Market and Trust review

Global markets saw a volatile start to the year impacted by heightened geopolitical risk ranging from regime change in Venezuela, US pressure over Greenland and deadly protests in Iran. The surprise nomination of Kevin Warsh, considered an inflation hawk, as the next Federal Reserve Chair contributed to the market’s volatility. With macro data broadly surprising to the upside, cyclicals outperformed and returns have broadened outside the US with emerging markets and Europe materially outperforming. The Trust’s NAV rose 0.9% in the month, outperforming the MSCI ACWI Financials Index by 1.8%, supported by the overweight position in Europe, strength in Asian life insurers and trading platforms (in both the US and Europe). This was partially offset by weakness in certain emerging market holdings (in India and Indonesia) and the underweight in HSBC Holdings.

Democratisation of trading

The democratisation of trading is a key theme for PCFT through its holdings in companies like Interactive Brokers Group, FlatexDEGIRO, Plus500 and IG Group Holdings. Advances in technology, lower costs and fractional ownership have lowered the barriers to entry for investment and empowered individuals to participate in investing earlier and more actively. These trends have coincided with behavioural shifts: younger generations, particularly millennials, are investing at earlier ages than previous cohorts thanks to greater access, innovation in products offered (predictive markets being the latest iteration) but also affordability barriers to home ownership. This structural shift in retail demand has led to strong growth for those trading platforms that can offer low costs, transparent pricing and a robust online offering. For example, Interactive Brokers Group, a holding in the Trust, reported a 32% year-on-year increase in client accounts to 4.4m in 4Q25. In response to demographic shifts and growing savings gaps, we are also seeing increased policy maker support to incentivise earlier long-term savings through tax changes and pension reform. One example is in Germany where Chancellor Merz has emphasised the requirement to modernise the German pension system through expanding the role for capital-funded private retirement savings and occupational pension schemes. We would expect progress on German pension reform to provide a material support to growth for companies like FlatexDEGIRO, a leading European online broker we view as well placed to sustain its strong growth.

The market is struggling to adapt to the pace of change with often little discrimination as to which businesses are exposed to AI disruption

US bank results

Recent results for banks in the US have largely come in ahead of expectations and have reassured on the outlook. US bank guidance implies double-digit earnings growth for 2026 (following a 17% increase last year) supported by lower funding costs, a pick-up in lending and a revival in capital market activity, positive operating leverage and a lower share count. While provisioning is expected to see a small increase (related to loan growth), asset quality data (non-performing loans -1bp) and commentary in the quarter pointed to a broadly stable picture. Regulatory developments received a lot of attention following President Trump’s call for a one-year 10% cap on credit card rates which weighed on the card lenders. We believe there is a relatively low probability of this passing through Congress, given the subsequent restriction on credit to borrowers, but expect elevated noise on potential populist measures ahead of the mid-term elections. Despite the recent threat to impose rate caps for card lenders, we consider the broader theme of regulatory easing for banks to continue. This is primarily driven by new leadership at the Federal Reserve, the Options Clearing Corporation and the Federal Deposit Insurance Corporation (FDIC) which are looking to recalibrate the supervisory approach with a focus back to responsible growth.

Artificial intelligence

AI vendor Anthropic’s launch at the end of the month of new plug-ins for Claude CoWork weighed on share prices within the Software, Data and Business Services sectors. This concern spread to Alternative Asset Managers with those companies with larger investments in the technology sector seeing the steepest sell-offs. There is an ongoing reassessment by the market of what constitutes proprietary data, what value customers will place on data services and ultimately what ‘moat’ companies operating within these sectors will have in the future. As with other paradigm shifts, the market is struggling to adapt to the pace of change with often little discrimination as to which businesses are exposed to AI disruption. Similarly, the rise of agentic-AI has impacted sentiment for the payments sector with merchant acquirers potentially at risk of disintermediation if they no longer become the orchestration layer for autonomous transactions. While the often-indiscriminate selling pressure has opened up opportunities for investment, it will take time to disprove the bear case, during which AI developments will continue to be revealed, so we have reduced the Trust’s exposure to the sub-sectors exposed and are now further underweight.

Outlook

In what has been a volatile month with markets impacted by both geopolitical and technological developments, we have been encouraged by recent results which have highlighted solid operating trends and have built conviction in the core themes the Trust is invested in.