From Asia to the UK, are investors rediscovering overlooked opportunities?

Schroders

Updated 07 Nov 2025

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by International Biotechnology (IBT). The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

The idea of ‘American exceptionalism’ has deep roots. First coined in the 19th century – and popularised by Alexis de Tocqueville’s ‘Democracy in America’ in the 1830s – it captured the belief that the United States was fundamentally different from other countries – a nation founded on ideals of liberty, individualism and enterprise, with a unique role to play in the world. The phrase gained fresh prominence in the early 20th century, and during the Cold War it hardened into doctrine – a lens through which US foreign policy, economic leadership and even moral authority were projected onto the global stage.

In more recent years, that sense of American distinctiveness has manifested itself powerfully in financial markets. In the recovery from the global financial crisis from 2009 onwards, we have seen the rise of a new form of exceptionalism – characterised by the outperformance of US equities, the dominance of large cap technology stocks and the sheer gravitational pull of Wall Street on global capital flows. But such prolonged market leadership has created growing concentration risk – and raised questions about where future returns are most likely to come from.

A self-reinforcing cycle

As money flooded into US markets, the trend became self-reinforcing. Passive investment vehicles tracked rising benchmarks. Valuations expanded. Index concentration intensified. And portfolios across the world became more heavily skewed towards a single market – and, increasingly, a handful of companies. Currently, the US accounts for more than 70% of the MSCI World Index¹ – a remarkable share for one country in what is ostensibly a global benchmark.

Yet history demonstrates that while markets can ignore gravity for a while, they cannot ignore it for ever. With political risks rising, fiscal sustainability under scrutiny and relative valuations stretched, many investors are no longer asking whether US outperformance will continue – now they’re asking how much exposure is too much and examining where capital might be better deployed in the years ahead.

While recent market performance shows no clear break in US leadership, signs of investor reassessment are emerging. Perhaps the clearest signal of this is in the weakness of the dollar, which has eaten away at the returns global investors receive from their US assets and may reflect a growing willingness among asset allocators to look elsewhere. What’s unfolding may not yet be a full-blown rotation, but it could be the early stages of a more strategic reallocation – away from concentrated US exposures and towards regions and asset classes offering more compelling long-term value.

Why now?

In financial markets, nothing lasts forever. Cycles evolve, leadership rotates and what once looked like structural dominance can give way to reversion – especially when concentration runs high and valuations stretch.

The election of Donald Trump for a second term as US President may well come to be seen as a turning point. US equities initially rallied, buoyed by familiar promises of tax cuts and deregulation. But that optimism was soon tempered by renewed tensions around global alliances, fresh tariff threats and a more combative foreign policy stance – developments that unsettled investors and prompted a sharp, albeit brief, correction.

While markets have since rebounded, the episode served as a reminder of just how sensitive sentiment towards highly-priced assets can be. Stocks with stretched valuations and elevated expectations can be especially vulnerable to a shift in market narrative or policy direction. Against this backdrop, it should not be surprising for investors to be asking how exposed they are to the US, and whether overlooked or undervalued alternatives might now offer a more balanced route to long-term growth.

Where can you turn?

For investors thinking about diversifying their portfolios away from the US, the Schroders range of investment trusts offers plenty of options. From the unloved and undervalued domestic stock market, through the demographic growth tailwinds of Asia, to the resilience and dependability of bricks and mortar in commercial real estate. This is a time for specialism over generalism – for trusts that genuinely know their territory – as we outline below.

The UK – value, income and growth

Until recently, few regional markets were looking as unloved as the UK. International investors had been reducing allocations steadily since before Brexit, with shrinking index weightings, political noise and a perceived lack of dynamism all perhaps serving as convenient reasons to look elsewhere. But capital flow data suggests that something profound is happening. US investors, in particular, have been buying UK stocks above all other international markets in 2025, taking advantage of others’ unwillingness to do so.

Taking a look at any number of UK quoted companies, the astute investor can see that the UK combines deep, liquid capital markets with high corporate governance standards, attractive dividend yields and a growing trend of value-enhancing share buybacks. While the domestic economic backdrop still faces challenges, it looks comparatively stable – especially when set against the policy uncertainty elsewhere. And with UK equities continuing to trade at a very significant discount to global peers, the valuation case is compelling.

Importantly, the UK market provides a different type of exposure to the US – with a higher weighting to traditional real economy sectors, a broader universe of high-yielding companies and a deep pool of small and mid-cap stocks more closely tied to the relatively benign outlook for the domestic economy. For investors looking to reduce their exposure to US concentration risk, these differences can offer meaningful diversification.

Schroder Income Growth Fund plc and Schroder UK Mid Cap Fund plc both demonstrate the value of selective, active exposure to UK equities. The former has a near 30-year track record of consistent dividend growth , delivered through astute stock picking and with flexibility to invest across the UK market cap spectrum whilst using the unique advantages of the investment trust structure to smooth and enhance income; the latter taps into the long-term potential of Britain’s “growth sweet spot”, companies that are profitable and cash generative, yet still able to grow at a superior rate, with a balanced exposure to both the UK and international markets.

Asia – structural growth and a wealth of opportunity

For investors seeking a credible alternative to US technology, Asia offers an obvious starting point. The region is home to world-leading innovation in areas such as semiconductors, automation, clean energy and digital infrastructure. In many cases, these companies offer similar growth potential to their US counterparts, without the same degree of valuation risk.

But the appeal of Asia extends well beyond tech. Demographic tailwinds, rising consumption and growing incomes are reshaping economies across the region – offering investors a deep and diverse opportunity set. Export demand still matters, and to an extent, Asia’s economic momentum remains at the mercy of global trade dynamics. But the region also tends to benefit when the dollar weakens – a distinct possibility if capital begins to flow more meaningfully out of the US.

These dynamics play to the strengths of selective active management. Schroder AsiaPacific Fund plc, Schroder Asian Total Return and Schroder Oriental Income Fund Limited each provide specialist access to the region, but with different objectives. Whether investors are focused on income, growth or a combination of the two, the range offers something for everyone.

Japan also deserves special mention – not least because of the striking parallels with the US today. In the 1980s, Japan came to dominate global indices through years of outperformance that culminated in an asset price bubble. The correction that followed ushered in decades of underperformance – until recently. Now, Japan is re-emerging, with very attractive valuations, improving macroeconomic fundamentals and widespread corporate governance reforms driving higher shareholder returns. This is fertile ground for active managers with a strong stock-picking track record, such as Masaki Taketsume, who manages Schroder Japan Trust plc.

Real estate – diversification with inflation linkage

Real estate has long offered investors a distinctive combination of total return, dividends, diversification and inflation protection from an income perspective. Over the past five years, the sector has weathered considerable challenges – first the uncertainty triggered by the pandemic, then the valuation reset resulting from the sharp rise in interest rates from record lows in 2022. But that repricing now appears to be behind us. In many areas, valuations have stabilised. Some sectors – particularly industrial and logistics – have already seen a strong rebound, and there are signs that the recovery is beginning to broaden.

Schroders’ real estate trusts are well positioned to take advantage. Schroder Real Estate Investment Trust focuses on UK commercial property and is actively improving the energy credentials of its portfolio of assets. This “brown-to-green” strategy is underpinned by growing evidence of a green premium – with sustainable, energy-efficient assets commanding higher rents and stronger valuations.

Meanwhile, Schroder European Real Estate Investment Trust targets locations with strong fundamentals, solid long-term growth prospects and resilient occupier demand. These are not generic bets on the region, but carefully selected exposures to Europe’s ‘winning cities’, backed by data and deep local knowledge.

Active asset management remains essential in commercial property – and with the scale, experience and deep resources that Schroders brings, shareholders benefit from more than just property exposure. With much of the global macro uncertainty now emanating from the US, real estate in the UK and Europe can offer a grounded, regionally nuanced source of diversification.

Biotech – innovation more important than geography

We have thus far focused on the case for reallocating away from the US, but there are still areas where American leadership remains well founded – and worth preserving exposure to. Biotech is one of them.

The sector is underpinned by powerful long-term drivers. As populations age and healthcare demands rise, the need for more effective treatments continues to grow. Many of these advances originate in the biotech sector, where innovation has the potential not only to improve patient outcomes but also to reshape the economics of care.

Recently, the US biotech sector has been caught up in the wider backlash to growing political uncertainty in America, but long-term outcomes will ultimately be tied to company progress. While market sentiment and interest rates affect investor appetite for the sector, intrinsic value is driven by rapidly advancing innovation and burgeoning global demand, neither of which are affected by macro swings.

International Biotechnology Trust plc offers targeted access to this opportunity through rigorous stock selection with a risk management overlay, focusing on businesses with differentiated science, strong management and a clear commercial pathway. Despite its global mandate, the trust’s managers choose to invest more than three-quarters of its assets in the US, because America retains deep-rooted structural advantages in biotech. These include world-leading academic institutions, access to strong capital markets and funding, a deep pool of specialist talent and a regulatory environment that remains highly supportive of innovation.

As a result of these advantages, biotech is one of the few areas where the US retains genuine global leadership. For investors rethinking their US exposure, this may be one of the most compellingly sensible ways to stay invested in America’s strengths.

A long-term rotation

Diversification is one of the oldest principles in investing – but over the past decade, many investors have found themselves pulled increasingly into a single market, and indeed, a handful of stocks with similar characteristics. Strong returns have masked growing concentration risk. But as the global picture shifts, those risks are becoming harder to ignore.

What we may be seeing now is the beginning of a longer-term rotation – one prompted by valuation concerns, fundamental reassessments and a changing sense of where future opportunities – and risks – might reside.

From some perspectives, the concept of American exceptionalism still holds weight. The US remains one of the most innovative, dynamic and entrepreneurial economies in the world. But when it comes to the financial exceptionalism that has defined global markets for more than a decade, the signs of change are hard to miss. Valuations are elevated, political risks have clearly risen and the gravitational pull of US equities is no longer guaranteed.

For investors looking to reduce risk, restore balance and tap into a broader set of global opportunities, Schroders’ specialist investment trusts – spanning regions, sectors and a range of investment objectives – are well placed to support investors through this changing landscape .

We ask when boards are going to bite the bullet and switch to value.

Thomas McMahon

Updated 12 Nov 2025

Disclaimer

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. This material should be considered as general market commentary.

By now, most investors will have picked up on the fact that the main UK, European and Japanese indices have all outperformed the US index this year, in sterling terms. Despite the stunning returns to a handful of AI-related names like Nvidia, a weak dollar and, dare we say it, the better value outside America, has led to higher returns away from the US, the black hole that been sucking in all the headlines and the capital for the past three years. However, we wonder if many investors have realised yet that value has outperformed growth this year too? Well, to be clear, it is only outside the US that this is true: the MSCI ACWI ex US Value Index is well ahead of the growth index. This is true year to date, over a 12-month period and over three years, all thanks to a fairly sustained upswing in relative returns since February 2024.

PERFORMANCE OF EX US INDICES

Why has value outperformed?

We think this shows that the market is being driven by AI, not by growth, an important distinction. In the major developed world indices, AI-related stocks have been amongst the top performers – SoftBank in Japan, ASML in Europe – but this has not prevented the value indices from outperforming the growth indices in either of these two markets, or in the UK. Other factors have been driving good returns from stocks with no connection to the artificial intelligence trade.

One commonality is the strong performance of banks in all three markets. In Japan, sustained modest inflation and wage increases have seen gently rising interest rates for the first time in decades, creating a positive macro picture for the industry. In the UK and Europe rates have actually been cut, but they remain high compared to the pre-COVID environment, so a reasonably positive environment for their margins remains. Economic growth could also be characterised as ‘getting worse, but slowly enough not to matter’ – there are no great signs of distress in businesses, which are muddling through on the whole, albeit with weak earnings growth. The strength of the rally – Barclays is up 52% this year and Lloyds 65%, for example, seems to be about the ‘value’. Markets are slowly re-rating businesses from deeply discounted levels, creating the stealth rally phenomenon so common when value strategies are successful.

We think one other factor behind this stealth value rally is the rebalancing away from the US we have seen this year, to a large extent by American investors. Morningstar flows data shows sustained inflows into European equities since January. We think investors looking to sell expensive American stocks have been drawn to cheap areas of the market in Europe, the UK and Japan, rather than switching expensive European stocks for their expensive US ones. Banks are also an obvious first place to look for general exposure to a market or an economy, for any investor looking to rebalance away from the US.

How durable is this trend?

We have become accustomed in recent years to consider interest rates to be a key reason for the divergence in performance between growth and value in the pre- and post-COVID environment. If it was as simple as this, then the cuts that are expected in the US, UK and Europe would suggest growth will come back into favour. But in the long period of low interest rates there were other factors supporting growth equities too, one of which was the openness of global trade. Trade tensions and tariff barriers boost demand for materials and energy to build production and manufacturing facilities, increasing demand for products of typical value sectors. They also raise costs and therefore inflation, increasing the appeal of near-term cash flows by reducing confidence in the value of future ones.

Moreover, a less globalised world is one in which the opportunity for growth companies is smaller. Recent years have seen quality growth companies that were once kings of the market fall into disfavour, and the quality growth strategies that were so successful in the post-GFC period have struggled. Diageo, for example, may have had some internal issues, but its brands have been increasingly challenged by local names in China, like Kweichow Moutai. Similarly, the German automakers have been left behind in the electronic vehicle industry by companies like BYD, which is the largest seller of EVs globally. In fact, BYD accounted for 22% of electric and hybrid sales in 2024, with Tesla second at just 10%. BMW was fourth with 3.1% and VW seventh, with 2.6%.

The US’s largest economic concern at the moment has to be the race for AI dominance, not just because of the economic value in the industry but also the strategic importance of leading it economically as well as technologically. In our view, this fear is being ruthlessly exploited by Jensen Huang, Sam Altman and other executives in AI names who are looking to extract all possible support and subsidies out of the US government. We think the main concern for investors is that AI becomes another industry in which China copies, improves and surpasses its Western competitors. The success of Chinese alternatives to Nvidia, OpenAI and other companies in the value chain would materially reduce the potential cash flows for the US leaders, not only in China but in its potential customers, which could not fail to hit multiples via lowering expected growth rates, and therefore stock prices.

At the time of writing, some comments by key executives on the strategic importance of AI have spooked the markets, showing how vulnerable AI-related stocks are at very high valuations. Jensen Huang, president and chief executive of Nvidia, set the cat amongst the pigeons by saying that China “will win the AI race” before revising his comments to the softer “China is nanoseconds behind and the US must win”. Meanwhile, Sarah Friar, the chief financial officer of OpenAI suggested a government backstop for the financing of its data centre deals might be helpful (one friend asks if they will backstop his Wetherspoons tab too). We think it is obvious that these companies are lobbying hard, and using the Washington elite’s fear of China to gain an advantage.

More worryingly, OpenAI’s comments have been widely read as suggesting the company isn’t likely to find the funds elsewhere that are needed to finance its own operations for some time to come, and sounds suspiciously like an appeal for a bailout. They follow the announcement of a number of puzzling deals in the space with a slight circular outline. For example, Nvidia will invest $100bn in OpenAI to allow it to build data centres, for which it will buy Nvidia chips (with the money Nvidia has given it). OpenAI buys AMD chips and also receives warrants over its equity, which equity is boosted by OpenAI’s purchases. OpenAI will pay Oracle for cloud-hosting; Oracle will spend the money on Nvidia chips to run OpenAI’s services. Nvidia pays CoreWeave for cloud-services capacity, which will run on Nvidia chips, allowing OpenAI to use CoreWeave.

You don’t need to be a short-seller to get a little nervous about these deals. A vast amount of cash needs to be spent to fulfil a fraction of the promises that are being made to shareholders, and one of the major players in this series of deals, OpenAI, is unprofitable. Meanwhile Nvidia needs more and more cash to be spent on infrastructure if its own valuation is to be justified by growth rates. A cynic might suggest that the industry is trying to frighten the US government into becoming the next source of cash once the huge piles built up by the large-cap tech companies during the last 15 years have run out. Meta’s results last week saw a negative net cash position for the first time in years, for example.

Whether the cynicism is justified or not, the sharp correction seen in the share prices of Nvidia and related stocks shows how sensitive they are to changes in growth expectations. The 15% losses to Palantir shareholders last week give another example: the company is trading on sky-high P/Es, and seems to have taken a hit solely due to news that famous short-seller Michael Burry had a large short position in the shares.

In conclusion, we think there are plenty of signs that some sort of consolidation in the shares of AI companies will be necessary, if not a correction. For investors, there are two worries. The first is China taking the lead technologically and its companies winning market share and crimping the US champions’ growth potential, knocking the shares back. The second is the huge investment in AI infrastructure is not leading to profitable businesses using that infrastructure, and is therefore getting harder and harder to finance. In short, there is an awful lot of growth priced in to the shares of Nvidia and similar names, which means there simply isn’t the same scope for the shares to rise, even if the worst fears for the industry are misplaced. Nvidia’s impressive sterling returns of 34% are dwarfed by Lloyds’ 74%, for example. Investors don’t need to think artificial intelligence is going to fail to think the companies are going to underperform.

In our view, the chief bull case for value stocks, whether they be defined by sector – mining, oil, banks, utilities – or valuation metrics versus history, is that they are cheap and the artificial intelligence trade is over-extended. We don’t think the economic environment favours growth over value, but that the exciting new technology in the market has sucked in money chasing potentially huge growth. Now the shares have moved, a more realistic assessment is needed of the financial potential of the products. Investors have become massively overweight the artificial intelligence trade and the rebalancing of 2025 is likely to continue.

How to get exposure to value?

If this is reason enough to make sure you have exposure to value in your portfolio, it’s worth reviewing the options in the investment trust sector. Frankly, there aren’t that many left after a long period of growth outperformance, for one reason after another. We dug into the Morningstar database to look for those trusts with the greatest allocation to value stocks, which are defined by the average of a number of backwards- and forwards-looking financial metrics. Value stocks are roughly those in the cheapest third. There are only 16 out of 154 trusts for which there is data (the remainder are mostly invested in alternatives, real estate or private assets) with more than 50% of their portfolio invested in value stocks. Of these, ten are members of the AIC UK Equity Income sector (or the UK Equity & Bond Income sector of one).

The trust with the highest allocation to value is one of these, Temple Bar (TMPL). While an equity income strategy naturally leads managers into cheaper stocks, as they tend to have higher dividend yields, Temple Bar’s strategy explicitly targets value, with 75% of the portfolio in value stocks. This has helped the trust deliver exceptional NAV total returns, its 23.5% annualised over the past three years putting it in the top ten performers in the whole sector, behind mostly technology focused trusts and Golden Prospect Precious Metals (GPM), boosted by this year’s extraordinary rally in gold miners. Sector peer Aberdeen Equity Income (AEI) is a rounding error behind when it comes to value exposure, as the table below shows. Total returns haven’t been as good over three years, but in 2025 AEI’s NAV total return of 24.2% is close to TMPL’s 28.5%, and ahead of the UK market’s 21.8%. The rating of the share price is pretty close to TMPL’s though, with the trust on a small discount of 0.5% at the time of writing versus TMPL’s 0.8% premium. In fact, AEI has traded on a premium more frequently than TMPL this year, which we attribute to the exceptionally high yield. While manager Thomas Moore does target capital growth as well as yield, the trust really stands out on the latter metric, currently yielding 6%. It has been held back a bit this year by the mid- and small-cap bias, as it has been large-cap value that has really outperformed.

TRUSTS MOST EXPOSED TO VALUE

Source: Morningstar, as at 06/11/2025

We think smaller companies could be a potential source of opportunity in the next few years. If the rotation away from AI and the US continues, it could see a re-rating in the large-cap value areas that have been the first port of call, and investors could move on to small- and mid-caps to find deeper value. The managers of Aberforth Smaller Companies (ASL) have reported interest from US strategic and private equity buyers has risen over the past two years, with many taking advantage of rock-bottom valuations to acquire strong UK-listed businesses. But we think it is fair to say that this value argument hasn’t filtered through to the mass market investor, and UK small-caps remain deeply out of favour.

While ASL has outperformed the sector and small-cap indices over three years, returns have been more muted this year. Investors like to think of small-caps as a play on the UK economy, although this is a massive simplification and many UK small-caps are international earners. So, concerns about the UK economy may have been weighing on the market. However, as we have seen with the banks, if the bad news is all in the price, you don’t need good news for a re-rating. If investors start to look for value opportunities to diversify their portfolios, there could be no more obvious place to look than UK small-caps, and ASL and its stablemate Aberforth Geared Value & Income (AGVI) are the only two straightforward value options in the UK small-cap sector.

However, Fidelity Special Values (FSV) takes an all-of-market approach but has had a long-standing bias to small- and mid-caps, and manager Alex Wright’s contrarian approach means it could well benefit from any re-rating of cheap UK stocks in these segments. That said, trades in the large-cap space have been important to the trust’s success, including owning some of the UK banks, which he bought into when they were deeply out of favour. The strong performance means there isn’t the same discount opportunity as there is with some of its sector peers, with the discount at the time of writing being just 2%.

There aren’t many trusts investing outside the UK to have a strong value bias. Murray International (MYI) is one that stands out, with 60% exposure to value stocks. Positioning is generally contrarian, MYI having a long-standing underweight to the US on valuation grounds, which has been beneficial this year, helping the trust deliver NAV total returns of 24% as global developed market indices are up around 13%. MYI’s co-manager Samantha Fitzpatrick will be speaking at our online event, Real Dividend Heroes and Growth Giants, on 25/11/2025, and you can register to hear from her here.

MYI has long held a significant position in Asia and the emerging markets. Meanwhile, Henderson Far East Income (HFEL) and Fidelity Asian Values (FAV) are wholly focused on Asia and also have more than 50% in value stocks. HFEL is primarily an income fund, while FAV is a total return focused proposition run by managers with a contrarian approach. This has driven strong returns versus the benchmark this year, with an overweight to the cheaper Chinese market over the more expensive Indian market boosting returns in its recently reported results, as well as some good returns from idiosyncratic single stock positions.

It’s notable there are no Japan or Europe trusts in the list of trusts with the highest value exposure. The Europe sectors have certainly become very biased towards growth. The trust with the highest exposure is JPMorgan European Growth & Income (JEGI), which sets out to provide core exposure, using a mixture of value and growth metrics to select stocks. The managers tilted back towards domestic European earnings this year, which may have increased the value tilt.

JAPAN & EUROPE SECTORS

Source: Morningstar, as at 06/11/2025

In Japan, there are a few strategies we would classify as value but don’t show up as such in the table. Schroder Japan (SJG) for example, has a stock-picking process that zeroes in on value and has led it to deliver strong performance under manager Masaki Taketsume. In the small-cap sector, we would highlight AVI Japan Opportunity (AJOT), which takes an activist approach to investing in deeply discounted small-caps. We think the data doesn’t show much of a value bias because the Japanese market includes some extremely cheap companies, so even a typical value strategy might not have to go into the cheapest stocks to find outstanding value, particularly if the manager is looking for an operationally strong business too. Additionally, AJOT’s approach is to invest, engage and watch the business re-rate substantially; if a business is being held through this life cycle, then towards the end of the holding period it may be showing lower value characteristics and higher growth characteristics.

Conclusion – Is value the next source of growth for the investment trust industry?

It’s clear that there aren’t many options for investors looking for a value approach left. We think this is why many of the trusts we have highlighted are trading on narrow discounts or indeed have been on slight premiums, even while the general perception remains that investment trusts are out of favour. Of course, those trading close to par are those that have shown good performance or a high yield, but we are suggesting that there is a good chance more of that will be produced by value strategies in the next few years. With so few value options to choose from, the upside pressure on share prices could become a pleasant problem for boards.

We should note, though, that the situation is not quite as bad as we have suggested. Our way of identifying a value strategy won’t capture all that could be grouped under that banner. We highlighted that a value strategy could easily lead managers into shares considered core by Morningstar, particularly when they re-rate. The data also can’t quite capture a portfolio such as that of AVI Global (AGT). AGT invests in companies with complicated structures that are trading well below their intrinsic value, which means mainly closed-ended funds, family-controlled holding companies and asset backed special situations in Japan. The managers’ assessment is based on their analysis of the underlying assets and their potential market value, which an analysis like Morningstar’s can’t capture. Indeed, over 25% of the portfolio isn’t graded growth, core or value by Morningstar at all. We think AGT could be a highly attractive source of growth opportunities if the market broadens out from the AI trade, and we provide a full update in the note we published this week.

In our view, boards and managers should be considering what new value strategies they can offer in the investment trust sector. The market currently seems under-served in most geographies, Europe in particular, and good performance by the value trusts should eventually lead to greater demand. It’s interesting to note the board of BlackRock Greater Europe (BRGE) appointing a new manager to the team in order to support the addition of some quality value ideas to the portfolio, citing the underperformance of growth in the current market; the board explains this was proposed by the manager, BlackRock. We think this might be a straw in the wind, and we might soon be seeing managers and private investors alike looking to increase their exposure to value.

Do you know the only thing that gives me pleasure ? It’s to see my dividends coming in” was famously said by John D. Rockefeller.

Warning. The biggest drawback to compounding dividends.

You may find yourself wishing away your life as you wait for the next dividends to be paid until you have enough to re-invest.

When you achieve your plan and you start to spend your dividends the opposite will happen. GL

GCP Infrastructure Investments Limited

(“GCP Infra” or the “Company”)

Quarterly investor update

12 November 2025

GCP Infra is pleased to announce the publication of its investor report, which is available at http://www.gcpinfra.co.uk.

At 30 September 2025:

·    The net asset value was, as previously announced, 101.40 pence per ordinary share;

·    The Company was exposed to a diversified and partially inflation protected portfolio of 47 investments with an unaudited valuation of £858.9 million; and

·    The portfolio had a weight-adjusted average annualised yield of 8.0%, principal outstanding of £912.2 million and an average life of 11 years.

Capital allocation

The Board reconfirms its commitment to the Company’s capital allocation policy set out in the 2024 Annual Report and Accounts, continuing to prioritise repayment of leverage, as well as reducing equity-like exposures and exposures in certain sectors, whilst also facilitating the return of £50.0 million of capital to shareholders. At 30 September 2025, the Company had £20.0 million (30 June 2025: £43.0 million) outstanding under its revolving credit arrangements, representing a net debt position of £8.0 million (30 June 2025: £36.2 million) which compares to the Company’s unaudited NAV of £848.7 million (30 June 2025: £864.1 million).

Further supporting the capital allocation policy, the Company bought back 8,937,270 ordinary shares in the quarter. In aggregate, the Company has purchased c. £23 million of shares since announcing the capital allocation policy.

The Company continues to progress transactions to dispose of assets in those sectors targeted in the capital allocation policy. If completed, such transactions would enable the Company to complete the capital allocation policy objectives of returning at least £50 million to shareholders and reducing the Company’s outstanding debt to nil. Further announcements will be made in due course, including as part of the Company’s annual report and financial statements, which are due to be published in December 2025.

REGIONAL REIT Limited

(“Regional REIT”, the “Group” or the “Company”)

Q3 2025 Trading Update and Dividend Declaration

Regional REIT Limited (LSE: RGL), the regional commercial property specialist, today announces a trading update for the three-month period from 1 July 2025 to 30 September 2025 and a dividend declaration for the third quarter of 2025.

Stephen Inglis, Head of ESR Europe LSPIM, Asset Manager commented:

“We remain committed to reducing leverage through our sales programme. During the quarter, we achieved £17.1m of disposals at 1% above 30 June 2025 valuation, reflecting good progress and we expect to achieve the upper end of our estimated £40m to £50m disposals for the full year. Leasing momentum has been negatively impacted by the uncertainty stemming from the broader economic environment and specifically by the inconsistent messaging from the UK Government regarding the forthcoming budget. The lack of clarity has led many prospective tenants to pause and adopt a ‘wait and see’ approach. While enquiry levels continue to improve, the time from initial enquiry to legal commitments remains lengthy.

In parallel, good progress continues to be made on the refinancing of the August 2026 banking facility with completion expected well ahead of maturity.”

Lettings and renewals update

During Q3 2025, 21 lettings to new tenants and renewals/regears were completed across 86,779 sq. ft., delivering £1.7m of annualised rental income. Retention remained high, with 87.0% of leases up for renewal remaining let to the same tenants at increased rents. Notably:

·      Nine leases were exchanged during Q3, totaling 15,757 sq. ft., contributing £0.4m per annum (“pa”) of rental income and 8.3% above June 2025 ERV. This takes the total number of leases exchanged with new tenants since 1 January 2025 to 29 leases, totaling 134,180 sq. ft.; delivering £1.8m pa of rental income when fully occupied and reflecting 5.1% above June 2025 ERV

·      Lease renewals in Q3 achieved a 5.2% uplift against June 2025 ERVs

·      Post quarter end, four additional lettings and renewals/regears have been achieved across 44,416 sq. ft. providing £0.4m of annualised rental income

These figures reflect the Group’s commitment to improve occupancy, through tenant retention and leasing of vacant accommodation while driving rental growth through proactive asset management.

Portfolio update

·    118 properties, 1,242 units and 690 tenants, totaling c.£595.9m of gross property assets value (30 June 2025: £608.3m)

·    Strategic disposals amounted to £17.1m (before costs), which were achieved at 1.0% above 30 June 2025 valuation and reflected a net initial yield of 7.1%

·    The Kennedy Building, Leeds was acquired for £1.1m (before costs) providing full ownership of a strategic island development site by Leeds railway station

·    Q3 CAPEX spend £3.4m; Q1-Q3 £9.4m

 Continued operational delivery

During the quarter, the programme of strategic asset disposals and the net movement in lettings together influenced both the rent roll and occupancy.

·    Rent roll of £54.3m (30 June 2025: £56.7m); ERV £80.8m (30 June 2025: £82.9m)

·    EPRA Occupancy (by ERV) 76.8% (30 June 2025: 78.6%)

·    EPRA Occupancy by portfolio segmentation*: Core 86.5%, CAPEX to Core 71.3%, Value Add 49.1%, and Sales at 61.4%

·    Total rent collection for the quarter as at 5 November 2025 97.7%

* Core: well positioned to deliver sustainable long-term income; Capex to Core: targeted investment to upgrade assets to secure lettings; Value Add: assets with potential for repositioning and planning gains; Sales: assets targeted for disposal programme

Maintaining balance sheet discipline while delivering on strategy

·    Cash and cash equivalent balances £54.4m (2024: £56.7m)

·    Net loan-to-value ratio c. 41.8%^*(2024: 41.8%)

·    Gross borrowings £303.6m (2024: £316.7m) – following post period end disposals, borrowings amount to £282.0m

·    Group cost of debt (incl. hedging) 3.4% pa (2024: 3.4% pa) -100% fixed and hedged. Good progress on refinancing the banking facility; completion expected well ahead of maturity of August 2026

·    A further five disposals completed post quarter end totalling £13.3m (before costs), 4.6% above 30 June 2025 valuation. Year-to-date disposals amount to £38.1m (before costs), 1.8% above book value. Expect to complete further disposals during Q4 ahead of year-end, supporting portfolio repositioning and balance sheet strengthening.

^* Gross property assets value based upon Colliers valuations as at 30 June 2025, adjusted for subsequent acquisitions, disposals and capital expenditure in the period.

Q3 2025 Dividend Declaration

As previously indicated, the Company will pay a dividend of 2.50 pence per share (“pps”) for the period 1 July 2025 to 30 September 2025. The entire dividend will be paid as a REIT property income distribution (“PID”).

Shareholders have the option to invest their dividend in a Dividend Reinvestment Plan (“DRIP”), and more details can be found on the Company’s website. 

The key dates relating to this dividend are:

Ex-dividend date	20 November 2025
Record date	21 November 2025
Last day for DRIP election	15 December 2025
Payment date	09 January 2026

The level of future payment of dividends will be determined by the Board having regard to, among other factors, the financial position and performance of the Group at the relevant time, UK REIT requirements, the interest of shareholders and the long-term future of the Company.

Outlook

Regional REIT faces a subdued investment market with positive leasing momentum hampered by extended transaction timelines and persistent uncertainty. The Board remains focused on strategic disposals and repositioning assets to unlock planning-led value. Operational discipline and dividend continuity remain priorities, underpinned by proactive asset management.

The 1 “Killer” AI Dividend (7.9%) Almost No One Knows About

Brett Owens, Chief Investment Strategist
Updated: November 11, 2025

We’ve got a sweet deal on one of my favorite AI dividends (current yield: 7.9%). And it’s not just because of last week’s stock market drop—though that does help.

Truth is, the bargain on this stout fund has been hanging around for a while now. But it’s on borrowed time indeed. We need to make our move.

Forget NVIDIA: This Is the Best AI Buy on the Board 

The AI play in question is the Cohen & Steers Infrastructure Fund (UTF). It’s the closed-end fund (CEF) behind that 7.9% dividend (which, by the way, pays monthly).

In addition to the dividend, we like UTF because it’s a “tollbooth” play on AI. You won’t find an NVIDIA (NVDA) or a Microsoft (MSFT) here. Instead, UTF holds stocks that provide the servers, transmission lines and power plants that keep the AI—and indeed the whole digital economy—well-lit and connected.

AI’s voracious power demand is, of course, far from a secret. Data centers—the engines behind ChatGPT and its competitors—already account for about 4% of US electricity consumption, and that number is climbing fast.

And UTF is here for it. Around 35% of the fund’s holdings are in utilities, with another 18% in gas distributors and pipelines. The fund also holds about 15% of its assets in corporate bonds, which stand to gain as rates move lower.

(That, by the way, is exactly what I see happening as AI disrupts the job market and Jay Powell’s term ends in the spring; he’ll almost certainly be replaced by someone who will work with the administration to cut rates.)

All the big names you’d expect are here, including major utilities like NextEra Energy (NEE), Duke Energy (DUK) and Dominion Resources (D), gas distributors like  Enbridge (ENB) and AI “backbones” such as cell-tower owner American Tower (AMT).

The fund is a holding of my Contrarian Income Report service, and is now in its second tour in our portfolio. Since we bought it in November 2020, it’s returned a tidy 40% for us—not bad for a “sleepy” fund like this in a period of mostly rising rates.

And in its first tour, from 2016 to 2019, the fund did even better, nearly doubling on a total-return basis. Given the discount it sports now (more on that in a sec) and much more favorable rate setup, this is the kind of return I expect in the next couple of years.

Before we get to the discount, let’s swing back to that dividend for a moment, because it really is about as steady as they come—and has even seen a modest uptick in the last couple of months:

UTF’s Dividend Never Flickers

Source: Income Calendar

AI’s thirst for electricity has sent the utilities sector—shown below by the performance of the go-to utility ETF, the Utilities Select Sector SPDR Fund (XLU), soaring past the S&P 500 this year:

AI Drives Utilities Past Stocks This Year 

This is not normal. This “low-drama” sector almost always trails stocks, and by wide margins, too. But while XLU—and many individual utility stocks—are crowded trades, UTF is anything but.

To get at the deal on offer here, we need to first remember that CEFs like UTF generally have a fixed share count for their entire lives. So they can, and often do, trade at different levels (discounts and premiums) to their net asset values, or NAVs. (NAV is another way of referring to the value of the fund’s underlying portfolio.)

And right now, UTF is doing something few other utility plays are—it’s trading at a steep, and sudden, discount:

UTF Drops to a Discount (That’s Now Starting to Narrow)

That’s weird, given that pretty well everything is going UTF’s way right now. So why does this deal exist?

The reason goes back to the fixed share count I just mentioned. Because while CEFs don’t issue shares like regular stocks, they do sometimes offer existing investors the right to buy more. That’s what UTF has done. And the resulting fear of dilution prompted some shareholders to sell—driving that huge discount you see above.

Now it’s fair to doubt that a share issue could cause such a violent move, and lucky for us, with CEFs, we have a way to check.

Market Price Plunges, NAV Plods Along Unaffected

With CEFs, when we get a setup like this, we simply need to look at the fund’s portfolio in isolation (something we can’t do with ETFs) and see what its real performance is doing. If it’s ticking along, as is the case here (see orange line above), we’ve almost certainly got a good buy setup.

That’s another reason why CEFs are smart contrarian investments. In regular stocks and ETFs, a bargain like this would appear and disappear fast—likely too fast for us regular folks to pounce. Not so with CEFs, because:

1. CEFs are a small market, so big “discount swings” often go unnoticed for quite a while, and …
2. CEF buyers tend to be risk-averse, so they’re quick to overreact to temporary worries, like a share issue.

Moreover, despite the slow-motion response to this drop, the fund’s discount is starting to close. It’s only a matter of time before its market price reassumes its rightful level above NAV. The time to make our move is now.

2025 is now a wrap, having achieved the fcast and the target.

Income of around £11,986. Now it’s time to turn to 2026.

Current expected quarter dividends £2,395.00

Total for 2026 £9,584.00.

While it’s possible that some dividends may be held or cut, some dividends will increase gently. To the total you have to add income as the dividends are re-invested, which should mean the Snowball should meet its fcast and its target.

HENDERSON FAR EAST INCOME LIMITED

Dividend

We declared four interim dividends in respect of the year ended 31 August 2025. These amounted to 24.90p per ordinary share, an increase of 1.2% over the prior year and maintaining our 18 year track record of increasing dividends.

The dividend has been substantially covered by portfolio revenues with a contribution of only £1.5m from reserves. A return to corporate dividend growth in the region gives us confidence that our long-term dividend growth opportunities remain very much intact for the future.

GREENCOAT UK WIND PLC

Initial response to the Government consultation on changes to inflation indexation in the Renewables Obligation scheme, market backdrop and capital allocation update

Renewables Obligation Consultation

On 31 October 2025, the UK Government published a consultation on potential changes to the inflation indexation in the Renewables Obligation (“RO“) scheme. The RO consultation has two options (noting that the consultation also invites suggestions for alternative options):

1.   Switch the indexation on the RO buy-out price from the Retail Price Index (“RPI“) to the Consumer Price Index (“CPI“) from March 2026;

2.   Freeze the current RO buy-out price until CPI catches up with RPI, in effect as if the RO buy-out price had always been inflated by CPI. Thereafter, CPI would apply. By the Government’s estimates, the catch up would occur around 2034/5 and so the RO buy-out price would remain frozen until then.

Based on the information available, initial calculations by the Investment Manager indicate that the impact of option 1 would reduce the latest reported NAV per share of the Company by 2.4p and option 2 by 10.6p.

The overarching policy aim is to reduce consumer bills given the costs of the RO are ultimately levied on consumers. By the Government’s own calculations, option 1 would save “approximately £3 per year for an average UK household” in 2030/31.

Whilst we draft our full response to the consultation, as well as engage directly with Government and peers, the Board and Investment Manager felt it helpful to set out some of the arguments we will make on behalf of investors and consumers.

Investors have made good faith investments into UK renewable energy projects based on stable, government-backed, inflation-linked support. Retrospective revision to the RO will inevitably erode investor confidence. The listed renewables market is a bellwether for investor sentiment and, in the five trading days that followed the Government’s announcement, the six largest UK listed renewable funds^[1] saw their combined market cap fall by circa £400 million / 5%.

Investor confidence is also expressed through the cost of capital; we anticipate that investors will demand a higher return on new investments to compensate for the risk of further Government intervention. A small increase in the cost of capital would substantially increase the cost to consumers of new renewable energy projects and can reasonably be expected to outweigh the purported savings to consumers and so serve to increase, rather than decrease, bills.

The role of renewables in the UK electricity market

UK electrical demand is, conservatively, set to increase by 30% by 2035, driven by the electrification of transport, heat and the expansion of data centre capacity. This sits against a backdrop of scheduled plant retirements in the next decade, with a quarter of the UK’s nuclear fleet and 20% of the gas fleet set to retire.

Renewable energy projects, in particular onshore wind and ground-mounted solar, remain the cheapest and quickest to build forms of new generation in the UK. It is therefore vital to retain investor and consumer support for renewable energy projects.

The renewable energy sector must also show what it has done, and can do, to reduce bills for consumers.  

Specifically, renewables can further reduce consumer bills in the near term.  The Review of Electricity Market Arrangements consultation included discussion of a voluntary Contract for Difference, where existing generators could agree to a fixed electricity price below the prevailing wholesale price.  Generators and investors would receive price certainty through a scheme that is voluntary, and consumers would enjoy a price lower than the current market level without volatility. 

Depending on take up, we estimate that this could reduce consumer bills by £30 per annum for an average UK household – substantially more than the proposed changes to RO indexation. It could also be delivered relatively quickly.  Investors could expect such an arrangement to be value neutral.

We will continue to engage with Government on this, and other ways, so that the sector and Government can work together to reduce bills whilst maintaining investor confidence.

Market Backdrop and Capital Allocation Update

Notwithstanding the impact of the RO Consultation on sentiment towards the listed renewables market, the Board and the Investment Manager are fully engaged and actively working to improve the Company’s overall attractiveness for shareholders.

The fees for the Investment Manager are already fully aligned with shareholders by reference to market capitalisation, which continues to be unmatched by peers, and disciplined capital allocation remains a key priority, in particular:

·    UKW reiterates its 10.35p dividend target for 2025, representing an annual distribution to shareholders of approximately £225m;

·    In the past 12 months, UKW has completed £222m of assets disposals at NAV with proceeds allocated to debt repayment and share buybacks;

·    As at 10 November 2025, UKW had completed £198m of share buybacks from its announced £200m total buyback programme. Share buybacks completed to date have added 1.7p per share to NAV.

As the Company approaches completion of its £200m total buyback programme, it is working towards further asset disposals, with a range of potential buyers. Furthermore, underlying asset cashflows are expected to increase as we enter the seasonally higher winter cash generation period and UKW continues to benefit from structurally high forecast dividend cover.

The Board and Investment Manager remain confident in their ability to allocate excess capital across further buybacks and de-gearing whilst maintaining strategic flexibility for the Company. This puts the Company in a position of strength from which to assess future capital allocation priorities.

Lucinda Riches, Chairman of UKW, said:

“The Board and the Investment Manager recognise the complexity of the market and are committed to enhancing the Company’s long-term attractiveness for our shareholders.

We will continue to navigate this market backdrop through strong sector leadership and disciplined capital allocation. Our attractive proposition and track record since IPO positions us well and we are resolutely focused on doing the right thing for shareholders.”

NextEnergy Solar Fund Limited

(“NESF” or the “Company”)

Potential Impact of UK Renewable Obligation Certificate and Feed in Tariff Consultation

On 31 October 2025, the UK’s Department for Energy Security and Net Zero (“DESNZ”) published a consultation regarding potential changes to the indexation of Renewable Obligation Certificates (“ROC”) and Feed-in Tariffs (“FiT”).  The consultation presents two options that could potentially affect NextEnergy Solar Fund’s Net Asset Value (“NAV”).

What are the ROC and FiT schemes?

The UK’s ROC and FiT schemes were designed and introduced by the UK Government to encourage investment in renewable electricity generation by providing long-term certainty of stable inflation-linked revenues.  The ROC scheme supports large-scale generators by awarding certificates for each megawatt-hour of renewable electricity produced.  Energy suppliers are obliged to buy the ROCs, providing a guaranteed and predictable source of income for generators. The FiT scheme helps smaller-scale generators by paying for both the electricity they generate and any surplus they export to the grid based on inflation-linked pricing set by the UK Government.  These schemes have been instrumental in making renewable energy projects in the UK financially viable.  Both schemes have now closed to new applicants and been replaced by newer schemes like Contracts for Difference.

How does ROC and FiT indexation work?

Currently, both ROC and FiT schemes adjust payments for inflation using the Retail Price Index (“RPI”).   Both are calculated using the previous year’s RPI and applied from 1 April each year.  As previously announced (and already reflected in the Company’s NAV), RPI will be retired as a measure of inflation from 2030 and the ROC and FiT schemes will instead use the Consumer Price Index (“CPI”).  As a measure of inflation, RPI has historically been higher than CPI.

What does the consultation propose?

DESNZ proposes to change the current approach to indexation of the ROC and FiT schemes.  Two potential options are proposed, both summarised below.

What are the two proposed options in the consultation and what is the estimated impact on NESF, if either is adopted?

As of 30 June 2025, approximately 50% of the Company’s total revenues were derived from the UK’s ROC and FiT schemes.

Option 1 – An immediate switch to CPI indexation from RPI:

​

•	What it means: The UK Government would change the inflation measure for ROC buy-out prices and FiT prices from RPI to CPI, effective from April 2026.
•	How it would work: Annual ROC and FiT prices would continue to be adjusted in line with inflation but would be linked to CPI instead of RPI.
•	Potential impact on NextEnergy Solar Fund if this option was adopted and applied to the 30 June 2025 NAV:

	Estimated impact on NAV per Ordinary Share	Estimated % impact on NAV
Option 1	c. -2p	c. -2%

Option 2 – An immediate, temporary freeze to the ROC and FiT prices:

•	What it means: The UK Government would temporarily freeze the ROC buy-out prices and FiT prices, effective from April 2026.
•	How it would work: ROC buy-out prices and FiT prices would be fixed temporarily at their current rate.  The UK Government would calculate ‘shadow’ price schedules for ROC buy-out prices and FiT prices as if CPI had been the relevant measure of inflation from 2002.  No further inflation-linked increases would be applied to ROC buy-out prices or FiT prices until the relevant ‘shadow’ price reaches the current rate.  From that point onwards, annual indexation would resume in line with CPI.
•	Potential impact on NextEnergy Solar Fund if this option was adopted and applied to the 30 June 2025 NAV:

	Estimated impact on NAV per Ordinary Share	Estimated % impact on NAV
Option 2	c. -8p	c. -9%

Investors should note that these are proposals around which the UK Government is currently consulting, and there is no certainty that either proposal will be implemented.

Investors should also note that the Company’s estimations currently consider only the direct impacts of the potential changes to the Company’s ROC and FiT revenues and are based on the limited information published by the UK Government in the consultation documentation.  At this stage it is not possible for the estimations to take into account countervailing impacts of the investment uncertainty introduced by the proposals, such as increases in wholesale power prices caused by increases in the cost of financing the planned increase in UK renewable generation capacity.