WealthSelect Responsible Active quarterly commentary - Review of Q3 2026

How our developed market holdings performed

Japan sets the pace

Japan was the standout region during the quarter, and this was reflected in the performance of our holding in the Quilter Investors Japanese Equity Fund (managed by M&G) which gained 5.7%. The market continues to benefit from a more supportive economic backdrop, improving corporate profitability, and ongoing corporate governance reforms aimed at enhancing shareholder value.

Resilience amid European weakness

European equities were the laggard over the period as higher energy prices, rising bond yields, and fiscal concerns weighed on investor sentiment. Despite the challenging backdrop our holding in the EdenTree Sustainable European Equity Fund proved relatively resilient. The fund's bias towards attractively valued companies with resilient earnings and strong cash generation provided some insulation from the broader market weakness.

Healthcare stages a recovery

Within our global specialist allocation, AB International Health Care was a notable performer, returning 3.7%. Healthcare has faced a difficult few years as demand normalised following the pandemic and policy uncertainty weighed on sentiment. However, more recently, parts of the sector have recovered strongly, with healthcare also providing some resilience during periods of AI-related market volatility.

How our equity holdings performed

Energy lifts the UK market

UK equities delivered positive returns during the quarter, supported by resilient economic data, attractive valuations, and a strong contribution from the energy and commodity sectors as oil prices moved higher. Our holdings generally lagged the broader market, largely due to our underweight to these sectors. Our strongest performer was the Janus Henderson UK Responsible Income Fund, as the market took a more considered view of companies previously seen as potential ‘AI losers’.

How our emerging market holdings performed

Value leads in mixed emerging markets

Emerging market equities delivered mixed returns during the quarter. Our strongest holding was the Pzena Emerging Markets Focused Value Fund, which benefited from an underweight to information technology and positive stock selection across a range of sectors. The JPMorgan Emerging Markets Equity Fund was held back by weakness across parts of the Asian tech and semiconductor supply chain, particularly in Korea and Taiwan.

How our fixed-interest holdings performed

Rising yields weigh on bonds

Fixed interest faced a challenging quarter as rising bond yields weighed on returns across government and corporate bond markets. Stronger US economic data, higher energy prices, and renewed inflation concerns led investors to reassess the outlook for interest rates, resulting in a broad sell-off in bond markets. Against this backdrop, all of our fixed interest holdings delivered negative returns, although the Quilter Investors Diversified Bond Fund (Premier Miton) proved relatively resilient. The fund’s active duration management helped mitigate some of the impact of rising yields, showing the value of a flexible approach in a difficult market environment.

How our alternatives holdings performed

Diversification proves its worth

Alternatives were broadly supportive during the quarter and were a relative bright spot compared to traditional fixed interest. The JP Morgan Global Macro Sustainable Fund was the strongest performer, returning 3.9%, demonstrating the benefits of a diversified return stream that is less reliant on the direction of traditional equity and bonds. In contrast, the Quilter Investors Long-Short Equity (JP Morgan) Fund struggled. Overall, our alternatives allocation helped cushion some of the weakness seen across fixed interest markets and provided valuable diversification benefits.