Equity markets were mixed in September as elevated energy prices, rising bond yields, and renewed central bank tightening weighed on sentiment. The Nasdaq rose on continued AI momentum, however the S&P 500, Eurostoxx, FTSE All-Share and Hang Seng all fell. Brent crude rose +14% over the month, while the US 10-year Treasury yield rose from 4.75% to 5.29%, and the 10-year UK gilt rose to 5.4%. The Federal Reserve raised rates for the first time since 2023; the ECB delivered a second consecutive 25bp hike to 2.50%; and the Bank of England held at 3.75%, warning “the risks to the inflation outlook are tilted to the upside”. The Trust fell in September 2026, however, it outperformed the benchmark. Relative outperformance was driven by positioning in Materials, and an underweight in Financials and Industrials. This was offset by underperformance in Communication Services, Consumer Staples and Health Care. At the single stock level, the three largest contributors to performance were BP, Shell, and Johnson Matthey. Both BP and Shell benefitted from elevated and rising oil prices amid the ongoing Middle East conflict and supply disruption concerns. BP additionally announced the appointment of a new chair and continued portfolio restructuring under CEO Meg O’Neill, including a reported review of its Brazilian biofuels business. Shell completed its acquisition of ARC Resources during the period. Johnson Matthey benefitted from broker upgrades during the period. BT Group, Comcast, and Kraft Heinz were the largest detractors from performance during the month. BT Group’s share price fell amid concerns over competition from satellite operators and the potential disruptive impact of agentic AI tools on the sector. Comcast’s share price fell after its CFO said that subscriber losses in its broadband segment will not improve this quarter compared to the same period last year. Kraft Heinz detracted from fund performance in September, continuing a decline that began following Q2 results in August, where better-than-expected sales were offset by a step-up in investment spend that weighed on the near-term profit outlook. In a world of heightened geopolitical uncertainty, the Trust remains invested in what we believe are fundamentally sound businesses, capable of growing profits over time yet still modestly valued by the market.
