Wise Multi-Asset Growth

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.

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.

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).