflation is finally trending lower. A further U-turn on inheritance tax for farmers reinforced the perception that the government is fighting for its political survival and is therefore likely to pursue policies aimed at scoring positive points after a tumultuous first 18 months in power. Despite inflation remaining slightly above target, the European Central Bank left its benchmark rate unchanged. At the other end of the spectrum, the Bank of Japan increased its base rate to the highest level in 30 years, reflecting sustained wage growth and inflation.
Concerns about aggressively lower interest rates in the US amid inflationary pressures, ongoing and new tariffs on specific metals, and rising geopolitical tensions (Nigeria, Yemen, Iran, Venezuela and Taiwan all flaring up in December) supported commodities such as gold, silver and copper, which recorded new all-time highs. On a more positive note for the global economy, however, oil remains weak due to oversupply and are still around $20 per barrel lower than at the start of 2025.
Fund Performance
Wise Multi-Asset Growth
In December, the IFSL Wise Multi-Asset Growth Fund was up 1.4%, behind the CBOE UK All Companies index (+2.1%) but ahead of its peer group, the IA Flexible Investment sector (+0.4%). For the year as a whole, we are pleased to report a return of 22.8%, marginally behind the UK equity market (+24.4%) and well ahead of other funds in our peer group (+12%). The Fund was in the top 5% of all funds in the sector in 2025 and is comfortably in the top quartile for all time periods.
The top contributors to performance last month were beneficiaries of the commodity moves described above, namely Jupiter Gold & Silver (which ended the year up close to 170%) and BlackRock World Mining Trust (which recorded a return of 74% in 2025). Other top contributors were, as was also the case for the year, our holdings in the biotechnology sector. The strong simultaneous performance of assets at opposite ends of the risk spectrum, such as gold and biotechnology, highlights how unusual market conditions have been in recent months. It also serves as a reminder of the benefits of a diversified portfolio such as ours, where the focus is on identifying quality undervalued assets and actively managing them.
The only notable detractors were Worldwide Healthcare which gave back some of its strong gains from November, and Achilles Investment Company which moved from a small premium to net asset value (NAV) to a small discount. Given this holding is amongst our less liquid investments, such price movements are not unexpected as a limited number of trades can have an outsized impact.
Wise Multi-Asset Income
In December, the IFSL Wise Multi-Asset Income Fund rose 2.3%, ahead of the IA Mixed Investment 40–85% sector, which rose 0.4%. This concluded a strong year for the fund which rose 21.7%, ahead of the comparator peer group which rose 11.6%. Given the backdrop of buoyant commodity markets, our strongest contributors to performance came from our specialist commodity funds, Blackrock World Mining and Blackrock Energy and Resources. Relief that the UK budget was no worse than expected helped support funds with UK equity exposure, such as Man GLG Income and Fidelity Special Values. More broadly our regional and specialist equity funds performed well, notably Polar Capital Global Financials and International Biotechnology Trust. Within Private Equity, Infrastructure and Property we saw divergence in performance. CT Private Equity responded well to its latest results with the underlying portfolio holdings enjoying very strong revenue and profit growth over the period and the prospect of Net Asset Value growth to be reported in coming months. Our core infrastructure holdings performed well in contrast to the renewables holdings, which suffered a hangover from the abandoned merger between HICL Infrastructure and the Renewables Infrastructure Group following HICL shareholder opposition. Within our property holdings, Workspace announced encouraging lettings, a disposal of non-core properties at a significant premium to the level implied by the current share price and the appointment of a new Finance Director, which completes the new management team to drive the company turnaround. Helical announced encouraging results although this failed to be reflected in the performance of the shares.
All data is in a total return format
Past performance is not a guide to future performance
Portfolio Changes
Wise Multi-Asset Growth
In terms of portfolio activity, we took some profit in the strong-performing holdings mentioned earlier, namely BlackRock World Mining, Jupiter Gold & Silver, International Biotechnology and RTW Biotech Opportunities, despite our continued confidence in their medium-term outlook. We reinvested the proceeds into a combination of lower relative performers (Amati UK Listed Smaller Companies, AVI Global Trust and TR Property) and more defensive positions (Pacific G10 Macro Rates, Premier Miton Strategic Monthly Income Bond and CVC Income & Growth).
Wise Multi-Asset Income
Over the month, we took profits in Blackrock World Mining, CT Private Equity and International Biotechnology Trust, where recent underlying performance has been very strong and discounts to Net Asset Value no longer look as compellingly attractive. We recycled into holdings where relative performance in recent months has been weaker and that we believe still offer attractive value. Within the property sector we added to Helical, LondonMetric, Picton Property Income and Workspace. Within Fixed Income we added to CVC Income and Growth and the Premier Miton Strategic Monthly Bond Income fund. Finally, we added to our International equity exposure via Pacific North of South Emerging Market Equity Income Opportunities and Brickwood Global Value.
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Full details of the IFSL Wise Funds, including risk warnings, are published in the IFSL Wise Funds Prospectus, the IFSL Wise Supplementary Information Document (SID) and the IFSL Wise Key Investor Information Documents (KIIDs) which are available on request and at wise-funds.co.uk/our funds. The IFSL Wise Funds are subject to normal stock market fluctuations and other risks inherent in such investments. The value of your investment and the income derived from it can go down as well as up, and you may not get back the money you invested. Capital appreciation in the early years will be adversely affected by the impact of initial charges and you should therefore regard your investment as medium to long term. Every effort is taken to ensure the accuracy of the data used in this document but no warranties are given. Wise Funds Limited is authorised and regulated by the Financial Conduct Authority, No768269. Investment Fund Services Limited is authorised and regulated by the Financial Conduct Authority, No. 464193.