Investment Update – August 2025

Read our latest Investment Update with our Head of Investments, Charlie Lloyd.

What happened in the markets?

Global equities made a new all-time high in July, shrugging aside ongoing tariff negotiations and subdued economic data. US equities benefited from a strong second-quarter earnings season for the Mag-7, with Microsoft the latest company to reach a market cap of $4trn. In sterling terms, US equities rose nearly 6% over the month, with European equities returning just 0.9%. Commodities outperformed gold, and credit spreads narrowed further.

Sterling gave up some of its recent strength following Labour’s failure to push through significant reform to welfare and benefits. This increases the probability that the Chancellor will need to announce tax rises in the Autumn budget to address the UK’s increasingly perilous fiscal position.

Source: Morningstar Direct, total return in GBP or hedged to GBP for bonds, for the calendar month

What did we do in the funds?

There was a further reduction to government bonds through a reduction to gilts. The UK’s budgetary arithmetic is tight, and recent volatility is a reminder that gilt yields are sensitive to events, given the importance of overseas gilt investors. In addition, AXA Strategic Bond fund was sold in Careful Growth and there were reductions to sterling and global corporate bonds in Tactical Balanced and Tactical Growth.

The proceeds were used to introduce a new holding – TwentyFour Monument Bond fund. This provides exposure to European ABS (asset backed securities) markets, providing attractive yields alongside investment grade credit quality and effectively zero interest rate duration.

This reflects our preference for high-quality credit over government duration given the prevalence of fiscal deficits and sticky inflation.

What is the outlook?

The Fed have so far resisted pressure from the Trump administration to lower interest rates, citing the potentially inflationary impact of tariffs on consumer prices later in the year. However, signs of softness in the US labour market have emerged, and we expect this to prompt a dovish turn from the Fed in the coming quarters.

Equities have recovered strongly since the April tariff lows, supported by US corporate earnings and a de-escalation of the tariff war, which has reduced recession risks.

The European economy should also receive a structural boost from higher German spending. However, US equity valuations leave little room for error should downside risks to growth emerge.

Download our full Investment Update to access more details:

Join our webinar

We are delighted to invite you to our next Webinar, where our Investment Team will be sharing updates and expert insights on, for example:

• The impact of tariffs…so far
• The US labour market – cracks appearing?
• Global equities at all-time highs

Date & Time: 18^th September, time: 12.30 pm-1.00 pm, click here or below to register.

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Learn more about our investment process, our funds and the Investment Team here.

If you have further questions about investing with Shackleton or want to get in touch with our team, please contact us. We are always happy to help.

Important information:

This document is issued by Shackleton, which is a trading style of Shackleton Advisers Limited. Shackleton makes no warranties or representations regarding the accuracy or completeness of the information contained herein.  We have prepared the following document based on our view of the current market. Nothing in this document shall be deemed to constitute financial or investment advice in any way. We recommend you speak to your adviser before making any decisions.  This document shall not constitute an invitation or inducement to any person to engage in investment activity. Past performance is not a guide to future returns and the value of capital invested and any income generated from may fluctuate in value. 

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