Key Takeaways
- The F&C Investment Trust has reduced US equity exposure this year and more than doubled its emerging market weighting.
- But lead manager Paul Niven says today’s AI boom has not yet reached the excesses seen during the dot-com bubble.
- The trust also offers private equity exposure, which one industry figure says gives it an edge over open-end funds.
The lead manager of F&C Investment Trust FCIT, Paul Niven, has this year been cutting exposure to US large-cap growth stocks and increasing the portfolio weighting toward emerging markets. This isn’t because he thinks US equities will fall if the AI boom turns to bust. Instead, Niven sees a stronger relative opportunity elsewhere as the valuation and earnings growth gap between the US and other markets began to narrow.
The US remains by far the £6 billion trust’s largest regional equity exposure, accounting for around 55% of the underlying portfolio at the end of July. Now, Niven is positioning for returns to broaden after a long period in which US exceptionalism—and a relatively small number of mega-cap stocks—drove global markets.
“We reduced growth stocks in the US overall, and subsequently in 2025 US stocks underperformed global equities. So far in 2026 they’ve also underperformed global equities,” he says.
Emerging markets have been the biggest recipient of additional capital over the past year, with much of F&C’s exposure concentrated in Asia. Its emerging markets strategy weighting stood at 13.2% at the end of July, compared with 6.1% at the end of 2025.
F&C is also slightly underweight the Magnificent Seven stocks and has favored value stocks over growth within the US.
However, Niven is not abandoning America’s technology giants: Following their recent underperformance, the Magnificent Seven look “far more interesting” from a valuation perspective than they did three to 12 months ago.
F&C Investment Trust — Top Five Equity Holdings
Are AI Stocks in a Bubble?
Despite geopolitical uncertainty and concerns over an AI bubble, Niven remains constructive on equities.
Fundamentals remain supportive, he says, with corporate defaults low and earnings expectations rising sharply. Equity valuations are moderately expensive rather than cheap, but Niven argues this is justified by the strength of earnings growth.
Nor does he think today’s AI boom has yet reached the excesses seen during the dot-com bubble. In contrast to that era, today’s largest technology companies are highly profitable and generate substantial free cash flow, he says.
However, he adds the sector is not without risks: the huge sums being spent on AI infrastructure could eventually become excessive if the economic returns fail to justify the investment. Hyperscaler spending could also begin to compete for capital and put upward pressure on bond yields.
But he says the market remains some way from the sort of excess that would signal the end of the cycle.
“The momentum in terms of not only fundamentals but markets can carry on longer than people expect to a point of excess, which is way beyond where we are today,” he says.
For now, Niven sums up his position more simply: “We’re not naively bullish, but relatively constructive.”
How F&C Investment Trust Works
The trust, which has a Morningstar Medalist Rating of Bronze, owns more than 400 companies, spanning different regions and investment styles, alongside an allocation to private equity. It’s designed to give investors a diversified global portfolio in a single holding.
The trust, which was founded in 1868, combines global and regional mandates spanning growth, value, quality and income strategies, with Niven responsible for bringing those different components together.
Niven, who has run the trust since 2014, decides how much capital to allocate to these styles, then specialist teams at asset manager Columbia Threadneedle choose which stocks to buy within them. So managers there will run separate North America, Europe, and emerging market equity “sleeves,” as well as implementing Niven’s private equity calls.
Morningstar analyst Michael Born describes F&C as “a well-executed multi-manager approach,” adding that the approach plays to Niven’s strengths. Morningstar currently rates both its People and Process pillars as Above Average.
Darius McDermott, managing director at investment broker Chelsea Financial Services, also sees F&C as a central holding: “We would view this multi-manager trust as a core holding with broad exposure across regions, styles, sectors and asset classes,” he says.
F&C has also delivered relatively consistent long-term performance. Morningstar data shows the trust returned an annualized 16.46% over three years and 9.68% over five years to Sept. 15, 2026. The trust has ranked in the top 23% and 34% of its Morningstar large-cap growth equity category over three- and five-year periods.
The year-to-date total return is 11%.
McDermott says the diversified approach can work against the trust when markets become particularly concentrated but expects this to level out over a full market cycle.
F&C Trust Also Has Private Equity Exposure
Like other UK-listed investment trusts, F&C also has an allocation to private equity, which accounted for 11.2% of the portfolio at the end of July.
The exposure is predominantly split between midmarket buyouts—where a PE firm buys a dominant stake in a mid-cap company—sourced through Columbia Threadneedle, and venture and growth opportunities sourced by private markets specialist Pantheon.
For McDermott, this provides another source of diversification.
“The trust also invests in less liquid/private assets, which can give investors exposure to opportunities that are harder to access through open-end funds,” he says.
