Ian Cowie: my winners and losers in Q3

Our columnist looks back at how his ‘forever fund’ fared over the last three months, including three double-digit gains.

1st October 2026 13:52

by Ian Cowie from interactive investor

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Despite many reasons to be fearful, the third quarter (Q3) of this year proved profitable for most investment trusts with capital growth and income giving reasons to be cheerful.

No fewer than 16 of the 24 investment trusts in my “forever fund” made money during Q3, including double-digit gains by three of them.

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But rising bond yields, currently at their highest levels since the global financial crisis in 2008, Trump tariffs, an oil price spike, Europe’s worst conflict since the Second World War, and bloodshed in the Middle East hit several funds hard.

So, because I know some of you enjoy my pratfalls more than my profits, let’s start with the investment trust shares that sank lower between July and September.

The laggards

Ecofin Global Utilities & Infra Ord (LSE:EGL) is Q3’s surprise stinker and, for the first time since I have been writing these reports, my worst performer, turning £1,000 at the outset into only £896 at the end of this period. That’s a bit of a blow because it remains the eighth-most valuable asset among more than 50 shares in my forever fund.

Rising risk-free returns elsewhere, especially from government bonds, have made the 3.4% income paid by EGL relatively less attractive; even though its dividends have increased by an annual average of 5.2% over the last five years.

Nor do I see any reduction in demand for the services provided by this investment trust’s top 10 holdings, led by National Grid (LSE:NG.), Britain’s biggest electricity distributor; NextEra Energy Inc (NYSE:NEE), the American renewables giant; or Iberdrola SA (XMAD:IBE), the Spanish utility.

So I am inclined to regard Q3’s disappointment as a reminder that share prices remain volatile in the short term. But I haven’t sold any EGL and remain a happy long-term investor. If the shares weren’t currently priced marginally above par, I might even have bought some more.

JPMorgan US Smaller Companies Ord (LSE:JUSC) was next worst among my investment trusts in Q3, turning £1,000 into £952. This was less of a surprise as US President Donald Trump’s taxes on imports are raising retail prices and reducing activity in the world’s biggest economy. However, I am beginning to have my doubts about this long-term holding, and its negligible yield of less than 1% is scarcely reason to be patient.

JPMorgan India Growth & Income plc (LSE:JIGI) was third-worst during Q3 with an end value of £968. High oil prices hurt India, because it has relatively little of its own, and Trump’s tariffs make a bad situation worse. Fears that artificial intelligence (AI) might wipe out the call centre business have also depressed valuations.

However, volatility in this emerging market is no surprise and JIGI’s recent aim to pay dividends equal to 4% of its net asset value (NAV) the previous September provides some comfort. As the share price has fallen since then, the current yield has been pushed up to 5.25%. I haven’t sold any JIGI shares and, with them priced nearly 9% below NAV, might buy more.

The winners

On a happier note, Scottish Mortgage Ord (LSE:SMT), where I first invested at £11.64 last March, when fleeing American hedge fund managers, who gained control of another Baillie Gifford fund elsewhere, delivered a double-digit return in Q3 by turning £1,000 into £1,103. This fund’s early exposure to Elon Musk’s extra-terrestrial venture, Space Exploration Technologies Corp Class A (NASDAQ:SPCX) or SpaceX, continues to look shrewd - even for those of us who shunned the SPCX initial public offering (IPO) on valuation grounds.

Other interesting top 10 assets include Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM), the microchip-maker; NVIDIA Corp (NASDAQ:NVDA) ditto; and their Dutch rival ASML Holding NV (EURONEXT:ASML), which makes the machines that make microchips. This fund gives me exposure to sectors I scarcely understand but suspect might own the future. Its near-9% discount to NAV adds to the attraction.

Greencoat UK Wind (LSE:UKW), the self-descriptive owner and operator of offshore and onshore wind farms, came second with a total return of £1,122. Strife in the Middle East is reminding everyone about the importance of energy security, or making our own, instead of relying on foreign dictators.

Never mind the geopolitics, UKW’s dividend yield of 9.3% rising by 7.8% is enough to warm the cockles of this investor’s wallet. Better still, the shares remain priced 14% below NAV, which looks like a bargain to this income-seeker.

City Natural Resources Grow & Inc PLC (LSE:CYN) completes my triumvirate of trusts that delivered double-digit returns in Q3, ending the period with £1,217 on the same £1,000 starting value. I am glad I paid £3.48 in July, as reported here back then, for shares that cost £4.06 as I write this.

Its underlying portfolio of shares in the copper, gold and uranium trades - plus the world’s biggest liquid petroleum gas (LPG) shipping specialist - has returned to favour but continues to yield 6.9% dividend income, despite boosting payouts by an eye-stretching annual average of 38% over the last five years.

However, it is important to beware these enhanced dividends have been topped up with some capital gains, and this fund has no revenue reserves. As usual, dividends are not guaranteed and can be cut or cancelled without notice.

Even so, Nick Britton, research director of the Association of Investment Companies (AIC), told me: “A heady cocktail of factors caused some sizeable gains in trusts exposed to oil, precious metals and renewable energy assets over the third quarter of the year. These factors included geopolitical uncertainty, inflation fears and ongoing resilience in major economies.

“The majority of sectors made positive returns over the quarter, including all the main equity sectors, and the average trust was up 3%, held back by property trusts which continue to see share price weakness despite offering attractive yields of around 7% to 9%.”

While there remain plenty of reasons to worry about what will happen next, and pessimism is the easiest way to sound clever to the credulous, Q3 showed how the stock market often surprises on the upside and rewards optimism. But you have to be in it to win it.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

Ian Cowie is a shareholder in City Natural Resources Growth and Income (CYN), Ecofin Global Utilities and Infrastructure (EGL), Greencoat UK Wind (UKW), JPMorgan India Growth and Income (JIGI), JPMorgan US Smaller Companies (JUSC) and Scottish Mortgage (SMT) as part of a globally diversified portfolio of investment trusts. You can see more at iancowie.co.uk

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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