Fund Focus: why all the massive moves?

We’ve seen a good deal of market volatility in recent history, to the point where it feels pretty routine for an index or a fund to have gained or lost 10% (or more) in a year.

2026 has upped the ante on this front, with many funds either in or near that territory after just five weeks.

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What’s going on? A fresh sell-off linked to artificial intelligence (AI) has crashed through the market, while some sectors have already made big gains in the face of fresh geopolitical woes.

We’ve also seen a few funds encounter specific issues of their own. If such gyrations are hard to keep up with, we can at least understand them.

Train derailed

The launch of an artificial intelligence (AI) agent that some view as a threat to enterprise software businesses has shaken up the sector, and in the UK market we saw big falls for RELX (LSE:REL), Sage Group (The) (LSE:SGE), Experian (LSE:EXPN) and London Stock Exchange Group (LSE:LSEG), as well as others such as Rightmove (LSE:RMV).

This is another slog of bad news for fund manager Nick Train, who recently survived a Finsbury Growth & Income Ord (LSE:FGT) continuation vote but lists those first four shares as the trust’s top positions (while also holding Rightmove).

Source: FE Analytics, as at 06/02/26. Past performance is not a guide to future performance.

But it’s not just him (as the above table shows).

The software rout explains why the software as a service-focused private equity trust HgCapital Trust Ord (LSE:HGT) has also taken a big hit, with its share price discount to net asset value (NAV) blowing out.

HGT has responded quickly, stressing its focus on an “AI-first” approach for holdings as well as unveiling a share buyback programme, while Train has defended the strength of his favoured companies.

A few other victims are worth mentioning here.

Molten Ventures Ord (LSE:GROW), the venture capital trust which lists Saas as one of its key areas of focus, is down by almost 7%, while cybersecurity and cloud computing exchange-traded funds (ETF) have taken a big hit.

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The WisdomTree Cloud Computing ETF - USD Acc GBP (LSE:KLWD), which invests predominantly in US shares, is down by almost a quarter, and cybersecurity funds have also suffered.

On the other side of the AI debate we’re seeing a weak showing from US tech shares, including the Magnificent Seven, as concerns about spending in this space take hold.

Some growth funds have suffered. Popular names Baillie Gifford American B Acc  and Morgan Stanley US Advantage I Acc GBP are down by 14% and 15%, respectively. We’ve also seen (inevitably tech-oriented) “innovation” funds such as Liontrust Global Innovation A Acc GBP take a bath.

Havens of different sorts

The latest AI news might distract us from the fact that geopolitical tension mounted again in January, thanks to some provocative behaviour from the US president.

That has bolstered an already strong investment theme in the form of defence, and while valuations have moderated in recent weeks we see some big gains on specialist funds.

Both the Future of Defence ETF Acc (LSE:NATO) and the Global X Defence Tech ETF USD Acc GBP (LSE:ARMG) have made double-digit returns, with other names such as the Invesco Defence Innovation ETF GBP (LSE:DFNX) not far behind it.

The big gains made by Seraphim Space Investment Trust Ord (LSE:SSIT) have moderated, although so has its share price premium.

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A sense of skittishness among investors is also a natural friend to the gold price, although that and silver experienced a big sell-off a week or so ago.

Baker Steel Resources Ord (LSE:BSRT) is still up by around 35% year to date, with BlackRock World Mining Trust Ord (LSE:BRWM) and BlackRock Energy and Resources Inc (LSE:BERI) up by around 13%. Generalist energy funds have made big gains in recent weeks, too.

Not all high flyers in this sector are having a good year so far. Shareholders in Golden Prospect Precious Metal Ord (LSE:GPM), a standout name from 2025, are slightly down in recent weeks.

It’s also worth noting that geopolitics, and fresh tariff talk, have not done wonders for the US dollar. The currency has faltered in recent weeks, which will partly explain why emerging market stocks (and funds) have already made big gains. A few other regions are also flying, from Latin America to South Korea.

‘Idiosyncratic’ woes

If those moves reflect a debate about the prospects for certain sectors and regions, some funds have very specific problems of their own.

The recent announcement that the government wanted to cap ground rents was, unsurprisingly, very harmful for Ground Rents Income Fund Ord (LSE:GRIO), with the trust predicting a big drop in its NAV as a result.

We’ve also seen portfolio gremlins eating into returns elsewhere. The normally steady 3i Infrastructure Ord (LSE:3IN) upset the market by announcing that it would likely have to write down the value of one holding (accounting for 5.7% of NAV) to zero.

Meanwhile, the punchy Chrysalis Investments Limited Ord (LSE:CHRY) has suffered at the hands of share price weakness for Klarna Group (NYSE:KLAR) since it IPOed in September last year.

These are all painful moves for investors, but at least ones we can understand. Deciding what to do with such a holding is a trickier call.