I will look at some interesting trends in the UK stock market as the Budget comes into view, then the link between the US mania and the gold price, followed by “What’s Hot?”.
There was a minor dip in the UK stock market in September, and I wanted to gauge what investors were buying as the Budget rears its head. The clear winners are large cap Value-style funds, the top 10 all being up in excess of 6.5%, whereas the tech heavy S&P 500 index is up 5.6%. One winner over this period is Invesco UK Equity Income, which raises an interesting historic parallel.
This was the original Woodford fund. I recall a reader letter to the Mail On Sunday in 1999, complaining about being invested in the Woodford’s Invesco fund, up something like 4% in the prior year, and looking for confirmation that they should switch to a tech fund, up 4x as much. You can probably imagine that the correspondent did not get the expected response.
“There is a tech bubble, the downside is huge, the Woodford fund is a sensible alternative, it’s the wrong time to be greedy” approximates to my published answer in 1999. A few months later the tech bubble burst, falls were around 80%. The Invesco fund was not just unscathed, but became a top performer and the Woodford legend began to build.
Today the encouraging signs from funds of Invesco, Newton (BNY), Schroders, Artemis and JOHCM shine a light on the potential in Value-style funds, as in 1999. The unfolding picture in the US and tech is equally clear, and just as worrying as 1999, possibly more so.
For example, on Tuesday the S&P 500 hit a new all-time high, but only 1 in 5 shares ended the day higher. That is what is called breadth, and it is very narrow, in fact the worst at a new high in at least 30 years (according to the elliottwave.com team). And in case you didn’t spot it, the value of tech darling Nvidia is now worth more than the whole German economy.
The fact of the mania can also be seen in the performance of gold in recent months. You will recall that the gold price had a breather in the 5 months to August and then went up 30% in a little over 2 months, with gold miners up 60%.
Though the US is 4.3% of the world population, it has accounted for 60% of gold ETF purchases in 2025. In March, exactly the wrong time to buy as the 5 month correction was just starting, US buyers dominated, accounting for 76% of gold ETF purchases. In September there were record flows into gold ETFs, and 61% came from the US. Physical gold is now down 15% from its peak, with peak buying occurring, yet again, just before the peak price.
There is an investor mania in the US, too much cash and complacency (a dangerous mix), and a hard-wired investor tendency to flock to the next shiniest thing – which was gold.
Moving on to the much heralded Xi-Trump meeting, it didn’t trigger any fireworks, which is to be welcomed. For all Trump’s ludicrous bluster, nothing of consequence was agreed, and China announced that they would “study and refine specific plans”. While Trump does theatre, China does thinking.
Over the last week, China equities were down a touch (0.7%), while Japan resumed progress as their self-proclaimed Iron Lady settles into her new job as Prime Minister – Nikkei 225 up 1.82%. FTSE 100 gained 0.6%, slightly more than the US. It was noticeable that the FTSE 250, likely more sensitive to the Budget, was down 1.32% - clearly there are some nerves.
Our What’s Hot, What’s Not feature unravels the trend amongst individual funds in the last month. Barings Korea has seemingly bounced out of nowhere in the last month, though has shot up 80% since its April low. Four tech-focussed funds are up in the region of 10%, closely followed by four Asian index funds, which is very unusual.
As you might expect, it is gold that features amongst the duds, though not terrible, down 3-4% in the calendar month. There is also a surprising collection of UK funds, both small and large cap – the problem is a Growth-style, when Value is beginning to turn, as you saw at the opening.
The What’s Hot? sectors tell a similar story, with Technology in the vanguard (up 8%), followed by three Asian sectors up in excess of 5%, without the assistance of China, which had a very quiet month. In addition to China, three UK sectors were dullards, though all were up slightly, and each of them would be notable beneficiaries of interest rates falling towards 3% in 2026, possibly lower.
On the whole there is a spooky calm across financial markets. Yet deep in the dark world of the Federal Reserve, there was a stirring. Though interest rates were cut this week, the Fed was sending mixed and worrying signals, a subject to which I will return in coming weeks.