The US economy slowed in the final quarter of 2025, expanding at an annualised rate of 1.4%, down from 4.4% in Q3. The moderation reflected softer consumer demand and weaker exports following a strong Q3. Goods spending slowed, although services activity remained resilient, while government spending declined due to the temporary federal shutdown. Encouragingly, business investment remained firm, particularly in intellectual property and technology, and the decline in residential investment eased. For 2025 as a whole, GDP grew 2.2%, a modest slowdown but still supportive of corporate earnings. The Federal Reserve held rates at 3.5%–3.75%, with policymakers divided on the timing of further easing.

The Euro area grew 0.3% in Q4, maintaining its steady pace. Spain led performance, while Germany and Italy recorded modest gains. Full-year growth improved to 1.5%. Inflation eased to 1.7% in January, with core pressures moderating. The ECB held rates steady and signalled a cautious, data-driven approach. Manufacturing returned to expansion, supporting a gradual stabilisation.

The UK economy grew 0.1% in Q4. Production rebounded, though services momentum remained limited and construction weakened. Full-year growth reached 1.3%. Inflation eased to 3.0%, and the Bank of England held rates at 3.75%, with a bias toward gradual easing. Overall, growth remains subdued but stabilising.

Global equities gained in February, with the MSCI World index gaining 0.64%, US Markets were lower with the S&P 500 falling 0.87% and the Nasdaq falling 3.38%, while UK equities outperformed, with the FTSE 100 up 6.72%, and Small Cap and AIM indices gaining 2.80% and 0.24% respectively.

Our portfolio performance was positively impacted by gains in UK small and mid-cap companies during February. The portfolio NAV increased 0.84% for the month, after all fees and expenses. During the month, we added to our holding in Impax Asset Management and trimmed 4Imprint Group.

Many portfolio companies reported results or trading updates during February. Rightmove delivered strong 2025 results with revenue up 9% and operating profit up 12%, supported by an expansion in Commercial, Mortgages and Rentals. EPS rose 15% and a £90m buyback was announced. Management guides to 8–10% revenue growth in 2026, with continued AI-led product development supporting long-term margins.

Money Supermarket reported modest top-line growth up 2% with EPS up 5% and a solid dividend. Growth in Money and Home Services offset car insurance headwinds and higher Pay-Per-Click costs. A £25m buyback was announced, with 2026 EBITDA expected broadly in line with consensus. RELX delivered another high-quality year with underlying revenue up 7%, adjusted EPS up 10%, strong cash conversion and £1.5bn in buybacks. The shift towards analytics and AI-enabled tools continues to drive durable growth.

Dunelm Group grew revenue 3.6% with resilient margins, though profit softened due to timing effects. Strong cash flow supported a 17p interim and 25p special dividend. NWF saw weaker H1 performance driven by Fuels, though Food and Feeds improved. Full-year expectations were unchanged. S&U Plc expanded receivables and lending volumes, with strong collections at Advantage and record activity at Aspen.

The largest contributors to performance during the month were PayPoint, AEW UK and LionTrust while Keystone, Money Supermarket and AJ Bell were the largest detractors from performance.