5 funds to watch for 2025 – how have the funds performed?

Artemis US Smaller Companies

This fund aims to deliver long-term growth by investing in smaller companies based in the US.

Smaller businesses are often among the most innovative and offer lots of growth potential, but they're riskier than their larger counterparts.

At the start of this year, the expectation was that US tariffs would have a greater impact on larger than smaller businesses. That’s because smaller companies are usually more domestically focused and rely less on taxed imports.

The implication is that funds investing in US smaller companies had the potential to perform or hold up better.

However, alongside unprecedented market uncertainty, some investors have favoured the perceived stability that established, larger business offer.

Interest rates have also remained high, unlike some other developed markets where rates have been coming down, which has kept borrowing costs high.

A weaker US dollar has also benefited larger international businesses more than domestically-focused firms.

This means most US smaller companies funds have suffered.

So far this year, the average fund in the IA North American Smaller Companies sector has lost 11.41%*.

The Artemis US Smaller Companies fund has performed broadly in line with the sector over this time.

The setback might present an opportunity to invest at lower share prices, though there are no guarantees and as is the nature of markets, they could fall again.

This fund remains one of our preferred choices for exposure to this part of the market.

We believe smaller companies offer attractive long-term growth potential, especially in an innovative market like the US, but they can be volatile.

The fund usually invests in 40-60 companies. Holding a smaller number of investments can increase risk, as each has a larger impact on performance.

Baillie Gifford Monthly Income

This fund invests across three broad investment areas – shares, real assets (like infrastructure and property) and bonds.

Infrastructure assets could benefit from increased government spending, both in the UK and overseas, while bonds could perform well if interest rates continue to fall and offer the potential to pay an attractive income.

The shares portion of the fund is made up of large companies that the fund’s managers expect to be able to pay and grow their dividend a long way into the future.

So far this year, to the end of June, the fund has grown 4.63%, with income reinvested. This compares with 2.69% for the average fund in its sector, the IA Mixed Investment 40-85% Shares sector.

It’s positive to see the fund perform well during a period when the broader global stock market has struggled and only grown 0.58%.

Investments in infrastructure and property held up well during the period of stock market weakness in early April. These companies typically have revenues that are linked in some way to inflation, for example property rents that are increased in line with inflation each year.

Because of the more consistent and predictable earnings that these companies achieve, their long-term performance is usually more consistent.

It also demonstrates the benefits of diversification in a broader investment portfolio and how different investments perform well at different times. When the economic backdrop is more positive, it could be the shares portion of the fund does better.

The fund’s yield (a measure of the income it pays) was 4.00% as at the end of May 2025, though remember yields are variable and not a reliable indicator of future income.

The fund can invest in emerging markets and use derivatives, which, if used, increases risk. It takes its charges from capital, which can increase the yield but reduces the potential for capital growth.

Invesco Tactical Bond

This fund’s managers can invest in all types of bonds, with few constraints placed on them.

This includes high yield bonds and derivatives, both of which add risk if used.

The fund’s performance hinges on their ability to interpret the bigger economic picture, and they can alter the fund's investments based on what they see.

They aim to shelter the fund when they see tough times ahead and seek strong returns as more opportunities become available.

The fund has performed well so far this year, growing 4.15% compared with 3.80% for the average fund in the IA Sterling Strategic Bond sector.

The more defensive nature of the fund has seen it hold up relatively well during more turbulent times for markets.

This is partly because almost half the fund is invested in what the managers call the ‘liquidity’ portion – this is made up of investments that are typically easy and quick to buy and sell, like cash, and short-dated and developed market bonds.

These investments are expected to provide an element of shelter when markets go through a tough patch. They can normally be sold quickly when the managers find new opportunities and want to increase risk for the potential of higher reward.

The rest of the fund mostly invests in investment grade corporate bonds, which pay a higher income to compensate for the greater risk of lending to companies over governments.

We think this is a good fund for exposure to the wider bond market. It takes away the hassle of deciding which type of bonds to invest in and when, because the managers are given the discretion to make these decisions for you.

Legal & General Future World ESG Tilted and Optimised Emerging Markets Index

This fund invests across a range of emerging markets including Taiwan, China, India, Korea, South Africa and Brazil. It’s a passive fund, which means it aims to track the performance of a benchmark rather than beat it, which active funds do.

It offers a different approach to some other passive funds though – the fund tilts its investments away from companies that score poorly on environmental, social and governance (ESG) criteria and towards those that score well.

This could be an advantage in emerging markets, where risks are higher. The fund also invests in some smaller companies, which adds risk.

The index the fund tracks also targets an annual reduction in its overall carbon emissions.

The fund has done a good job of tracking its benchmark, growing 4.65% in the first half of this year. More broadly, emerging markets have performed better than developed ones over this time, with regions such as Latin America, South Africa and Korea performing noticeably well, which has helped the fund’s performance.

Some of the fund’s largest investments currently include technology companies TSMC, Tencent and Samsung, as well as banks HDFC Bank and ICICI Bank. Overall, it invests in a diverse mix of 1,709 companies.

The fund’s one of the lowest-cost options to invest in emerging markets and it could help boost long-term growth potential – with some volatility along the way.

Troy Trojan

This fund’s managers aim to shelter investors' wealth just as much as grow it.

Rather than trying to shoot the lights out, the fund aims to grow investors' money steadily over the long run, while limiting losses when markets fall.

It tries to experience smaller ups and downs than the broader global stock market or an investment portfolio that's mainly invested in shares.

The fund’s grown 2.51% over the first six months of this year, which is similar to the rate of inflation (as measured by the UK retail price index) of 2.75%, and ahead of global stock markets. We feel this is a good return for a more conservative fund during what’s been a volatile period for markets.

Importantly, the fund held up much better than the broader UK and global stock markets when they fell sharply in April. The fund hasn’t rebounded as much during the recent recovery, but that’s what we’d expect.

Over 10% of the fund currently invests in gold, which has performed well this year.

Geopolitical risks remain high, and trade tariffs and tensions between the US and China haven’t dissipated. Gold tends do well during times of uncertainty, which is what we’ve seen.

Elsewhere, the fund continues to invest in established global companies, which provide long-term growth potential, and US index-linked bonds, which can shelter investors if inflation remains higher than the long-term US central bank targets. Its cash holdings can also help provide some shelter during market wobbles.

The manager has the flexibility to invest in smaller companies, which, if used, adds risk. The fund is also concentrated, which means each investment can contribute significantly to overall returns, but it can increase risk.

We continue to rate the fund as an option that could provide modest growth while providing some shelter during the tough times.