HL Growth Fund Performance Update – Third Quarter of 2026

Evie Rowland, Workplace Financial Wellbeing Specialist

October 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 July to 30 September 2026

The third quarter of 2026 was marked by energy-driven inflation and rising interest rates as conflict in the Middle East re-escalated. This pushed bond yields higher, making it more expensive for companies and governments to borrow money. Despite this, companies continued to report strong earnings in Q3 which saw stock markets reach record highs. The gains were driven by big technology companies who continue to dominate stock markets.

But the AI boom is not just a stock market story anymore. As companies continue to build AI into their systems, the spending and borrowing required to fund these projects has affected bond markets too, with government and corporate debt becoming one of the defining themes of the quarter.

Over the period, the HL Growth Fund rose in value by 1.1%*. Since the fund launched on 15 December 2021, the fund has grown by 46.9%.

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 0.8% in the third quarter and have returned 29.8% 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, although there are no guarantees of course. 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 stocks was the biggest contributor to the positive return it made in Q3, with the fund’s exposure to US technology stocks and companies in the UK being key drivers of growth. With only a small allocation to fixed income assets, the downturn in global bond markets detracted from growth slightly, but the impact on performance was minimised by the fund’s exposure to global high yield bonds which performed better as they are less sensitive to changes in interest rates.

Stock Markets

Bolstered by the double-digit gains made in Q2, the more measured gains posted in Q3 saw the US stock market reach several record highs. The US rose by 2.2% in Q3 as company earnings continued to grow. With such a small number of large tech companies being responsible for the gain, there is some concern that performance of stock markets is so heavily reliant on one sector.

Home to oil and gas companies which benefit from rising energy prices, the UK rose by 2.4% across the quarter. European equities, on the other hand, were down by 2.7% as investors showed concerns about the European Central Bank hiking interest rates in response to inflation and the effect this may have on growth.

Having outperformed the developed world for much of 2026, Global Emerging Markets lagged other regions. This came following an abrupt sell-off in semiconductors (a microchip material that is essential in the development of AI) as there was a call for the buildout of AI to slowdown.

However, both Trump and China pushed back on this call. Companies continued to spend heavily on the buildout of AI and increasingly turned to borrowing to finance these projects, which has impacted the credit markets too.

Bond Markets

Bond markets had a more challenging quarter. The Middle East conflict saw the price of oil rise once again. This contributed to inflation concerns which prompted central banks to increase interest rates, creating a difficult environment for bonds.

Governments also continued to issue large amounts of debt. Government bonds, once viewed as a safe investment by many, are now viewed as assets with real fiscal risk attached. This has contributed to higher bond yields as investors demand a higher return to compensate.

Large technology companies have also been raising significant amounts of money to fund the buildout of AI. The increased demand for investor capital between governments and companies drove yields even higher.

Looking Ahead

Going into Q4, questions remain over whether stocks will continue to withstand rising bond yields. A fiscal focus is inevitable as investors will monitor inflation, interest rates, announcements made in the UK’s autumn budget and results from the US midterms. With a Democrat victory becoming a real possibility, investors will pay close attention to what a blue sweep will mean for the technology sector.

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 September 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.