February 2026 Review

• The final day of February saw the US, in conjunction with Israel, initiate strikes against Iran, toppling its leader in the process. Iran’s response, in targeting other regional pro-US states, has led to concerns about the length of the conflict and the disruption to energy supplies from the region.  Energy prices rose sharply.
• Equity and bond markets were negatively impacted by the above event although most equity markets started March ahead for 2026 to date, the exception being the technology dominated Nasdaq 100 in the US which is in negative territory to the end of February by over 1%.
• The share prices of US software companies took a hit on fears that artificial intelligence (AI) will render them obsolete. Their price declines were triggered by the release of Anthropic’s Claude Opus 4.6.
• US Supreme Court ruled Trump’s tariffs to be an illegal use of emergency law powers.
• Private credit market funds aimed at US retail investors were unnerved by Blue Owl permanently halting redemptions at one of its funds.
• US Core Consumer Price Index (CPI) inflation came in at 2.5%, the slowest year-on-year rate since March 2021.
• UK economic growth as measured by Gross Domestic Product (GDP) in the final quarter of 2025 was 0.1%, slightly below forecast. For 2026 as a whole, UK GDP was 1.3%.
• UK Consumer Price Index (CPI) inflation for January 2026 fell to 3.0% year-on-year from 3.4% in December 2025.
• Japanese Prime Minister, Sanae Takaichi, gambled to build on her popularity and gain a decisive majority for her Liberal Democratic Party (LDP) in a snap election on February 8^th. It paid off.  She now has a sizeable majority.  Japanese equities rallied further on the news and at one point were up over 14% in 2026 to date.

Firstly, Pier has no exposure to private credit in reference to the fifth bullet point above.

Secondly  it feels like an appropriate time to remind investors of the difficulties of market timing.  For those tempted to try, here is a quote from a well-known investor, “When it comes to so-called market timing there are only two sorts of people: those who can’t do it, and those who know they can’t do it,”

Below is an example of the benefit of not trying to time markets using the US S&P500 equity index over a ten year period from the end of 2015 to the end of 2025.  Going into cash and never getting back into the market will have been punitive to investors; even assuming an investor was in cash for just one month would still have led to sub-optimal returns compared to staying invested  through a difficult time.

Your Money

Pier clients have benefitted from a reduction in overall concentration risk due to Pier’s strategic asset allocation shift in the second half of 2025, away from tracker funds weighted according to market capitalisation, where a few large US companies dominated global equity indices. A simultaneous move to mitigate foreign exchange or currency risk has also played a part in reducing overall  risk.  Pier’s strategic shift to increase its allocation to Sterling (to be consistent with achieving UK inflation plus outcomes for clients) has helped.  The residual exposures to the US currency are balanced out by exposures predominantly to the Euro and Yen, which typically both move in the opposite direction to the US Dollar.

The aforementioned strategic asset allocation shift has proved to be a benefit to all of the Plus Funds and Model Portfolios in the table below, as the equity market rally broadened out to companies of varying sizes rather than a few extremely large US companies.  That broadening out extended to non-US markets as the latter  played catch-up with US markets which have seen  large tech-related companies lag along with the Nasdaq 100 equity index (the latter being one of the few markets to have posted negative returns year to date).  In contrast, Japanese equities are up over 14% over the same period, buoyed by Prime Minister Sanae Takaichi’s snap election and subsequent majority victory.

The figures below are before the market reaction to  Saturday’s strikes on Iran by the US and Israel, which understandably lowered most equity markets but which helped developed government bond markets where their safe haven status helped yields to edge lower (prices rose) initially.

Portfolio Performance

*The figures for the Plus range relate to the IFSL Pier Plus Funds with effect from 1^st January 2026 and to the Plus Model Portfolios prior to that date.