Fund Focus: the ‘boring’ sectors worth backing

There’s a huge amount of excitement welling up in markets at the minute. The Space Exploration Technologies Corp Class A (NASDAQ:SPCX) IPO has gone off with a bang, and there’s plenty more to come this year via the planned flotations for artificial intelligence (AI) players Anthropic and OpenAI.

There’s also the prospect of even more private companies going public. 

Bending Spoons, a company that acquires and rejuvenates digital businesses (such as Meetup and WeTransfer) and features prominently in some Baillie Gifford-managed investment trusts such as Schiehallion Fund Ord (LSE:MNTN), recently filed for a US IPO.

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Meanwhile, the AI trade continues to propel sectors and funds, be it emerging markets or portfolios like Polar Capital Technology Ord (LSE:PCT). That leaves investors in a familiar position, where returns have been very strong but bubble worries continue to mount.

It’s hard to know how to act in such circumstances, bar following the sensible mantras of investing regularly and diversifying. Equally, some investors may simply go to cash for peace of mind, although this strategy can be costly in the long run.

However the sheer level of excitement around a handful of themes has left certain sectors, and funds, out in the cold. And buying into these less glamorous areas may at least hand you a degree of diversification.

Boring sectors to watch

Many markets and sectors have gotten caught up in the AI trade, and could find themselves exposed if sentiment were to turn. But some pockets of the market have had a different experience.

One market to highlight is India, which appears to have missed out on the AI trade. 

If we look at emerging market performance over the last 12 months, the MSCI Korea index has returned more than 220% (in sterling terms), with MSCI Taiwan making 105%. A lot of this can be linked to AI, what with the big gains made by Samsung Electronics Co Ltd DR (LSE:SMSN), SK Hynix and Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM).

The MSCI India index has had a very different experience, losing around 12% in that time.

The market’s struggles might partly still represent the fact that Indian shares had such a strong run in the past and valuations did look high – but the market also lacks the likes of a major chipmaker, denying it a role in the AI trade.

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Funds and trusts in the space have predictably struggled, with all the names in the relevant Investment Association (IA) and Association of Investment Companies (AIC) sectors sitting on a loss so far in 2026. 

These vary in severity: Ashoka India Equity Investment Ord (LSE:AIE), a former high-flyer with a focus on small and mid-cap shares, is down by 11.6%, while the open-ended JPM India is having a worse time of it with a loss of around 15%. The popular Jupiter India I Acc (B4TZHH9) is down by around 10%.

Those investing here are still partly focused on the story of strong demographics, with sectors such as financials giving exposure to the consumer. There are also some potential AI “victims” via the likes of software stocks.

Unloved areas

Closer to home, both UK and European equities have returned to form in recent years but still lack obvious, direct exposure to some of the flashier themes and sectors. 

Certain UK funds, such as Temple Bar Ord (LSE:TMPL), have flown high thanks to exposure to resurgent sectors like financials, but there are other funds that can be held alongside it.

European equity funds can meanwhile quietly produce the goods. The mid cap-focused Premier Miton European Opports B Acc (BZ2K2M8) is performing very well, as has the value-focused WS Lightman European R Acc (BGPFJN7). 

These arguably hold less fashionable stocks: the Premier Miton fund, for one, lists holdings such as PolyPeptide Group AG (SIX:PPGN), which is involved in manufacturing for the biotech sector – even if the fund’s top 10 holdings list also includes a semiconductor company.

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The search for “boring” might also take investors to some beaten-up parts of the market. One example would be consumer goods companies, which can often be found in some of the quality growth funds that have had a challenging few years.

Meanwhile, a few niche portfolios give exposure to sectors less likely to get caught up in the market hype.

An unglamorous but often strongly performing name is Polar Capital Global Ins I Acc (B5339C5), which has produced good returns in the long run and can act as a diversifier against the global equity market, too. 

We can also delve into other niche segments via funds such as Utilico Emerging Markets Ord (LSE:UEM).

There’s no guarantee that such sectors will fare well in the future, or not run into their own mishaps. But there are at least a few parts of the market where bubble worries don’t dominate.