What happens when market leadership and sentiment turn?

What appears to be a turning point in market leadership has driven a sharp inflection in the Premier Miton European Opportunities Fund recent performance, driven largely by three main areas, Financials, Technology and Healthcare.

It’s felt like a game of two contrasting phases for markets; over the 12-month period to 30 April 2026, the Premier Miton European Opportunities Fund returned 21.41%, compared with 20.39% for the FTSE World Europe ex UK Index and 15.79% for the IA Europe Excluding UK Sector. the fund underperformed the index by around 14% and the sector by 10% in the ten months from April 2025 to the end of February 2026.

We didn’t make any dramatic changes to the fund; instead, the key shift appeared to be the way the market viewed the companies we held. We run a number of what we think are uncorrelated positions in the fund. Every single one of these went against us in the first ten months from April 25 to the middle of February 26 and then outperformed in the last ten weeks. This is highly unusual, and not what we would normally expect.

Over the 5-year period to 30 April 2026, the fund delivered 17.01%, compared with 59.94% for the FTSE World Europe ex UK Index and 42.50% for the IA Europe ex UK sector.

Financials

We started the period with ~15% of the fund invested in financials vs ~22% index weight. Within that, we owned one bank (a 1.7% position), so the true underweight to banks was much greater than the headline relative position. We are of the opinion that the primary driver of the strong performance from 2020 to the end of 2025 has run its course, and the longer term headwinds, including structural challenges and the gradual disintermediation of traditional banks, may begin to reemerge.

Our financials positioning was the largest detractor to performance in the 10 months from April 2025 to February 2026. However, it seems that the positive trends that supported banks in the last few years have been largely exhausted, and as a result our sector positioning has flipped to become a positive contributor.

Source: Bloomberg data from 14.12.2025 to 20.05.2026, Past performance is not a reliable indicator of future returns.

Healthcare

Healthcare has been about ¼ of the fund since the fund was launched in December 2015. We really like medtech companies because we think they have high barriers to entry, high returns on capital, a growing end market, and good earnings growth.

The companies that we hold in the fund are very different from each other, but we had uniformly poor performance from them all in the first period, making it the second worst sector detractor. It would be a slight oversimplification to blame it all on RFK Jr.’s campaign against science and science funding, but this was a big part of the derating story. More recently, we seem to have hit a valuation and sentiment trough, and suddenly our healthcare exposure has since been a strong positive contributor to performance. Obviously, the interest rate cycle that has influenced the financials’ performance is unrelated to Mr. Kennedy’s war on science (and maths!), so we find it coincidental that healthcare turned at a similar time to financials.

In particular, I would highlight our position in Polypeptide. Polypeptide is a manufacturer of pharmaceutical compounds that it makes on behalf of its biotech and big pharma clients; it doesn’t own the drugs, but it manufactures on behalf of the drug owners. Its focus is on a class of drugs called peptides, of which the most famous category is GLP-1’s - the anti-obesity drugs taking the world by storm. We own Polypeptide because we see strong demand growth for peptide drugs, and therefore a good long-term growth outlook for the company.

From the start of the year to 13 April, the stock has risen by around 40%, helped by reports from Bloomberg News of takeover interest from private equity funds including EQT, Advent and KKR.

Technology

Technology has been a rather uneven sector for us, and an explanation of this requires that we separate hardware and software trends. While the sector was an overall positive contributor during the ten months of fund underperformance, the positive contribution from our hardware names was to some extent offset by our exposure to anything related to software.

In the ten weeks when the fund performance bounced, software names contributed positively, while hardware continued to outperform. These movements appear to reflect a shift in sentiment towards software and its subsequent partial recovery, rather than being driven by the interest rate cycle or the factors behind the earlier weakness and rebound in medtech.

Source: Bloomberg data from 01.02.2024 to 24.04.2026. Past performance is not a reliable indicator of future returns.

Of all the names we own in the sector, Soitec has been one of the more notable contributors recently. We have always had conviction in our thesis that the company has many of the characteristics we look for to provide long-term returns for our clients, however, the company had seen their share price fall dramatically since December 2021.

In April 2025, the shares were trading below €50 and were over €100 by the end of April 2026. However, the shares did fall below €25 along the way. The recent rally appears to have been driven by excitement about next-generation data centre architectures moving from using copper wires to fibre-optic cables, which require silicon photonics based on Soitec’s technology.

Nvidia announced that their next generation networking switches would be based on silicon photonics back in March 2025, and we are somewhat baffled that the market ignored the potential impact of this announcement for a year. We have been trimming the stock as the share price increases to keep within our position sizing requirements but continue to view its long-term fundamentals positively, while recognising that market conditions can change.

It’s also worth highlighting Technophobe, a leading manufacturer of probe cards, which are used to test chips and make sure only working chips make it into finished products. As chips become more complicated, testing intensity increases at an exponential rate. The shares have risen and, while we still see potential for the company, we have been taking partial profits to stop the position from becoming too large.

A new name to the fund is SKAN which is a manufacturer of ‘isolators’ used in the manufacture and packaging of modern pharmaceuticals. In the earlier phase of pharmaceutical development, when small molecule drugs dominated, the drug would be manufactured and sterilized afterwards; this is not possible with modern biological or peptide drugs, as they’re heat sensitive. Therefore, these drugs need to be packaged in a sterile environment. Previously this would have been done in clean rooms but is now done in isolators which are around 1000x cleaner because they don’t contain people. SKAN is the market leader in terms of market share and technology.

Conclusion

We are pleased to have seen a turn in the market sentiment recently and for this to have been reflected in the fund’s performance. We don’t think the recent strong performance reflects an overly concentrated strategy; rather it is the result of a number of independent positions contributing positively at the same time.

We continue to see potential opportunities across areas such as software and financials. Having been out of favour for several years, quality and growth equities may be beginning to recover, and we believe the recent turn is just the beginning of what we foresee as a recovery to new heights.

Thomas Brown

Fund Manager