Original thinking | 4 September 2025

Monthly news and views covering August

Chris Robinson &

Ian Rees

IN BRIEF

Share prices continue to increase in price to reach new highs
Government bonds start to signal concern regarding Government borrowing (not just UK!!)
The French government pressures European stock markets on default risks.

For information purposes only. Any views and opinions expressed here are those of the author at the time of writing and can change; they may not represent the views of Premier Miton and should not be taken as statements of fact, nor should they be relied upon for making investment decisions.

Investing involves risk. The value of an investment can go down as well as up which means that you could get back less than you originally invested when you come to sell your investment. The value of your investment might not keep up with any rise in the cost of living.

Premier Miton is unable to provide investment, tax or financial planning advice. We recommend that you discuss any investment decisions with a financial adviser.

For further information on the risks of investment and glossary terms please refer to the end of the document.

The month of August

It’s fair to say, US bond markets in the month of August reflected a rise in uncertainty concerning Federal Reserve independence, as well as Government borrowing levels coinciding with more debt issuance to come in the UK, Europe and Japan, yet this volatility didn’t stop some equity markets pushing new highs once again.

The best performing market was the FTSE China Index, a collective of the biggest fifty Chinese companies, climbing 7.7% in the month. This coincided with a continued surge in export growth amid ongoing talks on the China-US trade deal, which has again seen an extension of the deadline.

Japanese equities were positive for the month of August with the Nikkei Index climbing 4.5% and MSCI Japan Smaller Companies Index rallying 5.1%. The majority of this was based on expectation that a new government would increase spending to boost economic growth. This backdrop also saw the Japanese 10-year Government bond yield rising close to a 17-year high.

Whilst equity markets were able to rise higher in Asia, indices composed of large companies broke new ground for a brief period before retracing. In contrast, the FTSE Small Cap ex-Investment Trusts Index fell 1.6%, as concerns that UK Government spending plans would see interest rates remain elevated and increase the borrowing costs on UK smaller companies. The market concern has been that this could trigger an event similar to that of 3-years ago with Liz Truss’s budget that upset UK financial markets.

Rachel Reeves will need to tread a fine line ahead of her 26^th November budget statement. Whilst she has looked for every way possible to avoid breaking election promises on tax, the bond market is clearly signaling she needs to change her approach if spending cuts are not forthcoming. Longer dated UK Government bond prices fell and yields rose, with the UK 10-year government bond yield finishing the month at 4.7%, up from closer to 4.5% at the start of the month.

It wasn’t just the UK where borrowing concerns were emphasised by bond market moves. Current French Prime Minister, Francois Bayrou (who has called a vote of confidence on 8^th September), has been aiming to reduce the French budget deficit. However, removing two bank holidays seemed to be the final straw for his plans in causing a revolt. A vote of no confidence is likely, leading to a new budget plan being put forward. French bond yields also rose as a result, but it didn’t stop the FTSE Europe ex-UK Index rising 1.2% as European manufacturing and services surveys continued to point to a positive outlook as we go into the final stages of 2025.

It’s very rare that we finish by covering the US equity market given its dominance for most investors, but it was noteworthy that performance in sterling terms was again negative for August when the S&P 500 Index fell 0.1%. However, US equities appear reassured by Fed Chair Jerome Powell’s speech at the Jackson Hole Summit. Here Powell laid out plans for interest rate cuts with US jobs data supporting this move, albeit cautioned from inflation readings signalling potential pressures ahead from tariffs. On this note, tariffs for small priced imports came into effect at the end of the month.

Viewing things from afar, we remain concerned by the questions around the independence of the Federal Reserve. The last time that political influence gained control of monetary policy by cutting interest rates, this presaged the ‘Great Inflation’ episode of the 1970’s. Despite this lesson from history, US equity and bond markets have been remarkably calm amongst this noise, with US Government bond yields barely moving in the month.

As we look at September, we reflect that it has been a positive period for markets and we believe we are due some volatility following the strong stock market recovery we have seen since April, especially as we have the potential for two major government fiscal policy shifts and a month of central bank announcements ahead. This does not mean equities cannot continue on an upwards trajectory amidst these challenges, it will be just more of a test.

Key positioning for the portfolios

We made a change to portfolios on the 31^st July, following a strong run in equity markets.
The change included profit-taking in equities and reallocating back to fixed income.
It also included an increase in European equities, as well as a reduction in Japan.
We remain positive on the global growth outlook, but believe it’s important to take profits after periods of strong performance.

Glossary

Bonds (or fixed income)

Types of investments that allow investors to loan money to governments and companies, usually in return for a regular fixed level of interest until the bond’s maturity date, plus the return of the original value of the bond at the maturity date. The price of bonds will vary, and the investment terms of bonds will also vary.

Government bonds

A type of bond, issued by a government. They pay out a regular fixed amount of interest until the bond’s maturity date, when the issue value of the bond should also be repaid. In the UK they are called gilts and in the US they are referred to as treasuries.

Index

An index is a method of tracking the performance of a group of shares, bonds, other assets or factors. For example, the FTSE 100 Index is made up of the 100 largest companies on the London Stock Exchange.

Yield

The dividend per share divided by the stock's or fund’s price per share and expressed as a percentage. The historic yield is the dividend income distributed during the past year and expressed as a percentage of the share price on a particular day.

Risks

Typically, there is less risk of losing money over the long-term (which we define as over 5 years) from an investment that is considered low risk, although potential returns may also be lower. Investments considered higher risk typically offer greater opportunities for better long-term returns, though the risk of losing money is also likely to be higher.

The performance information presented in this document relates to the past. Past performance is not a reliable indicator of future returns.

Forecasts are not reliable indicators of future returns.

Some of the main specific risks that apply to the funds that these portfolios invest in are summarised here. If the funds that are held in the portfolios change, the types of investment risk that the portfolios are exposed to will also change.

Fixed income investments, such as bonds, can be higher risk or lower risk depending on the financial strength of the issuer of the bond, where the bond ranks in the issuer’s structure or the length of time until the bond matures. It is possible that the income due or the repayment value will not be met. They can be particularly affected by changes in central bank interest rates and by inflation.

Equities (company shares) can experience high levels of price fluctuation. Smaller company shares can be riskier than the largest companies, companies in less developed countries (emerging markets) can be risker than those in developed countries and funds focused on a particular country or region can be riskier than funds that are more geographically diverse. These risks can result in bigger movements in the value of the fund. Equities can be affected by changes in central bank interest rates and by inflation.

Derivatives may be used within funds for different reasons, usually to reduce risk, which can be called “hedging”. This can limit gains in certain circumstances as well. Derivatives can also be used to generate income or to increase the risk being taken, which can have positive or negative outcomes. The derivatives used can be options or futures which are types of contracts that are dealt on an exchange or negotiated with a third party. More complex derivatives may also be used. Derivatives can also introduce leverage to a fund, which is similar to borrowing money to invest.

Funds may have holdings in investments such as commodities (raw materials), infrastructure and property as well as other areas such as specialist lending and renewable energy. These investments will be indirect, which means accessing these assets by investing in companies, other funds or similar investment vehicles. These investments can also increase risk and experience sharp price movements. Funds focused on specific sectors or industries, such as property or infrastructure, may carry a higher level of risk and can experience bigger movements in value. Certain investments can be impacted by decisions made by third parties, such as governments or regulators.

There are many other factors that can influence the value of a fund. These include currency movements, changes in the law, regulations or tax, operational systems or third-party failures, or financial market conditions that make it difficult to buy or sell investments for the fund.

*Funds that are managed to maintain a specific risk profile, or that invest in other funds that themselves are managed to maintain a specific risk profile, may have their potential growth or income constrained as a result.

*Applicable for the Premier Miton Blend Portfolios only.

Important Information

This is a marketing communication.

Whilst every effort has been made to ensure the accuracy of the information provided, we regret that we cannot accept responsibility for any omissions or errors.

Reference to any investment should not be considered advice or an investment recommendation.

All data is sourced to Premier Miton unless otherwise stated.

Source for performance data: FE Analytics.

All performance figures have been given in £ sterling.

Source: FTSE International Limited (“FTSE”) © FTSE 2025. “FTSE®” is a trademark of the London Stock Exchange Group companies and is used by FTSE under licence. All rights in the FTSE indices and / or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and / or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Copyright © 2025, S&P Dow Jones Indices LLC. Reproduction of S&P Indices in any form is prohibited except with the prior written permission of S&P. S&P does not guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such information. S&P DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall S&P be liable for any direct, indirect, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with subscriber’s or others’ use of S&P Indices.

This document and all of the information contained in it, including without limitation all text, data, graphs, charts, images (collectively, the “Information”) is the property of Premier Fund Managers Limited and/or Premier Portfolio Managers Limited (“Premier Miton”) or any third party involved in providing or compiling any Information (collectively, the “Data Providers”) and is provided for informational purposes only. The Information may not be modified, reverse-engineered, manipulated, reproduced or distributed in whole or in part without prior written permission from Premier Miton. All rights in the Information are reserved by Premier Miton and/or the Data Providers.

Marketing communication issued by Premier Miton Investors. Premier Portfolio Managers Limited is registered in England no. 01235867. Premier Fund Managers Limited is registered in England no. 02274227. Both companies are authorised and regulated by the Financial Conduct Authority and are members of the ‘Premier Miton Investors’ marketing group and subsidiaries of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE.

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©Premier Miton Investors. 2025. Issued by Premier Miton Investors. Premier Portfolio Managers Limited is registered in England no. 01235867. Premier Fund Managers Limited is registered in England no. 02274227. Both companies are authorised and regulated by the Financial Conduct Authority and are members of the ‘Premier Miton Investors’ marketing group and subsidiaries of Premier Miton Group plc (registered in England no. 06306664). Registered office: Eastgate Court, High Street, Guildford, Surrey GU1 3DE.

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