Market Commentary

Q3 2026

Global equity markets delivered further positive returns during Q3 2026 despite a more challenging backdrop than that experienced in the previous quarter. Investors navigated rising geopolitical tensions in the Middle East, higher energy prices, renewed tariff announcements and further monetary tightening from several central banks. Nevertheless, economic growth remained resilient, particularly in the United States, where strong corporate earnings and continued investment in artificial intelligence (AI) infrastructure supported equity valuations.

Developed Markets

Emerging markets continued to benefit from improving earnings expectations and ongoing demand linked to technology and semiconductor supply chains.

Emerging Markets

Europe (ex UK)

European equity markets produced positive returns despite facing greater challenges from elevated energy prices and slower economic growth.

UK equities performed reasonably well during the quarter, supported by the market's exposure to energy, financial and value-oriented sectors.

UK Equities

Fixed income and Monetary policy

Bond markets experienced a difficult quarter as inflation concerns re-emerged and central banks maintained a
higher-for-longer interest rate stance.

Commodities

Commodities were among the strongest-performing asset classes during Q3.

Q1 2026 IP MPS Performance and fund changes

Accumulation Range
During the quarter, we reviewed our multi asset funds and decided to make the following changes:

  • Balanced & Balanced Plus Accumulation: we introduced the Aviva Inv Multi-asset Plus III 9 and reduced exposure to CT Universal MAP Balanced 3 Acc reflecting stronger overall performance, improved diversification and lower overall costs. We also removed the Jupiter Merian Global Equity Absolute Return fund in the Balanced portfolio due to cost reduction.

  • Moderately Adventurous Accumulation: We introduced the L&G Multi Index 7 C Acc by replacing holdings in HSBC Global Strategy Dynamic C Acc and Jupiter India I Acc. This was due to better cost and performance metrics, and the desire to give the portfolio a better UK exposure.

  • Adventurous Accumulation: We introduced the HSBC MSCI Emerging Mkts Eq Idx Acc S and increased Artemis SmartGARP Global Emerging Markets I Acc exposure by removing iShares Emerging Markets Equity Index D Acc and Jupiter India I Acc. This was to provide the portfolio with exposure to broader emerging market strategies,  greater diversification while maintaining long-term growth potential.

Income Range
The Income Range continued to benefit from the higher-yield environment across both fixed income and equity markets, and on review, the Investment Committee decided to leave all portfolios unchanged.

Passive Range
During the period, we reviewed the use of our I-shares funds and determined that where there was an identical benchmark, the use of HSBC funds was more cost effective. The move to the equivalent HSBC passive funds resulted in better tracking errors and reduced fees across the range. The OCF reduced by 2bps for most portfolios.

Outlook
Looking ahead, markets continue to balance strong corporate earnings and resilient economic growth against the risks posed by elevated inflation, geopolitical uncertainty and higher interest rates.

We will continue with our diversified approach using funds with different investment methodologies, whilst continuing to look for funds that can enhance this strategy.

Martin Nelmes

Investment Director and Chairman of the Network Investment Committee

This document is aimed at Investment Professionals only and should not be relied upon by Private Investors. Our comments and opinion are intended as general information only and do not constitute advice or recommendation. Information is sourced directly from fund managers and websites. Therefore, this information is as current as is available at the time of production.

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