ii ACE 40 performance review 2025

Performance of the funds on the ACE 40 list ranged between +37.0% and -3.3% over the year. Key drivers of positive returns were exposure to the strongly performing equity markets of Europe and China and to alternative energy. Particular weakness was seen from equities in India, while the US also lagged and at the sector level, the consumer sectors fared worst.

• Invest with ii: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

Strength was seen from both the active and passive funds on the list that are focused on alternative energy. Polar Capital Smart Energy I Acc GBP posted a return of 35.6%. The fund is managed by the experienced Thiemo Lang whose investment process focuses on bottom-up selection of quality-growth companies that trade at reasonable valuations and provide solutions that enable the decarbonisation and electrification of the global energy sector. High exposure to the technology sector is a feature. Notable stock successes included Lumentum Holdings Inc (NASDAQ:LITE) and Doosan Enerbility.

iShares Global Clean Engy Trns ETF $Dist GBP (LSE:INRG), which tracks the S&P Global Clean Energy Transition Index, posted a return of 37.0% and saw significant positive contributions from stocks such as Bloom Energy Corp Class A (NYSE:BE), Nextpower Inc Class A (NASDAQ:NXT) and Vestas Wind Systems AS (XETRA:VWSB).

EdenTree European Equity B Inc showed a gain of 33.7%, which reflected the strength of European equities over the year. The fund adopts a contrarian, value approach and focuses on stocks that are out of favour, are more cyclical by nature, or are undergoing what are deemed to be temporary difficulties. Positive environmental, social, and governance (ESG) screening is also employed. The value bias was a positive over the year and helped the fund outperform the mainstream Morningstar DM Eur xUK TME Index.

iShares MSCI EM SRI ETF USD Acc GBP (LSE:SUES) tracks the MSCI EM SRI Select Reduced Fossil Fuel Index and produced a return of 23.0%, with a strong contribution from its exposure to Taiwan. However, the fund underperformed against the mainstream MSCI EM Index as the SRI criteria negatively impacted stock selection in China and South Korea.

• Investment outlook: expert opinion, analysis and ideas
• Key tax changes impacting investors in 2026

Fidelity Responsible Asia Equity W Acc is the next fund on the top five performers list with a 22% return. The portfolio has a focus on stocks with quality growth characteristics and some exposure to turnaround situations where a catalyst is evident. In addition to producing strong absolute returns, the fund narrowly outperformed its MSCI AC Asia ex Japan Index benchmark with the overweight to Samsung Electronics Co Ltd DR (LSE:SMSN) being a significant contributor.

Moving to the bottom five performers on the ACE 40 list, we see the weakest returns from Brown Advisory US Sust Gr GBP B Inc with a negative 3.3% return. The managers of this fund incorporate sustainable investing traits into their long-term fundamental research process, which focuses on identifying sustainable business advantages. Attribution versus the mainstream Morningstar US TME Index shows stock selection as the negative, particularly within IT, communication services and financials. Although the recent weakness has dented the longer-term track record, in the past the fund has shown its ability to outperform the mainstream index and the Morningstar US Large-Mid Growth Index.

With a return of 1.9%, the next fund on the list is Baillie Gifford Rspnb Glb Eq Inc B Acc. This income fund focuses on dividend growth stocks, and this results in a portfolio that can at times show a yield only slightly higher than the mainstream MSCI ACWI benchmark and a slight growth bias. These biases are persistent and more obvious versus global equity income peers.

Over the year, the fund underperformed both comparators by a considerable margin. The focus on stable-growth stocks has clearly caused considerable headwinds for the approach. This style bias primarily shows up as weakness in stock selection across most sectors using traditional attribution versus the mainstream Morningstar Global TME Index. Despite the recent underperformance, the fund outperforms the Morningstar Global Equity Income Category average since inception and offers a differentiated approach for ESG investors looking for a growing income stream from global equities.

Relative weakness from US equities impacted the iShares MSCI USA SRI ETF USD Acc GBP (LSE:SUUS), which posted a return of 3.3%. This passive fund invests in a sub-set of equities within the MSCI USA Index that demonstrate higher ESG ratings than other sector peers, as well as excluding companies involved in controversial businesses such as weapons, thermal coal, tobacco and oil sands. The ESG criteria detracted during 2025.

• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
• Experts name fund and trust opportunities at start of 2026

Wellington Global Stewards GBP N Acc was the next fund on the list posting a 4.1% return. The managers of this fund aim to hold stocks that combine a high relative return on capital with good stewardship, which they believe can lower capital costs over time. Returns over 2025 were behind mainstream indices and were also behind SRI indices, although to a lesser extent. Versus the mainstream Morningstar Global TME Index attribution shows weakness in industrials and IT as the main culprits. Despite the recent weakness, we retain conviction in the potential of this fund based on the size of the analytical resource supporting the managers and the experience levels within it, while there is an equally impressive level of resource available on the sustainability side.

The final fund on the underperformers list is TM Gravis Clean Energy Income C GBP Acc. The fund aims to provide an income in the region of 5% and primarily invests in closed-ended investment companies and yield companies that are involved in the provision, storage and consumption of clean energy. The fund therefore provides relative defensive exposure to the clean energy space. With a return of just under 5% for the year, the fund has produced a reasonable absolute return, but it is well behind the returns of the higher-risk S&P Global Clean Energy Index. Although we would expect the fund to lag that index during a strong upswing, the scale of the recent underperformance is disappointing.

Top five ACE 40 funds in 2025

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/12/2025. Past performance is not a guide to future performance.

Bottom five ACE 40 funds in 2025

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/12/2025. Past performance is not a guide to future performance.

Top five ACE 40 funds over five years

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/12/2025. Past performance is not a guide to future performance.

Bottom five ACE 40 funds over five years

Source: Morningstar - Total Return for OE / Market Return for CE - (GBP) to 31/12/2025. Past performance is not a guide to future performance.

Most-bought ACE 40 funds in 2025

Most-sold ACE 40 funds in 2025

Changes to the ACE 40 list (under review/developments)

• Removal of Pacific Assets Trust, Impax Environmental Markets Trust & Stewart Investors Global Emerging Markets All Cap Fund. Inclusion of iShares MSCI Japan SRI ETF.

ACE 40 videos in Q4

None in Q4.