Experts name fund and trust opportunities at start of 2026

Markets may not feel like they are in the January sales as 2026 begins. Yet for investors willing to look beyond the obvious, there are still bargains on the shelves – with fundamentals to match.

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“As we enter 2026, valuations across most markets appear stretched on the surface, yet beneath that, there are areas where pricing remains attractive and fundamentals are compelling,” says Louis Hutchings, portfolio manager in the multi-manager team at Nedgroup Investments.

We asked fund analysts and asset allocators where they see the most compelling value for the year ahead – and which funds and investment trusts they are backing.

Japan: reform-driven value

For Hutchings, Japan offers an attractive mix of valuation support and improving fundamentals.

“Structural reforms are reshaping corporate behaviour, with more independent boards and a sharper focus on capital discipline and shareholder returns,” he says. “These changes, combined with healthy investment and consumption trends, have driven meaningful margin expansion in recent years.”

Nedgroup accesses the opportunity via the Lazard Japanese Strategic Eq EA Acc GBP fund.

“The Tokyo-based, fully fluent team is a genuine edge in a market where cultural nuance and face-to-face engagement matter – especially when assessing the credibility of reform and management intent,” adds Hutchings.

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James Sullivan, head of partnerships at Tyndall Investment Management, views Japan as quietly mispriced.

“While the focus in recent times has been on the US market and the technology sector, Japan has been quietly delivering very acceptable earnings growth, helping support a very sensible and possibly attractive price/earnings rating,” he says.

Over both three and five years, the Topix has outpaced the S&P 500 in earnings per share growth – a trend Tyndall believes has gone largely unnoticed.

It uses Jupiter Japan Income I Acc and Fidelity Index Japan P Acc for exposure.

Asia and emerging markets: selective opportunities

Wealth manger JM Finn is overweight Asia – fertile ground for value-conscious investors.

“We believe Asian markets are well-positioned to deliver outsized returns over the medium term,” says senior research analyst Samir Shah. “In particular, companies with solid balance sheets, steady cash-flow streams and undemanding valuations are likely to stand out.”

The wealth manager is considering a material increase in allocation to M&G Asian GBP I Acc due to its conviction in the region and the fund’s management team, process and portfolio.

“Under David Perrett’s leadership, the fund has consistently ranked in the top quartile of its peer group and delivered an annualised return 6% above the MSCI Asia Pacific ex-Japan index over the past five years,” says Shah.

“The team’s global presence across London, Singapore, Hong Kong, Mumbai and Tokyo ensures deep regional insights and comprehensive coverage, further enhancing the quality of stock selection.”

Darius McDermott, managing director at FundCalibre, takes a broader view across emerging markets: “Emerging markets remain an important part of long-term portfolios, but success depends on being selective,” he says.

He highlights FP Carmignac Emerging Markets A GBP Acc, which boasts a high-conviction portfolio tilted towards large and mid-sized businesses positioned to benefit from long-term structural trends.

The bulk of assets (82%) are in Asia with a further fifth (17%) in Latin America.

“The team begins with a broad universe and narrows it by identifying under-penetrated sectors with sustainable growth potential,” adds McDermott.

Europe: value with income support

Despite a strong run in 2025, Europe remain reasonably priced compared to the US. Hutchings points to supportive macro conditions and resilient balance sheets.

“While political uncertainty and cautious sentiment persist, the potential for easing geopolitical risks suggests room for further upside as fiscal and monetary policy effects continue to filter through,” he adds.

Nedgroup’s preferred vehicle is Waverton European Capital Gr F GBP Inc. Its philosophy centres on identifying changes in earnings visibility earlier than the market.

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For Sullivan, Europe has similar characteristics to Japan – ageing populations, low birth rates, slower growth economies and stock markets that are deemed to be more established and export-orientated.

“The yield that investors can pick up from Europe remains relatively healthy and contributes nicely towards total return rather than relying purely on capital growth,” he adds.

It likes EdenTree European Equity B Inc, a constituent of the ii ACE 40 of sustainable fund ideas, Liontrust European Dynamic I GBP Acc and Polar Cptl Eurp Ex UK Inc Class I Acc.

Some of the largest holdings of Schiehallion Fund, a late-stage private equity trust managed by Baillie Gifford, include SpaceX and Italian tech firm Bending Spoons. Credit: Thomas Fuller/SOPA Images/LightRocket via Getty Images.

Income: quality comes back into focus

McDermott believes quality equity strategies will return to the fore in 2026.

“Markets have been generous to weaker balance sheets at times, but that rarely lasts,” he says. “When conditions tighten, it’s strong cash generation and disciplined management that drive returns.”

He points to the benefit of investing in high-quality companies, which “tend to deliver more reliable outcomes because they can absorb shocks and continue investing through the cycle”.

Guinness Global Equity Income Y GBP Acc is a good example. Its managers focus on selecting the best businesses in each sector rather than chasing headline yield, increasing the chances of growing income and capital over time.

“The concentrated, equally weighted structure and the one-in, one-out discipline keep the portfolio focused on the managers’ strongest ideas,” adds McDermott.

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JM Finn invests in Murray Income Trust Ord (LSE:MUT) and welcomes the mandate moving to the Artemis UK equity income team in the first quarter of 2026.

“With the recently announced changes, we’re doing more work on the fund as its now offers a nice combination of a manager with a proven track record, well-respected investment process and an attractive fee structure,” says Shah.

The trust yields 4.4% and has a 52-year record of rising dividends. Its discount (as at 2 January) is -8.1%.

UK equities: overlooked value at home

Wealth manager WH Ireland has a strong home bias and believes UK equities still offer compelling value. It has exposure to equity income funds spanning both value and quality growth styles, as well as smaller companies.

“Quality growth has had such a poor period of performance that it is arguably now a value opportunity,” says Ollie Clark, deputy head of research at WH Ireland.

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For consistent exposure to traditional value companies, it likes TM Redwheel UK Eq Inc R Acc. Despite generating returns of 25% during 2025, it still trades on just 10 times earnings.

The removal of Budget uncertainty and falling interest rates could stimulate economic growth, which bode well for smaller companies funds such as RGI UK Listed Smaller Coms B Acc, he adds.

Private equity: exits unlock value

Adam Norris, co-portfolio manager of CT Global Managed Portfolio Trust, believes private equity is approaching a turning point.

Private equity managers have traditionally relied on IPOs to sell companies and reinvest proceeds, but between 2022 and 2024 the calendar year average was almost 40% below the previous 10-year run rate, “stuttering the private equity flywheel”, according to Norris.

“Public markets are now warming to IPOs and 2025 is set to reach the long-term average once again,” he says. “And with private equity managers now able to head for the exit, we are heading for the value.”

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The trust’s largest single holding is Oakley Capital Investments Ord (LSE:OCI), a trust focused on European entrepreneurs across the technology, consumer, business services and education sectors. Its discount stands at -22%.

CT Global Managed Portfolio has also increased exposure to Schiehallion Fund Ord (LSE:MNTNl), a late-stage private equity trust managed by Baillie Gifford. It is trading on a discount of -17.6%.

“The trust has had a tricky few years as growth investing moved sharply out of favour. However, we now see clear winners of its investment approach, with some of its largest holdings, namely SpaceX and Bending Spoons, achieving valuation levels rarely found within private equity,” adds Norris.

Alastair Laing, chief executive officer of CG Asset Management, highlights North Atlantic Smaller Cos Ord (LSE:NAS), which spans UK small caps and private equity. Its discount is -36.5%. It is the largest holding in ii Super 60 constituent Capital Gearing Ord (LSE:CGT) Trust.

“The UK small-capitalisation market has been very out of favour, resulting in undemanding valuations in the underlying portfolio,” says Laing.

Infrastructure: income at a discount

Capital Gearing initiated a position in International Public Partnerships Ord (LSE:INPP) in 2018 and added significantly to it in 2025. The portfolio of infrastructure projects includes train leasing, offshore power cables and London’s new “super sewer”. INPP yields around 7%. Its discount is -16%.

“These assets are mostly in the UK and have highly predictable, long-term cash flows, typically with an element of inflation linking,” says Laing.

Laing adds: “These private assets are hard to value, so discounts should be taken with a pinch of salt, however INPP has sold £345 million of assets, or 13% of the portfolio, to third parties at or above NAV, giving some hard evidence of pricing.”