To outperform inflation.
Actively managed with a long-term bias to real assets e.g. equities. The Portfolio normally invests in a wide range of ETFs to gain significant diversification and exceptional liquidity at very low cost.
| Top 10 Holdings | % of Portfolio |
|---|---|
| iShares Core MSCI EM IMI UCITS ETF | 12.4 |
| Amundi UK Equity All Cap UCITS ETF | 10.6 |
| iShares Core FTSE 100 UCITS ETF | 9.5 |
| VANGUARD INV SER-UK GILT UCITS ETF | 8.3 |
| iShares Core UK Gilts UCITS ETF | 8.2 |
| Invesco FTSE RAFI US 1000 UCITS ETF | 7.7 |
| Amundi MSCI Japan UCITS ETF | 5.4 |
| SPDR Sterling Corporate Bond UCITS ETF | 4.3 |
| Vanguard FTSE 250 UCITS ETF | 4.2 |
| Invesco GBP Corporate Bond UCITS ETF | 4 |
| Number of Holdings | Yield to Maturity | Maturity | Duration | S&P Rating |
|---|---|---|---|---|
| 148 Govt. Bonds 1,541 Corp. Bonds | 4.92% | 8.63 | 5.68 | A/A- |
| Number of Holdings | Best Dividend Yield Forward 12m | Best Price to Book Forward | Best P/E Ratio * | Best LTG EPS |
|---|---|---|---|---|
| 5,462 | 3.0% | 2.1 | 14.8 | 13.3% |
| Long-Term Return | 6.7% |
|---|---|
| Asia Pacific Ex. Japan (MSCI Asia Ex Jap) | 13.6% |
| Em Markets (MSCI EM) | 13.0% |
| US Equities (MSCI USA) | 11.9% |
| Japan (MSCI Japan) | 10.7% |
| UK Index-Linked Gilts (Barclays UK Infl Linked) | 10.6% |
| Europe Excl UK (MSCI Eur. Ex UK) | 9.5% |
| UK Equities (MSCI UK) | 9.1% |
| UK Gilts (Bloomberg UK Govt All>1 Yr) | 7.2% |
| UK Corp Bonds (iBoxx Large Cap TRI Index) | 5.4% |
Performance is based on the monthly performance of the first client discretionary portfolio after all charges. Individual client portfolios may differ due partly to differences in the timing of initial investment or withdrawals or rebalancing. The SCM/MoneyShe Long-Term Return (£) Benchmark is inflation (the return of the UK RPI All Items Index). Competitor data is based on the performance of the IA Mixed Investment 40-85% Shares Sector and the comparison is offered as a guide only.
| 12m to 31/12/2020 | 12m to 31/12/2021 | 12m to 31/12/2022 | 12m to 31/12/2023 | 12m to 31/12/2024 | 12m to 31/12/2025 |
|---|---|---|---|---|---|
| 2.3% | 9.9% | -7.1% | 9.2% | 6.5% | 16.0% |
Source: SCM Private LLP
Past performance is not a guide to future returns. The value of investments and the income from them can go down as well as up, so investors may not recover the amount of their original investment.
| ALL Fees & Charges | Percentage |
|---|---|
| SCM Discretionary Fund Management Charge | 0.40% |
| Underlying ETF costs (KIID Ongoing Charge) | 0.16% |
| Transaction Costs of buying/selling funds | 0.12% |
| Transaction Costs within funds | 0.05% |
| Custody & Administration Fee | 0.12% |
| Total Fees & Charges | 0.85% |
No changes were made to SCM Portfolios during December.
2025 concluded one of the most volatile and policy-driven years since the pandemic, with financial markets contending with geopolitical friction, sudden shifts in trade policy, and an investment narrative increasingly dominated by artificial intelligence. Against this backdrop, SCM Portfolios performed strongly. The Long-Term Return Portfolio (the most held across our client base) returned +16% last year, comfortably ahead of the +11.6% delivered by the average fund in its competitor IA Mixed Investment 40–85% Shares category.
This outperformance was driven by deliberate asset allocation decisions taken throughout the year; rather than high beta, sector bets or following the crowd. We progressively reduced exposure to areas exhibiting signs of speculative behaviour, particularly in US equities, and rotated into more balanced, globally diversified positions with a focus on valuation and long-term resilience.
Key Themes – AI Froth, Equity Fatigue, and Fed Guardrails
While the S&P 500 and Nasdaq delivered respectable calendar-year returns, a closer look reveals an increasingly narrow and unstable rally. The US market’s performance in 2025 was largely driven by a small group of mega-cap tech companies, with AI-linked names accounting for more than 80% of Nasdaq gains over the first nine months. However, enthusiasm for this theme began to wane by year-end.
In December, Oracle’s warning on its AI-related capital spending plans triggered a broader reassessment of the sector’s financial sustainability. Its recent bond issuance, linked to funding new data centre capacity, began trading at levels more commonly associated with high-yield credit. Investors are beginning to catch up with our thinking and acknowledge that the AI infrastructure build-out may be far more capital-intensive than previously assumed, and returns may be less certain.
At the same time, seasonal equity strength failed to materialise. Markets typically benefit from a “Santa rally” in November and December, but in 2025, momentum stalled. The Nasdaq ended the quarter flat, and even the S&P 500 underperformed European and Japanese indices, which benefited from more value-oriented positioning.
Most of the SCM portfolios have performed exceptionally well relative to peers throughout 2025, particularly in our mixed-asset strategies. This performance has been achieved not through risk-taking, but through careful asset allocation, selective rebalancing and progressive de-risking. Over the course of the year, we have systematically reduced equity exposure across many portfolios, reallocating the proceeds into bonds and, where possible, into high-quality sovereign bonds rather than corporate credit. This tilt has helped protect clients from the speculative volatility that now characterises much of the US equity market.
The most crucial structural development in global markets remains the dominant role of AI in the US equity rally. The “Magnificent 7” tech stocks fell 1.1% in November, marking their first monthly decline since March. This came despite strong headline earnings from Nvidia, which fell by more than 12% during the month. Meta also continued to weaken following its October decline, amid concern over the scale and sustainability of its AI-related capex.
Of note was Oracle, which reported better-than-expected revenue growth from its cloud infrastructure division, yet saw its shares fall sharply as markets questioned the company’s ability to fund its aggressive expansion plans. Recent bond issuance linked to AI infrastructure is now trading closer to high-yield levels, and the cost of insuring Oracle debt jumped 45% in November. This serves as a warning that the AI capex cycle may not deliver the returns investors are banking on, particularly given the rapid pace of technological change and potential supply-demand mismatches in the data centre market. The dramatic fall in the market cap of Oracle is shown below:
December was also a month of political noise, as President Trump’s administration intensified pressure on the Federal Reserve, including an unprecedented subpoena against Chair Powell. While markets initially shrugged, concerns grew about the politicisation of monetary policy and whether the Fed could maintain independence through the election cycle.
Despite this, market expectations of rate cuts in 2026 have begun to recede. Core inflation remains sticky, and trade-related pass-through continues to feed into consumer prices. The US dollar, which had weakened sharply earlier in the year, regained ground in December as markets reassessed the global growth and policy divergence narrative.
SCM Portfolios: Strong Performance, Steady Discipline
SCM Portfolios ended the year in a strong position, benefitting from disciplined strategies and decisions throughout a volatile and distorted market cycle. The early October reduction in equity exposure (within the Multi-Asset Portfolios) by between 15 to 18% proved prudent, locking in gains and reducing exposure to increasingly frothy market segments.
In portfolios where permitted, we shifted proceeds into high-quality government bonds, particularly UK gilts and US Treasuries, to avoid overreliance on credit spreads, which have reached historically ultra-low levels.
Looking ahead, the opening weeks of 2026 suggest that volatility is not behind us. New tariffs on European exports, uncertainty over the Fed’s direction, and a crowded geopolitical calendar all present risks. But the lessons of 2025, namely valuation discipline, thematic diversification, and proactive rebalancing, will remain at the core of our SCM approach.
