The first half of 2026 was a positive period for US investors.
Markets experienced some ups and downs during the period due to geopolitical tensions, higher energy prices and inflation concerns, but the US economy remained resilient and many companies continued to grow their profits at an above average rate, helping share prices move higher.
The Trust’s NAV total return was 13.6% over the six months to 31 July 2026. This was below the 17.7% return from the Russell 1000 Value Index, but ahead of the 7.9% return delivered by the S&P High Yield Dividend Aristocrats Index.
At the same time, the share price total return was 17.3%, helped by a narrowing of the discount.
US equity markets delivered strong overall returns, although performance varied significantly across different parts of the market. Banks benefited from a supportive macro and regulatory environment, while energy companies were helped by higher energy prices and increasing capital returns to shareholders. Technology-related businesses linked to the AI investment theme were also among the strongest performers.
Several portfolio holdings delivered strong returns, including Dell Technologies, the company selling AI-optimised servers and storage in addition to the computers it is known for. The company benefited from growing demand for technology infrastructure, which translated into strong momentum in its AI server business and significant increases to earnings estimates.
CVS Health, the US healthcare insurance and pharmacy business, also performed strongly as investors became more confident in the turnaround in margins at its Aetna insurance business, with the company increasing earnings guidance again.
Lastly, Lamar Advertising, which owns outdoor advertising assets across North America, performed well as the company saw revenue growth accelerate on improving demand in its local advertising business.
As usual, we did have a handful of holdings that held back returns.
Amongst those, Zoetis, a leading animal health company, was affected by increased competition and fewer pet owners visiting vets, which led to earnings estimates being reduced.
Another detractor was Nike, whose stock continued to struggle as its revenue recovery is taking longer than expected and earnings estimates have come down on margin pressures.
We made a small number of changes to the portfolio during the period.
We initiated a new position in Marsh McLennan, a global insurance and risk management business, and re-established a position in Danaher, a healthcare and life sciences company, when their share prices offered what we believed to be an attractive opportunity.
Activity elsewhere was relatively limited, with most changes focused on increasing existing holdings where we continued to see strong long-term potential.
The outlook for many US companies remains positive, with the median company in the portfolio growing earnings around 10% in 2026.
Economic growth remains resilient and the ongoing AI investment cycle continues to support demand across a range of industries, creating opportunities in several areas of the market.
Recent fiscal policy changes, including incentives for capital investment and research and development, and a wave of deregulation, should continue to support business investment.
Some areas of the market look expensive, but we continue to find growth companies trading at reasonable multiples and, overall, view the valuation of the portfolio as attractive.
We remain focused on high-quality businesses that can provide growing income alongside long-term growth potential.