Manchester & London Capital Management’s Mark Sheppard has achieved his first AAA Citywire manager rating as his tech-heavy trust continues to significantly outpace its global equity peers.

The manager of Manchester & London (MNL ) has earned the top ranking this month as his portfolio extends its impressive performance streak. The £420m trust ranks first in its 11-strong Equities Global peer group over the past three years thanks to a net asset value (NAV) return of 169.1%. This is nearly four times the 43.8% return from the average peer  and well ahead of Monks (MNKS ) in second at 48.7%.

MNL is also ranked first place over one and five years, but slips into second place over 10 years to sit behind Scottish Mortgage (SMT ), with its 436.3% return pipped to the post by a 472.9% rise from Baillie Gifford’s flagship trust.

Sheppard’s commitment to technology has catapulted the fund’s NAV in recent years, especially his exceptionally large 41.2% weighting to Nvidia, which has been a significant catalyst for returns. The second largest weighting is Microsoft at 23.3% of the fund.

In the latest MNL factsheet, Sheppard said he exited Micron Technology and ‘substantially reduced’ ASML after strong performance from both, noting that ‘their histories of volatile earnings and limited forward visibility made it prudent to scale back at elevated valuations’.

Pushing further into artificial intelligence (AI), Sheppard added AI infrastructure plays Ciena Corp and CoreWeave, as well as taking a punt on space-tech with a small position in the ARK Space Exploration & Innovation ETF.

‘While the space sector remains nascent, it is beginning to present more tangible, investable opportunities,’ Sheppard said.

MNL hit a new all time high NAV in September after the fund returned nearly 7% in the month, but Sheppard warned of a ‘short-term pause and refresh’ in equity markets.

Biotech turnaround

Schroders’ Ailsa Craig and Marek Poszepczynski marked a tentative return to form with a move up to an AA rating.

The biotech duo, who manage the £323m International Biotechnology (IBT ) trust, have climbed the rankings to their highest ever level thanks to a stellar three-year performance.

The portfolio tops the leaderboard in the five-strong Equities Biotechnology & Healthcare sector thanks to its 38.7% NAV return over three years, easily beating the 8% return from the average trust.

The fund has bucked the downtrend in biotech over recent years, with a 22.3% return over one year versus an average trust decline of 2%. Over five years, IBT has grown its NAV 33.5% − three times the 10.3% return from the average portfolio over the same time frame.

IBT’s most recent financial year to 31 August marked the fourth consecutive year of outperformance of its Nasdaq Biotechnology index, which continued to decline due to unease caused by the Trump administration’s contentious appointments across key healthcare roles, including vaccine-sceptic Robert F Kennedy being appointed secretary of health, and the onslaught of trade tariffs.

The Nasdaq Biotech index bottomed in mid-April and since then the managers said it has been ‘supported by a step back from worst-case scenarios on trade and a more encouraging policy backdrop for the healthcare industry specifically’.

‘Sentiment improved as investors began to realise that biotech was less exposed to the threat of pricing reform than pharma,’ they said.

‘The continued pace of Food and Drug Administration approvals and signs of resilience in the innovation pipeline also helped restore confidence in the biotech sector’s long-term fundamentals.’

UK: Tentatively back in favour

Fidelity International managers Alex Wright and Jonathan Winton have climbed back up to an AA rating as UK companies benefit from an ongoing rotation out of US equities.

The pair run the £1.2bn Fidelity Special Values (FSV ) trust, which invests in undervalued UK companies, of which they are rich pickings given how out of favour the domestic market has been over the past decade.

However, the cheap valuations have attracted plenty of overseas and private equity buyers in recent years and now retail investors are once again turning their attention to the market as they look for shelter away from the highly valued US market.

Wright and Winton have enjoyed three months of AA ratings this year - July, August and October – as their fund continues to sit in poll position in the Equities UK All Companies sector.

Over three years, it has returned 65.7% against a return of 49.5% from the average trust. Over one year, its NAV has grown 19.9% versus 9.4%, while over five and 10 years the performance is particularly impressive, with returns of 133.3% and 161% respectively, against 54.4% and 76.6% from the average trust.

In their latest factsheet, the managers said UK equities had been supported by the US Federal Reserve’s 0.25% base rate cut in September and dovish comments from policymakers.

‘Firmer commodity prices and a weaker sterling helped support revenues of FTSE 100 companies and sustain investors’ risk appetite,’ they said.

Basic materials were a winning sector thanks to stronger metal prices, while industrials and financials also outperformed.

‘While the market’s optimism and rise in valuations should warrant caution, we believe the UK market continues to offer relative value against other regions, including the US, Europe, Japan and Asia Pacific ex-Japan - both on a forward price/earnings basis and when adjusting for sectoral differences,’ said the managers.