HL Growth Fund Performance Update – Second Quarter of 2026

Evie Rowland, Workplace Financial Wellbeing Specialist

July 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 April to 30 June 2026

After a turbulent start to the year, the second quarter of 2026 saw global markets make a full recovery as tensions in the Middle East eased and concerns around inflation reduced. Investors entered Q2 with optimism and there was an air of excitement as shares in Elon Musk’s rocket company, SpaceX, became available to the public for the first time via a stock market floatation.

However, one of the defining themes of the quarter was “market concentration”, meaning a small number of large technology and AI companies were responsible for most of the gains seen across stock markets. This has been a recurring theme of recent years, as tech and AI companies have driven the market rally for some time now.

Over the period, the HL Growth Fund rose in value by 13.8%*. Since the fund launched on 15 December 2021, the fund has grown by 45.3%.

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 rose by 9.6% in the second quarter and have returned 28.7% since the HL Growth Fund launched.

The HL Growth Fund invests into a mix of two asset types: shares and bonds. Shares are higher risk but offer greater potential returns over the long term. Bonds tend to experience smaller ups and downs but generally offer lower long-term returns. Let’s take a closer look at how different investments performed within the fund.

The HL Growth Fund: Key Performance Takeaway

The HL Growth Fund’s large allocation to the US was a big driver of growth for the fund, as technology and AI-related companies led the gains. The fund’s exposure to Emerging Markets also delivered particularly strong returns.

Demand for technology products, particularly the computer chips used in AI, helped markets such as Taiwan and South Korea achieve some of the strongest returns of the quarter. The fund’s allocation to bonds also added to the fund’s total return, although they made a smaller contribution than that of shares over the period.

Stock Markets

Over the quarter, the US saw steady growth of 14.4% following a strong earnings season. Many US companies exceeded their expectations which renewed investor confidence and the S&P 500 rose for 9 consecutive weeks.

European equities also rallied, making a gain of 12.3% in Q2 following de-escalation in the Middle East and the better inflationary environment. The UK stock market rose just under 5% which lagged other regions. Being home to many oil and energy companies, the UK is sensitive to the downturn of oil prices following the re-opening of the Strait of Hormuz.

Overall, Emerging Markets were the best performers of the quarter, rising by 23.3%. This is the best quarterly gain the sector has made since Q2 of 2009 and was driven by particularly strong growth in Korea and Taiwan, the latter being home to one of the largest semiconductor manufacturers in the world – a type of microchip that is integral to the development AI.

The stock market party started in April but came to an abrupt, although thankfully short-lived, pause in early June. Donald Trump – under the guise of sanctions for purported but unsubstantiated forced labour accusations – imposed a fresh round of tariffs on many of the US’ trading partners, including the UK.

As the quarter closed, momentum began to fade but global stock markets still posted a positive return. Investors were generally pleased to see strong returns in sectors other than tech, which helped to alleviate concern of over-concentration in a particular sector.

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.

Reports of strong company earnings saw high yield bonds come out on top, up by 3% in Q2, and investment grade corporate bonds outperform government bonds. Overall, there was a small rise in the price of global bonds.

Looking Ahead

Whilst market concentration was the defining theme of Q2, Q3 has shown early signs of “market broadening” as we start to see growth in companies outside of the technology sector.

With the flotation of two more large tech companies on the horizon, all eyes are on earnings as investors analyse how much these companies are spending and earning in return.

Inflation will also be a hot topic as investors weigh up whether the ceasefire in the Middle East will last and whether central banks will change interest rates in response. 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 30 June 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.