IFSL RC Brown UK Primary Opportunities | Fund Update | December 2025
December: Further gains and a remarkable year for the FTSE
We were treated to a Santa Rally as rate cuts in the UK and US were confirmed and UK inflation, whilst still well above its 2% target, fell to 3.2% in November (from 3.6%). Expectations for further rate cuts in 2026 have therefore increased, helping to support equity market valuations.
Global equities have re-rated over the past three years with a third year in a row of global equity gains. AI, defence, gold and the banking sector proved particularly strong in 2025. There has been limited earnings growth outside the US, and as we turn our thoughts to 2026, we believe a pick up in earnings is required if stock markets are to enjoy significant further gains. Europe and the UK do have the benefit of relatively modest valuations. The same cannot be said of the US, whose market leadership proves ever narrower –the ten largest companies in the S&P 500 represent over 40% of the index. Passive asset allocators are not getting significant diversification. 2026 could well be the year that active investment managers start a cycle of outperformance.
We added Power Probe, purchased at IPO and Sainsbury’s to the portfolio, as part of a secondary sell down.
In December the IFSL RC Brown UK Primary Opportunities fund returned 1.6% compared with 2.2% for the FTSE All Share and 1.4% for the IA UK All Companies sector, all on a total return basis.
In 2025 the Fund returned 19.1% compared with 24.0% for the FTSE All Share and 15.4% for the IA UK All Companies sector, all on a total return basis.
Active fund managers lagged the FTSE All Share as the FTSE 100 significantly outperformed the mid and small cap index, which active fund managers have a higher exposure to. Whilst our Fund has had a heavy exposure (over 70%) to the large companies, it inevitably remains underweight larger companies given the greater number of companies in the FTSE 250, FTSE small cap and AIM indices. Our well diversified portfolio, along with tried and trusted primary opportunities process, enabled us to comfortably outperform our peers. With returns being relatively narrow across a small number of sectors, those fund managers who had little or no exposure to the banking, tobacco, resources, telecoms, pharmaceuticals and defence sector, will have suffered materially. Cynics like to argue that these are old fashioned industries with limited growth and therefore not worthy of investment. Unsurprisingly we disagree, we view many of these companies as reliable performers that pay attractive and growing dividends and despite this year’s rally, remain modestly valued. If the UK can increase its growth rate in coming years, these companies will be beneficiaries.
Purchases
Power Probe is an automotive diagnostic tool designer and manufacturer whose products are used principally by mechanics to aid in diagnosing vehicle faults. Sales are predominantly in the US but the company aspires to increase sales in Europe. Whilst below the £100m market capitalisation that we would usually expect our companies to be size wise, we had held numerous meetings with the company in the lead up to IPO and were particularly impressed with management and the growth profile of the business, providing confidence that the Company is capable of growing substantially from here. The proceeds of the IPO are to be used to build a new factory in the US, as part of its re-shoring process. The shares have enjoyed a strong start to listed life, rising over 20%.
Sainsbury’s is the UK’s second largest supermarket chain. We acquired the shares at a discount as part of a sell down by its largest shareholder, the Qatar Investment Authority. Supermarkets have performed relatively well during the cost of living crisis as consumers reduce eating out and replace with more home prepared meals. With inflation falling, we see the potential for supermarkets to potentially grow their margins. Sainsbury’s valuation is modest and with a dividend yield in excess of 6%, we believe there is scope for reasonable gains from these levels.
Sales
We trimmed the holdings in financial companies Chesnara and Shawbrook on strength, whilst also taking some profits in Coats.
Cumulative Performance (Total Return %) – To 30 December 2025
| Fund/Benchmark Name | 3M | 6M | 1Y | 3Y | 5Y | 10Y | Since Inception (28/05/1997) |
| IFSL RC Brown UK Primary Opportunities P Acc | 5.4 | 9.4 | 19.1 | 33.7 | 34.0 | 95.6 | 604.0 |
| Quartile Ranking IA UK All Companies | 2 | 2 | 2 | 3 | 3 | 2 | 2 |
| IA UK All Companies | 3.9 | 7.2 | 15.4 | 33.6 | 42.5 | 83.7 | 422.5 |
| FTSE All Share | 6.4 | 13.7 | 24.0 | 46.5 | 73.9 | 123.4 | 526.9 |
Source: FE: 31/12/2025
Discrete Annual Performance (Total Return%) – To 30 December 2025
| Fund/Benchmark Name | Year to 31/12/2025 | Year to 31/12/2024 | Year to 31/12/2023 | Year to 31/12/2022 | Year to 31/12/2021 |
| IFSL RC Brown UK Primary Opportunities P Acc | 19.1 | 7.0 | 4.9 | -16.9 | 20.5 |
| Quartile Ranking IA UK All Companies | 2 | 3 | 4 | 4 | 1 |
| IA UK All Companies | 15.4 | 7.9 | 7.4 | -9.1 | 17.3 |
| FTSE All Share | 24.0 | 9.5 | 7.9 | 0.3 | 18.3 |
Source: FE: 31/12/2025
Please be advised that the past is not necessarily a guide to future performance. Investments and the income derived from them can fall as well as rise and the investor may not get back the amount originally invested.
