HL Growth Fund Performance Update – First Quarter of 2026

Evie Rowland, Workplace Financial Wellbeing Specialist

30 April 2026

The HL Growth Fund is our “default fund” for workplace pensions. That means it’s likely to be where your monthly pension contributions are invested if you haven’t made your own investment decisions.

If you’d like to know more, visit our website.

Remember that investing is for the long term and your pension is typically invested over many years or even decades. You shouldn’t base your investment decisions on short term events.

This update will help you understand how markets affect the value of your pension investments. Past performance is not a guide to the future. This is not personal advice, please ask for advice if you are unsure of a course of action for your circumstances.

Quarter Review - 1 January to 31 March 2026

Investors entered the first quarter of 2026 with a cautious optimism that the good times from the last 3 years could continue. The narrative abruptly shifted as geopolitical tensions escalated early in the year, culminating in a dangerous and ongoing conflict in the Middle East. This has become the defining event of the quarter, reshaping the investment landscape and causing significant unrest in some segments of the markets.

Donald Trump first caused a stir in January by ordering a dramatic military operation in Venezuela. He then stepped up his rhetoric towards the end of January by challenging Denmark’s claim over Greenland. His suggestion that the island could instead become part of the United States—backed by threats of tariffs and military action—added to investor unease which created a headwind for European and UK stock markets in particular.

As the quarter unfolded, markets rose in response to the US Supreme Court ruling against Trump’s tariffs on February 20th, the prospect of tariff refunds reducing trade disruption. This was until news of the death of Iranian leader, Ali Khameini, in a joint US-Israeli missile strike broke just 8 days later.

March saw Iran target US regional allies and infrastructure whilst Israel and the US struck Iranian oil, gas and industrial assets. In response to the attack, the Iranian regime closed the Strait of Hormuz, a critical oil transit waterway through which 20% of the world’s oil is transported. The Suez Canal, an alternative route for oil tankers, also became a major risk as Iran’s allies in Yemen, the Houthis, showed hostility to shipping passing through the Red Sea. With supply limited, oil prices moved decisively higher, going above $100 a barrel for the first time since the early stages of the invasion of Ukraine, and the price of gas in Europe surged by over 65%.

Oil plays a complex but significant role in financial markets. For energy companies, an increase in oil prices typically means their profits rise which drives up their share price. Many energy companies are listed in the UK stock market which can explain why it rose by 2.4% in the quarter. However, for economies generally and other industry sectors, the impact of oil prices is a concern. The UK and many countries in Europe are energy-dependent and large importers of oil, so a supply restriction leads to inflationary pressures. High inflation is often met with poor stock market returns as consumers have less to spend and companies have higher production costs, both of which drive down profits for companies and their share price.

The HL Growth Fund invests into a mix of two asset types: shares and bonds. In such conditions, the HL Growth Fund fell in value by 2.9%*. Since the fund launched on 15 December 2021, the fund has grown by 27.7%.

To assess the fund’s performance, we benchmark it for comparison purposes against a group of funds with a similar investment mix, represented by the “IA Mixed Investment 40-85% Shares Sector”. Funds in this sector fell by 1.6% in the first quarter and have returned 17.4% since the HL Growth Fund launched.

The HL Growth Fund

The events of Q1 saw developed equity markets struggle and the 500 largest companies in the US fall by 4.4%. With half of the fund allocated to the US, exposure to this area was the biggest detractor of growth. The fund did however see gains from its exposure to shares in global smaller companies and emerging markets, emphasising the importance of diversification.

Stock Markets

Across equity markets, performance varied significantly by sector. Energy and mining companies benefited from higher commodity prices, which provided a boost to the UK market given its heavy weighting towards these industries. Commodities typically price in US dollars which also added to positive returns when converted back to Sterling thanks to a slightly weaker Pound over the period.

European markets struggled, with most regions declining. Germany and France were among the weakest, falling 6.6% and 3.5% respectively, as higher energy costs weighed on their economies.

In contrast, performance was more positive in parts of Asia and Emerging Markets. Developed markets in the Pacific region all made positive gains over the period, led by Hong Kong and Australia. Growth was also supported by very strong performance of technology companies in Taiwan and South Korea.

Bond Markets

The HL Growth Fund has an allocation to bonds as their returns are typically less volatile than that of shares. They usually perform well at different times to shares which also helps to balance out returns.

Bond prices tend to move in the opposite direction to interest rates. When interest rates go up, bond prices tend to go down. This is because bonds usually pay fixed rates of interest to their investors, which look comparably less attractive as interest rates rise, as the issuance of new bonds offering higher rates of interest look more attractive.

No changes to headline interest rates across the European, British, American or Japanese Central Banks over the quarter meant bond market activity was muted. Inflation-linked bonds - benefiting from the renewed inflationary environment - performed the strongest, up by just under 1%.

Looking Ahead

As we enter into the second quarter of 2026, geopolitical tensions and uncertainty remain high. Whilst a 10-day ceasefire between the US and Iran saw oil prices drop and global markets rally as the Strait of Hormuz reopened, the US maintained their naval blockades of Iranian ports which led to the closing of the Strait again. Markets do not respond well to uncertainty and so, whilst unpleasant, volatility will not be uncommon.

Key elections in the UK and the USA in Q2 and Q4 of this year could also trigger periods of volatility as investors grapple with what that might mean for the prospects of the two countries on either side of the Atlantic.

For long-term investors, staying diversified across regions and sectors remains key to capture market growth wherever it may occur, and to reduce overreliance on a single country or area of the market. The HL Growth Fund remains diversified geographically and across different asset types, to navigate the months ahead.

Past performance is not a guide to the future. The comparator is the IA Mixed Investment 40-85% Shares NR.

*The HL Growth Fund launched on 15 December 2021. N/A means full year figures are unavailable. Source: Lipper IM, to 31 March 2026.

Unless stated otherwise, figures are expressed in GBP terms, to show the returns experienced from the perspective of a UK investor.

Important notes

Investing for longer increases the likelihood of positive returns. Over a period of five years or more, investments usually give you a higher return compared to cash savings. But investments can go down as well as up in value, so you could get back less than you put in.

Once invested in a pension, your money is usually no longer accessible until at least age 55, rising to 57 in 2028.

The HL Growth Fund is managed by Hargreaves Lansdown Fund Managers Ltd, a subsidiary of Hargreaves Lansdown Limited.