February 2026 Investment Summary

A positive month for the Active range with returns ranging from 2.37% (Active 1) to 4.22% (Active 5).

*P Acc share class with data sourced from FE analytics as at 28 February 2026.

February brought sustained market volatility, but delivered solid portfolio returns.

Equity markets diverged as global policy shifts reshaped sentiment. The voiding of 2025 US duties, triggered President Trump to announce a new 10-15% global tariff for 150 days in response, pressuring emerging markets and putting existing tariff deals under threat. High-end manufacturing hubs such as South Korea and Taiwan remained focal, though the broader sector struggled as the AI-driven rally met valuation headwinds and disruption narratives. The FTSE 100 significantly outperformed, gaining +7.0% and surpassing 10,900, while the Stoxx 600 rose +3.9%, led by defensives. In contrast, the S&P 500 fell -0.8% and the Nasdaq dropped -3.3%, reflecting investor rotation away from various parts of disrupted technology, like software while investors exhibited some profit taking on AI and MAG 7 stocks, given stretched valuations and announcements CAPEX that were larger than anticipated.

In the US, the Supreme Court’s ruling against last year’s reciprocal tariffs prompted the administration to deploy a revised 10% global tariff with an ambition to move to 15%. Effective tariff levels remain broadly unchanged from 2025. The EU and UK are actively weighing responses.

US monetary policy turned more hawkish, with FOMC minutes revealing divisions over potential cuts versus hikes. Inflation eased to 2.4% (from 2.7%), yet Treasury yields stayed anchored as markets continued to price in 2 rate cuts by the Fed this year.

The Bank of England held rates at 3.75% by a narrow 5-4 vote, balancing easing inflation (3.0%, down from 3.4%) against deteriorating labour conditions with unemployment at 5.2%, its highest since early 2021.

Geopolitical risk escalated late in the month, as US-Iran relations deteriorated sharply. After nuclear talks failed to progress, the US and Israel launched coordinated strikes on Iranian military and nuclear-linked sites on 28 February. Iran retaliated with missile and drone attacks across Israel and several Gulf states, leading to regional airspace closures and elevated defence readiness. Investors have reacted by repositioning out of wining trades year-to-date and adding to laggards, while bond yields have risen sharply to levels seen at the start of the year, as the inflationary impact from higher oil prices could limit central banks’ abilities to cut interest rates. Markets remain attentive to evolving economic data, with volatility centred around key macro announcements, while geopolitical risks have grown. Diverging inflation paths and uneven growth are driving asymmetric central bank policies, while fiscal dynamics and liquidity conditions add complexity. This backdrop sets the stage for greater dispersion across assets and regions in the months ahead.

WS Prudential Risk Managed Passive - Tactical asset allocation activity

Following a sharp sell-off in some equity markets, we increased our equity overweight to 2.75%; adding to our Asian equity position and initiating a position in Japan. Our basket is now made up of US, Asia, Europe, Japan and GEM. We hold overweight positions in US Treasuries and UK Gilts with underweights in US and European Corporate bonds.

Emerging Markets

The fund invests in emerging markets. Generally less well regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could either increase or decrease. These investments therefore carry more risk.

High Yield Bonds

The fund invests in high yield bonds. High yield bonds carry a greater risk of default than investment grade bonds, and economic conditions and interest rate movements will have a greater effect on their price. Income levels may not be achieved and the income provided may vary.

Value of Investments

The value of investments, and any income can fall, as well as rise, so you could get back less than you invested. Neither capital nor income is guaranteed.

Investments Long Term

Investments should be regarded as long term and are not suitable for money which may be needed in the short term, you should always have a sufficient cash reserve.

Property

The fund invests in Property funds, property shares or direct property. In particular the following risks will apply:- The property market is illiquid and this can, in exceptional circumstances, lead to times in which clients are unable to dispose of part or all of their holding. Property valuations are made by independent agents but are ultimately subjective and a matter of judgement. Property transaction costs are high (typically around 7% due to legal costs, valuations and stamp duty)

Derivative Exposure

The fund invests in derivatives as part of its investment strategy, over and above their use for Efficient Portfolio Management (EPM). Investors should be aware that the use of these instruments can, under certain circumstances, increase the volatility and risk profile of the Fund beyond that expected of a fund that only invests in equities. The fund may also be exposed to the risk that the company issuing the derivative may not honour their obligations which in turn could lead to losses arising.

Umbrella Liabilities

If the liabilities of one fund were to exceed its assets, the other funds within the scheme might have to transfer across money to cover the liabilities.

Solvency of Bond Issuers

If the fund you choose invests in bonds there is a risk that the issuer may default, resulting in a loss to the portfolio.

Returns Are Not Guaranteed

What you receive when you sell your investment is not guaranteed; it depends on how your investments perform.

Inflation

Inflation will reduce the real value of your investments in future.

Taxation and Tax Relief

Levels of taxation and tax relief are subject to change.