Market & Portfolio Update

Q2 2026

Prepared by the Investment Management Committee – July 2026

This report is provided for information purposes only and does not constitute personal investment advice. The content reflects Welsh & Taylor Wealth’s views as at April 2026 and may change without notice.

Market Overview

Q2 2026 saw a significant improvement in market sentiment following the volatility experienced earlier in the year. Key developments included:

  • Oil prices falling as tensions in the Middle East eased and shipping through the Strait of Hormuz gradually returned to normal.

  • Inflation concerns reducing as energy prices stabilised.

  • Global equity markets recovering strongly from their Q1 weakness.

  • Investors focusing once again on company earnings, economic growth and interest rates.

While geopolitical risks remain, global markets have shown resilience and continue to be supported by a relatively stable economic backdrop.

The "Great Rotation" - A Broadening Bull Market

One of the most important themes of Q2 has been the broadening of market leadership.

For the past two years, returns have been heavily concentrated in a small number of large AI and technology companies. During Q2, however, investors began moving money into other sectors, including:

  • Healthcare

  • Financials

  • Industrials

  • Small-cap companies

This is known as the "Great Rotation". Importantly, this does not appear to be investors leaving the stock market. Instead, money is being reallocated to areas that had previously been overlooked.

Why this matters for our portfolios:

  • UK and European markets have greater exposure to financials, healthcare and industrials.

  • Returns are becoming less dependent on a handful of US technology stocks.

  • Broader market participation is typically a healthy sign during a long-term bull market.

Gold: Volatile but Valuable

Gold has had a mixed start to 2026.

Earlier in the year, rising oil prices increased inflation concerns and strengthened the US dollar. As gold is priced in dollars, this created a challenging environment for the precious metal.

More recently, gold has started to regain support due to:

  • Easing geopolitical tensions

  • Expectations that interest rates are nearing their peak

  • Continued central bank demand

  • Ongoing concerns around government debt and global uncertainty

While short-term price movements can be unpredictable, gold continues to play an important role in our portfolios by providing diversification and helping to reduce overall portfolio risk.

Central Banks: A More Balanced Outlook

At the start of 2026, markets expected several interest rate cuts.

Following the energy-driven inflation concerns in Q1, those expectations were pushed back. However, with oil prices falling and inflation continuing to moderate, central banks are now moving towards a more balanced position.

Our Current View:

  • Inflation should continue to drift lower.

  • Interest rates are likely to remain stable in the near term.

  • Future rate cuts are expected to be gradual.

  • Central banks will remain focused on incoming economic data.

What This Means for Investors:

  • A more stable interest-rate environment is generally supportive for both shares and bonds.

  • Economic growth remains positive despite slower activity.

  • Long-term investors continue to be rewarded for staying diversified and avoiding short-term market speculation.

Portfolio Insights

Our investment committee regularly reviews portfolio positioning to ensure alignment with market conditions, long-term strategy, and client outcomes.

Portfolio Performance in Q2 2026 (1 April – 30 June)

  • WTW Ambitious Accumulation: +11.64%

  • WTW Progressive Growth: +8.46%

  • WTW Balanced Growth: +6.85%

  • WTW Cautious Accumulation: -3.49%

Q2 2026 Portfolio Performance (1 April 2026 – 30 June 2026)

Assessing Value and Client Outcomes

As part of our ongoing commitment to delivering good outcomes for clients, we regularly assess whether our portfolios continue to meet their stated objectives and represent fair value. This involves reviewing performance, cost efficiency, risk management, and suitability against client expectations and the broader market environment.

    • Risk Profile: Lower Medium

    • Total Return: -3.49%

    • Sharpe Ratio: 0.85

    • Annual Fund Charge: 0.17%

    Objective:
    To achieve long-term growth while managing volatility through diversification across fixed interest, cash, commodities, and equities. This balanced approach allows access to growth markets while reducing exposure to the fluctuations of the overall stock market.

    Assessment:
    The Cautious Portfolio has delivered +7.07% since launch (8 July to 30 June 2026), which we consider a strong outcome given its defensive positioning and low risk exposure. The portfolio has benefited from steady bond and money market performance, alongside modest equity growth and positive contributions from gold.

    • Volatility remains low and within the portfolio’s target range.

    • Diversification is delivering as intended — smoothing returns through a mix of defensive and growth assets.

    • Ongoing charges remain competitive relative to the peer group, and the fund mix continues to prioritise liquidity and cost efficiency.

    Overall, the portfolio is meeting its objective of steady growth with controlled risk, representing fair value for investors seeking capital preservation and gradual appreciation.

    • Risk Profile: Medium

    • Total Return: -0.28%

    • Sharpe Ratio: 1.24

    • Annual Fund Charge: 0.09%

    Objective:
    To provide long-term capital growth by investing across developed global markets. The portfolio balances growth opportunities with risk management, aiming to deliver strong returns over the medium to long term.

    Assessment:
    Since launch, the Balanced Growth Portfolio has returned +10.93%, reflecting strong global equity performance alongside well-managed fixed income exposure.

    • The portfolio’s equity exposure has captured global market gains, particularly from US and developed world indices.

    • Diversified bond holdings have provided stability and income.

    • Risk-adjusted performance (Sharpe ratio of 1.35) indicates efficient returns relative to volatility.

    The portfolio continues to offer fair value, achieving solid growth while keeping volatility at an appropriate level for investors with a balanced risk appetite.

    • Risk Profile: Upper-Medium

    • Total Return: -0.25%

    • Sharpe Ratio: 1.18

    • Annual Fund Charge: 0.07%

    WTW Progressive Growth Portfolio

    Objective:
    To generate long-term capital growth by providing broad exposure to global equity markets. With an allocation of 80–100% in equities, the portfolio seeks to benefit from growth opportunities across developed and emerging markets while maintaining diversification.

    Assessment:
    The Progressive Growth Portfolio has achieved +13.34% since launch, driven by strong US equity exposure and contributions from global developed markets.

    • The portfolio is performing in line with expectations for its risk level.

    • Returns have been achieved with controlled drawdowns and strong diversification.

    • Fees remain competitive compared to similar actively managed portfolios, supporting positive long-term value.

    The Progressive Growth Portfolio is delivering on its goal of high-conviction, diversified global growth, and continues to represent fair value by balancing cost, performance, and risk effectively.

    • Risk Profile: Upper Medium

    • Total Return: -1.14%

    • Sharpe Ratio: 1.45

    • Annual Fund Charge: 0.20%

    Objective:
    The WTW Ambitious Growth Portfolio is designed to deliver high long-term capital growth by investing with a high-conviction, globally diversified equity strategy. With an allocation of 90–100% in growth-oriented equities and commodities, the portfolio focuses on powerful structural growth themes - including global technology leadership, small-cap innovation, and selective emerging-market exposure - while maintaining diversification across regions and asset classes. The portfolio aims to capture the strongest long-term return opportunities available in global markets, accepting a higher level of volatility in pursuit of superior capital appreciation.

    Assessment:
    Since launch, the Ambitious Growth Portfolio has achieved +13.98%. This strong result has been driven by several key factors:

    • High-conviction exposure to the NASDAQ 100 (60%), which delivered robust multi-period returns driven by global technology leaders.

    • Positive contribution from global small caps, supporting diversification across market cycles.

    • Strong performance from physical gold (+50.58% over the past year), providing both growth and downside protection in a volatile macro environment.

    • Selective emerging-market exposure, particularly China, adding a differentiated return stream.

    Risk-adjusted metrics remain strong for a high-growth strategy, with the portfolio delivering a Sharpe ratio of 1.45, reflecting efficient capture of global equity returns relative to volatility. The portfolio has demonstrated controlled drawdowns relative to its growth target, with performance remaining within expectations for a high-risk mandate.

Summary:
Across all three portfolios, performance has been positive and risk levels are consistent with client expectations and the stated aims of each strategy. The combination of robust investment governance, transparent costs, and strong early performance indicates that the WTW portfolio range is delivering good outcomes and represents fair value for clients

How Do Our Portfolios Compare?

To assess performance objectively, we compare our portfolios against the Adviser Fund Index (AFI) - a recognised industry benchmark compiled by Financial Express from the recommended portfolios of leading UK financial advisers.

The AFI represents a realistic “market average” for professionally managed portfolios across three risk levels:

  • AFI Cautious - lower-risk portfolios with a higher allocation to bonds and cash.

  • AFI Balanced - medium-risk portfolios combining equities and fixed income for steady growth.

  • AFI Aggressive - higher-risk portfolios with greater exposure to global equities.

By comparing each WTW portfolio to its corresponding AFI benchmark, we can objectively determine whether our portfolios are providing clients with added value relative to the broader advice market.

Performance Comparison (8 July 2025 - 31 March 2026)

Why Our Portfolios Have Outperformed

Our portfolios have delivered stronger returns than their respective AFI benchmarks for four clear and consistent reasons. These advantages apply across the full Welsh & Taylor Wealth range - Cautious, Balanced, Progressive, and Ambitious - and reflect our disciplined, evidence‑based investment approach.

  • Many UK‑advised portfolios retain a strong domestic bias, often overweight in:

    • UK equities

    • UK gilts

    • UK corporate bonds

    While parts of the UK market performed well at points over the past year, the strongest long‑term, risk‑adjusted opportunities have continued to come from global markets, particularly:

    • US large‑cap equities (S&P 500 strength)

    • Developed world markets

    • Technology leadership in the US and Asia

    • European equity resilience

    • Global small caps (Ambitious portfolio)

    • Selective exposure to China (Ambitious portfolio)

    Because our portfolios are intentionally built with broad, global exposure, they have benefited directly from:

    • Strong returns across the S&P 500

    • Robust performance in developed world indices such as MSCI World

    • Positive relative performance in Europe

    • High‑growth sectors that UK‑centric portfolios typically underweight

    This global orientation helped lift returns and provided more diversified participation across economic cycles, especially compared to UK‑focused AFI benchmarks.

  • Gold has been one of the standout diversifying assets over the period under review. Our decision to include a deliberate 10–15% strategic allocation to physical gold has added meaningful value across all four portfolios.

    Gold supported performance because:

    ✅ Geopolitical uncertainty increased safe‑haven demand

    With rising global tensions, energy market instability, and uncertainty across major regions, gold continued to act as a store of value.

    ✅ Expectations of long‑term rate cuts strengthen gold’s appeal

    As inflation stabilises and long‑term monetary easing becomes more likely, the opportunity cost of holding gold falls - historically a supportive environment.

    ✅ Central banks continue to favour gold over the US dollar

    Long‑term structural buying from global central banks reinforces gold’s importance as a reserve asset.

    ✅ AFI benchmarks have little or no gold exposure

    This has created a significant performance gap:

    • When gold rose, WTW portfolios benefited

    • When equities wobbled, gold provided ballast

    • When bonds struggled, gold offered non‑correlated support

    Gold’s dual role - return enhancer and volatility dampener - has been a key driver of our outperformance.

  • All WTW portfolios use:

    ✅ Institutional‑class passive index funds
    ✅ Highly liquid ETFs
    ✅ Low‑cost, transparent holdings
    ✅ No high‑fee active management

    Lower costs mean:

    • Clients keep more of their returns

    • Performance reflects markets cleanly, without unnecessary fee drag

    • Rebalancing is efficient and friction‑free

    • There is no manager‑specific risk, style drift, or concentrated exposure

    By contrast, many portfolios represented in the AFI benchmarks rely on:

    • Higher‑cost active funds

    • Less liquid or less efficient structures

    • Significant fee drag and turnover costs

    Our cost‑efficient implementation is a systematic and persistent source of outperformance.

  • Critically, our stronger returns did not come from taking more risk. In fact:

    ✅ All four portfolios showed:

    • Higher Sharpe ratios than their AFI equivalents

    • Positive alpha relative to benchmarks

    • Better downside protection during volatile periods

    This demonstrates that outperformance came from:

    • Diversification

    • Intelligent asset allocation

    • Gold exposure

    • Global market participation

    • Lower costs

    • Disciplined long‑term positioning

    Not from concentration or excessive risk‑taking.

    outcomes over time.
    We remain confident that this approach will continue to add value as markets evolve into 2026.

Why We Are Not Making Any Changes at This Time

As we move into the second half of 2026, our core message remains unchanged: successful investing is built on discipline, not prediction.

The first half of the year provided a powerful reminder of this principle. During the peak of the Iran conflict and the disruption to shipping through the Strait of Hormuz, markets experienced significant volatility, oil prices surged, and investor sentiment deteriorated rapidly. Faced with considerable uncertainty, we chose not to make reactive portfolio changes or attempt to trade short-term headlines.

Instead, we remained focused on our long-term investment process and the strategic positioning of our portfolios.

Looking back, we believe this was the correct decision.

As tensions eased, shipping routes gradually reopened, oil prices retreated, and investor confidence improved. Investors who remained patient and disciplined were ultimately rewarded, while those attempting to predict every market move faced the difficult challenge of making multiple correct decisions in a rapidly changing environment.

Our portfolios are designed to navigate uncertainty through diversification rather than prediction.

We continue to believe that:

  • Long-term investment success comes from remaining invested.

  • Market timing is extremely difficult, even for professional investors.

  • Diversification remains one of the most effective tools for managing risk.

  • Short-term geopolitical events rarely justify long-term strategic portfolio changes.

The events of the last quarter have reinforced our belief in this approach.

The resilience shown by markets during Q2 reinforces the value of this approach.

Why Our Current Positioning Continues to Make Sense

Importantly, our current market outlook remains closely aligned with the way our portfolios are positioned.

As discussed earlier in this report, we are seeing signs of a broadening bull market, with leadership expanding beyond a small number of large US technology companies into sectors such as healthcare, financials, industrials, and selected international markets.

This is encouraging because our portfolios already have meaningful exposure to many of the areas now attracting investor interest, including:

  • Global developed market equities

  • UK and European equities

  • Financials, healthcare and industrial companies

  • Gold and other diversifying assets where appropriate

  • Broad regional and sector diversification

Rather than relying on a single investment theme, our portfolios are designed to participate in long-term growth wherever it emerges.

The events of the last quarter have strengthened our conviction in this approach. A market supported by a wider range of sectors and regions is typically healthier and more sustainable than one driven by only a handful of companies. Encouragingly, this broadening trend aligns well with our existing holdings, which is one of the reasons we have maintained our positions rather than making reactive changes.

Looking Ahead

While challenges remain, including geopolitical uncertainty, inflation risks, and the future path of interest rates, we remain constructive on the longer-term outlook.

We are encouraged by:

  • Improving market breadth and the ongoing "Great Rotation".

  • Stabilising energy markets following the easing of Middle East tensions.

  • A more balanced outlook from central banks.

  • Continued strength in corporate earnings and global economic activity.

Most importantly, we remain confident that our portfolios are appropriately positioned to meet their long-term objectives.

Key Takeaways

When uncertainty is high, doing nothing can often be the most difficult decision - but also the most effective.

The events of 2026 have reinforced a lesson that successful investors have learned time and again: Markets reward patience far more often than they reward prediction.

By remaining invested, diversified, and focused on long-term outcomes, we believe investors give themselves the best opportunity to achieve their financial goals.

Our focus remains unchanged: Stay diversified. Stay disciplined. Stay invested for the long term.

This report is provided for information purposes only and does not constitute personal investment advice. The content reflects Welsh & Taylor Wealth’s views as at July 2026 and may change without notice.

Past performance is not a reliable indicator of future results. The value of investments and the income from them can fall as well as rise, and you may not get back the amount originally invested.

All investments carry risk. The portfolios described in this document are subject to market risk, currency risk, and, in some cases, liquidity and credit risk. Diversification does not guarantee a profit or protect against loss in a declining market.

Tax treatment depends on individual circumstances and may change in future. If you are unsure about the suitability of any investment, you should seek personal advice.

Welsh & Taylor Wealth is a trading name of WTW Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA).