Wise Multi-Asset Income

Across major economies, inflation data surprised on the downside. In the US, core inflation came in lower than expected, reinforcing the view that price pressures are cooling. This prompted the Federal Reserve to cut rates by 0.25%, its second move in as many months, while signalling a slower pace of future easing. Bond yields initially fell sharply as investors priced in additional cuts before stabilising when Jerome Powell, Chairman of the Federal Reserve, stressed that policy would remain data-dependent. Softer private sector employment data and moderating wage growth added to the impression that inflation is gradually returning toward target, however, without the economy tipping into recession.

Trade policy developments also helped lift sentiment. After threatening sweeping new tariffs on Chinese imports early in the month, the US administration softened its tone, narrowing its focus to specific products and reaffirming key economic interdependencies between the two nations. The shift suggested a move toward more pragmatic, managed trade relations rather than outright confrontation, which in turn supported global risk appetite. Targeted measures to secure domestic supplies of critical minerals and new agreements with major pharmaceutical firms—exchanging temporary tariff exemptions for lower drug prices—reinforced this more balanced approach.

In Europe, inflation continued to moderate. Political developments briefly unsettled markets as France’s Prime Minister resigned and was later reinstated, but a workable budget compromise helped restore calm. In the UK, gilt yields fell as investors anticipated further Bank of England rate cuts in 2026, though fiscal uncertainty and the prospect of higher taxes ahead of November’s Budget weighed on sentiment.

Japan stood out politically and economically. The election of Sanae Takaichi as leader of the ruling LDP—set to become Japan’s first female Prime Minister—triggered a sharp rally in equities and a weaker yen, as investors bet on large-scale fiscal stimulus and a continued dovish stance from the Bank of Japan. Her alignment with US economic-security priorities, including efforts to reduce dependence on Chinese imports, strengthened expectations of a more assertive fiscal and industrial policy stance.

Market performance was positive across most major asset classes. Global equities advanced strongly, led by a standout rally in Japan and solid gains in the US. Japanese shares surged to record highs as expectations of large-scale fiscal stimulus and a weaker yen boosted industrial and export sectors, while in the US, technology-heavy indices outperformed on robust earnings and renewed optimism around AI investment. European and Asian markets also posted gains as cooling inflation, easing trade tensions and the prospect of lower interest rates supported risk sentiment. For UK investors, weaker sterling amplified overseas returns, though domestically focused mid- and small-cap equities lagged their large-cap peers, which benefited from global exposure. Bond markets were firmer as yields declined, reflecting softer inflation data and growing confidence that central banks are nearing the end of their tightening cycles. Commodities delivered mixed results. Oil stabilised as OPEC+ (the Organisation of the Petroleum Exporting Countries) paused planned production increases, helping to calm fears of oversupply. Gold briefly reached new highs before easing back as investor confidence improved, while industrial metals such as copper and iron ore held firm, supported by a softer US dollar and steady demand across Asia.Against this backdrop, the IFSL Wise Multi-Asset Income Fund rose 2.3%, behind the IA Mixed Investment 40–85% sector, which gained 3.4%. Our equity funds performed well over the month, with Odyssean Investment Trust and Man Income Fund performing strongly despite their greater exposure to UK mid- and smaller-sized companies. Our specialist equity funds, International Biotechnology Trust and Ecofin Global Utilities & Infrastructure, were particularly strong performers. The biotechnology sector is emerging from an unusually long period of weak performance, not helped by politically induced concerns over tariffs and drug pricing. Deals from AstraZeneca and Pfizer around price reductions, tariffs and the onshoring of manufacturing to the US proved more positive than feared and helped lift sentiment across the sector. Biotech investors were then able to focus on a further wave of acquisitions by large-cap pharmaceutical companies seeking to replenish pipelines as blockbuster drugs come off patent. International Biotechnology Trust saw two more of its holdings—Akero Therapeutics and Avidity Biosciences—acquired at significant premiums, marking the eighth and ninth such transactions this year. Our private equity holdings also contributed positively, reflecting the buoyant environment for risk assets. ICG Enterprise reported a steady increase in net asset value and portfolio returns, supported by strong earnings growth and several major portfolio exits. With solid liquidity, ongoing share buybacks and a narrowing discount—helped by prudent balance sheet management and consistent realisations achieved at or above carrying value—investor confidence improved further through the month. Despite the favourable backdrop of lower government bond yields, our renewables holdings were weaker. Bluefield Solar announced that it had ended sale discussions and proposed an alternative route forward for the group, focusing on sustainable growth from building out its pipeline of solar projects, but at the cost of a reduced dividend. Despite clear value within the sector, the market took both pieces of news badly, weighing on performance.

October was a reasonably busy trading month for the fund. Within renewables, we switched our holding in Greencoat UK Wind into Foresight Environmental Infrastructure, a more diversified company with less debt and lower sensitivity to power prices and government subsidies. Following the departure of the managers, we also switched our holding in Schroder Emerging Market Value into Prusik Asian Equity Income and Pacific North of South Emerging Markets Equity Income Opportunities. The Aberdeen Asian Income holding was switched at the same time. We initiated holdings in CVC Income & Growth, which invests in senior secured loans and other corporate credit, and in Life Science REIT, a specialist property fund committed to selling its property holdings over the next 18 months. We also introduced Brickwood Global Value, a global equity fund, funded by a reduction in our Schroder Global Equity Income position. Elsewhere, we took profits in holdings that have performed strongly, such as Ecofin Global Utilities & Infrastructure, BlackRock World Mining, International Biotechnology Trust and ICG Enterprise, and recycled capital into names that have lagged. As such, we increased our exposure to Aberforth Smaller Companies, Helical, International Public Partnerships, Odyssean Investment Trust and Polar Capital Global Financials.