Blog

Trillions of pounds worth of assets are managed by London’s listed investment houses. Their purpose is to deliver financial security for clients by growing and preserving the value of their capital.

Larger managers, such as Legal & General, Aberdeen, M&G and Schroders, offer access to a wide range of asset classes and geographies, can handle the largest mandates and tend to focus on mainstream markets.

Smaller players offer distinctive investment approaches and niche and specialist options for diversification, often catering to wealthy individuals with an appetite for impact investing or risk, or who carry tax burdens that are suitable for easing through venture capital trusts and enterprise investment schemes. These enable investors to earn tax breaks in return for providing capital to young British companies. 

Among these smaller managers are Polar Capital, whose offering includes technology, scientific and financial funds. Foresight specialises in infrastructure and private equity opportunities that can help tackle climate change, and Liontrust with its range of funds focused on sustainability. A clue as to what makes Mercia Asset Management stand out is in the name of its range of VCTs: Northern.

This manager steers clear of overfished London and south-east England, preferring to find opportunities in regional towns and cities — 80 per cent of its investment activity is outside south-east England — where it can identify and support high-growth, ambitious businesses on attractive valuations, and which meet its impact and socially responsible requirements. 

Investing in niche areas and cutting-edge smaller companies is not without its risks, and while there is demand in the market for differentiation and diversification in terms of strategies and processes, good performance is essential to keeping fund flows and management fees coming in. 

BUY: Mercia Asset Management (MERC)

Inflows accelerated in the final quarter, writes Mark Robinson.

Mercia Asset Management slipped back into the black at its March year-end, as the specialist asset manager increased its cash margin. Performance was aided by economies of scale, and evidenced by a 390 basis point rise in the adjusted margin to 22.1 per cent.

It’s too early to judge whether this vindicates the “Mercia 27”, a 100 per cent growth target, as it was only outlined a year ago. But the scaling of the fund management business is under way, and it wouldn’t be fanciful to suggest that Mercia has already made strides to meet its Ebitda target of £10mn by full-year 2027.

The group realised a fair-value loss of £300,000 in the period, against a £4.5mn gain in the previous year, though fair-value movements strengthened appreciably in regard to unrealised assets. In contrast to many industry peers, Mercia increased its third-party funds under management (FUM) by around 10 per cent on an organic basis to £1.8bn, with no redemptions recorded. Venture FUM rose by 1.6 per cent to £928mn.

Meanwhile, the direct investment portfolio’s fair-value assessment stood at £126mn, against £117mn last time around. Management intends to offload about 70 per cent of these direct investments over the next couple of years, so exit activity is set to rise in the near term. Some mandates are moving into the realisation phase within its equity and debt funding businesses.

The bulk of the inflows were recorded in the final quarter of its financial year. They reflected both existing mandates and new fund management contracts. The period also saw successful Venture Capital Trust and Enterprise Investment Scheme fundraisings. Given the timing, it is unlikely that the related impact of the inflows on revenues is fully reflected in these figures.

Mercia’s ability to rejig its business focus is aided by an unencumbered balance sheet. And a number of funding rounds were completed following the period end. The group carries no debt and exited full-year 2025 with £39.3mn in net cash. This has underpinned a 5 per cent increase in the proposed final dividend, along with the commencement of an annual share buyback policy of up to £3.0mn.

It’s a niche offering for investors: venture capital funding, private equity and debt finance to high-growth regional UK small and medium-sized enterprises. Consequently, sell-side coverage is limited, but Mercia trades on a 45 per cent discount to the consensus target price, and by 23 per cent to net assets, giving rise to a price/book ratio of 0.7 times. We maintain that Mercia is undervalued, or maybe unfairly overlooked.

BUY: Currys (CURY)

The electronics retailer’s turnaround strategy is paying off despite ongoing cost pressures, writes Valeria Martinez.

Currys is showing why it was the right call to push back against Elliott Management’s takeover approach last year. The once-struggling retailer has turned a corner, with chief executive Alex Baldock’s turnaround plan starting to deliver. A sharp rise in free cash flow and profits has allowed the group to reinstate its dividend after a two-year break. 

While the company is still dealing with cost pressures, from high inflation to rising national insurance contributions, it has done a decent job of managing them so far. Another £32mn in annual costs is expected from last year’s Autumn Budget, but Currys plans to offset this by cutting central costs and automating and offshoring parts of the business.

Helpfully, demand has been resilient despite the wider economic backdrop. UK and Ireland like-for-like sales rose 4 per cent in the year to May 3, with operating profits up 8 per cent to £153mn. Margins held steady at 2.9 per cent.

A growing focus for Currys is more profitable revenue streams, such as credit, repairs and connectivity services. These so-called “solution” sales rely less on one-off product purchases and tend to deliver better margins. Revenue from these areas rose 9 per cent to £814mn last year, and Panmure Liberum estimates they now make up 28 per cent of UK and Ireland revenue. 

Net cash stood at £184mn at the year end, excluding leases and pensions. When accounting for a £103mn pension deficit, the net position is now £81mn, which Panmure Liberum analyst Wayne Brown said is £901mn better than six years ago. “The prospects for buybacks this year are very real,” he said, though they are likely to hinge on the outcome of the pension triennial review due later this year.

The shares are up more than 70 per cent over the past year, yet still trade at just 11.4 times forward earnings. That’s well below their five-year average of 31.7 times.

HOLD: Wynnstay (WYN)

Firm farm gate prices underpin the agricultural supplier’s interims, writes Julian Hofmann.

Good farm gate prices this year for all agricultural products has meant a decent profit harvest for suppliers to the industry. Feed and equipment supplier Wynnstay has reaped the benefit, reporting the same amount of profit in its first-half results as it managed for the whole of last year.

The half-year results are typically the highest point in the company’s annual working capital cycle as it stockpiles products in advance of the spring planting season. This meant the company’s business segments in fact reflected the vagaries of the preceding season.

For instance, feed and grain revenue more than doubled to £900,000, but grain trading was down 13 per cent as the poor harvest in 2024 worked its way through the supply system. In the meantime, the company sold off its Twyford mill and has outsourced milling for its poultry feed.

Arable profits tripled to £1.4mn on the back of better fertiliser prices and favourable spring planting conditions. Meanwhile, the company’s network of 51 stores generated a higher profit of £3.1mn with both footfall and margins remaining stable.

The company is midway through project Genesis, which is its plan to simplify the business and improve returns on capital consistently across the group and to invest where supply is constrained — Wynnstay’s investment in a new fertiliser facility in Avonmouth is part of this strategy.

Wynnstay’s shares have started to recover after a rocky couple of years. The price/earnings ratio of 13.6 for this year reflects its gradual reorganisation. However, until there is evidence of margin improvement, we remain cautious.

(Bloomberg) — US stock futures retreated Friday as American trade partners pushed for concessions ahead of a July 9 deadline to finalize trade deals with the Trump administration.

Contracts for the US benchmark fell 0.6% after the gauge ended the trading week at a fresh all-time high. US President Donald Trump dialed up trade tensions after Thursday’s close, warning partners he may start setting levies of as much as 70% unilaterally as soon as today.

With less than a week to go before the deadline, European Union carmakers and capitals were pushing for an agreement that would allow for tariff relief in return for increasing US investments, Bloomberg News reported. Meanwhile, a draft US-Swiss trade accord contained assurances about tariffs on pharma exports, according to people familiar with the matter.

Europe’s Stoxx 600 closed 0.5% lower, recovering from a steeper intraday decline. Gold rose 0.3% as investors sought havens. The dollar dipped. US stock and Treasury markets were closed for the July 4 holiday.

Equity markets have rallied sharply since April’s tariff-driven volatility, partly fueled by the ongoing strength of the US economy. Still, some investor caution lingers as the trade war continues to cloud the outlook for inflation and corporate profitability.

“There’s a little bit of doubt creeping in, especially after the bump up this week,” said Neil Wilson, investor strategist at Saxo UK. “Today’s a good day to take a little bit of risk off. But I don’t think there’s a fundamental shift, it’s all on the margins at the moment.”

What Markets Live Strategists Say:

“It would take a shocking set of trade outcomes to overwhelm the slew of good news we’ve recently had. All the more so, given that the bullishness of institutional investors has been tempered by constant threats, leaving them relatively underexposed to a market at record highs.”

— Mark Cudmore, Markets Live Executive Editor

The S&P 500’s surge has put it on the verge of triggering a sell signal, according to Michael Hartnett of Bank of America Corp.

The strategist advised that investors consider trimming their holdings once the index climbs beyond 6,300, a level just 0.3% above where it closed on Thursday. He also reiterated that bubble risks are mounting into the summer, especially following the House’s approval of a $3.4 trillion fiscal package featuring tax cuts.

“Overbought markets can stay overbought as greed is harder to conquer than fear,” Hartnett wrote in a note.

UK gilts resumed their slide after a selloff on Wednesday that was driven by fiscal concerns. The yield on 10-year UK government debt advanced two basis points to 4.56%, compared with 4.45% at the close on Tuesday. The pound was flat.

In signs of diplomatic and trade tensions escalating between China and the EU, Beijing said it intends to cancel part of a two-day summit with EU leaders planned for later this month. China also imposed anti-dumping duties on European brandy for five years, while exempting major cognac makers that meet a price commitment.

In commodities, oil dropped in the lead-up to an OPEC+ meeting that’s set to deliver another oversized production hike, threatening to swell a glut forecast for later this year.

Corporate Highlights:

• President Donald Trump’s administration plans to restrict shipments of AI chips from the likes of Nvidia Corp. to Malaysia and Thailand, part of an effort to crack down on suspected semiconductor smuggling into China.
• India’s regulator has temporarily barred Jane Street Group LLC from accessing the local securities market, dealing a severe hit to the US firm that allegedly made $4.3 billion in trading gains in the South Asian nation in less than two years.
• French train maker Alstom SA has won a €2 billion ($2.4 billion) order from New York’s Metropolitan Transportation Authority, which is in the process of modernizing its fleet.
• Frasers Group Plc warned Hugo Boss AG it will vote against any dividends, as the British retailer owned by billionaire Mike Ashley exerts its influence after years of building a stake in the German fashion house.
• Airlines across Europe have canceled hundreds of flights on the second day of an air traffic controllers’ strike in France that’s causing chaos just as the busiest travel season of the year gets underway.
• Banco Sabadell SA has called two shareholders meetings as it seeks to approve an extraordinary dividend after agreeing to sell it’s UK unit — part of its broader attempt to block a takeover by larger rival BBVA SA.
• Country Garden Holdings Co.’s sales slid again in June, with the developer faring worse than peers, as a lack of policy support dampened demand.

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.6% as of 2:08 p.m. New York time
• Futures on the Dow Jones Industrial Average fell 0.6%
• The MSCI World Index was little changed
• The MSCI Asia Pacific Index fell 0.3%
• The MSCI Emerging Markets Index fell 0.5%
• Ibovespa rose 0.4% to a record high
• S&P/BMV IPC was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro rose 0.2% to $1.1775
• The British pound was little changed at $1.3649
• The Japanese yen rose 0.3% to 144.50 per dollar
• The offshore yuan was little changed at 7.1658 per dollar
• The Mexican peso was little changed at 18.6343

Cryptocurrencies

• Bitcoin slipped 1.9%, more than any closing loss since June 22
• Ether slipped 4.1%, more than any closing loss since June 22

Bonds

• The yield on 10-year Treasuries was little changed at 4.35%
• Germany’s 10-year yield was little changed at 2.61%
• Britain’s 10-year yield advanced one basis point to 4.55%

Commodities

• West Texas Intermediate crude fell 0.7%, more than any closing loss since June 24
• Spot gold rose 0.3% to $3,337.39 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Sebastian Boyd.

©2025 Bloomberg L.P.