Introduction
At our recent Hamilton and Inches Christmas drinks I mentioned, ironically within the confines of a jeweller, that precious metals had been one of the best performing asset classes year to date.
The last few weeks of the year did not take the luster off gold and it ended the year up 62%. On the following page you will see that gold was also last year’s best performing asset class and to have bettered this year’s performance we would need to go all the way back to 1979.
We introduced gold to client portfolios in Q2 2024 – its performance contribution alongside that of our strategic asset allocation and fund selection has helped all our 15 core strategies, across risk profiles and styles, produce top quartile returns against our peer group for the past 12 and 36 months. A result we are very proud to report, especially as we know these strategies work towards the achievement of your personal goals.
Equity market shocks do arrive, probably more frequently than one may ordinarily expect and last year was no exception with the likes of DeepSeek AI and Trump’s liberation day tariffs rocking markets. However, sound fundamentals and a supportive stance from policymakers meant that investors who maintained their long-term investment policy were rewarded.
At North Capital we continue to grow and have been joined by three new starts, Phoebe Barbour and Kirsten Shuttleworth joined our operations team as an analyst and office manager respectively. We also welcomed Tom Simmonds into the advisory team and we are pleased to announce that we have an experienced new adviser joining us in March 2026. We moved office in October 2025, saying goodbye to our previous home of 6 years, but our new office at Wemyss Place offers further room for expansion and provides a modern open plan style of working. Please do pay us a visit if you are in Edinburgh.
As Katy and her team outline in the 2026 market outlook, we continue to be positively positioned and expect markets to produce further gains in the year ahead. Whilst Shakespeare certainly wasn’t talking about portfolio diversification theory when he said “All that glitters is not gold!” there are numerous drivers of returns and sound fundamentals to allow investors to be optimistic moving into the new year.
Thank you for your continued trust, it is and always will be a privilege to advise and manage your wealth. Hopefully we provide you with the comfort that your financial affairs are well looked after to allow you to focus on the most important matters in life. We wish you a successful and healthy 2026.
Highlights
Non-US equity markets bucked a multi-year trend outperforming the tech heavy US market.
Gold surged 62%, outperforming all major equity markets.
Central banks in Europe, UK and the US all continued their rate-cutting cycles, but the pace of cuts may slow in 2026.
The global economy remained resilient while inflation continued to fall.
After 2025, the year of elections, governments across the world started governing with most electing to increase public spending.
Geopolitical uncertainties featured throughout the year.
This Callan table shows performance for various asset classes (colour coded) across multiple time frames.
| 10 years | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|
|
Gold
271.8%
|
Oil
25.4%
|
EM Equities
30.6%
|
UK Property
1.2%
|
Oil
35.6%
|
Gold
20.9%
|
Oil
65.6%
|
Oil
41.8%
|
Developed Equities
23.1%
|
Gold
26.6%
|
Gold
62.5%
|
|
Developed Equities
218.0%
|
EM Equities
9.7%
|
Developed Equities
18.5%
|
Cash
0.8%
|
Developed Equities
27.3%
|
EM Equities
19.1%
|
Developed Equities
24.2%
|
UK Property
3.7%
|
Gold
12.8%
|
Developed Equities
21.0%
|
EM Equities
31.3%
|
|
Oil
168.4%
|
Developed Equities
9.0%
|
Oil
14.2%
|
Government Bonds
-0.4%
|
EM Equities
18%
|
Developed Equities
13.5%
|
UK Property
10.1%
|
Cash
1.5%
|
EM Equities
9.9%
|
EM Equities
13.1%
|
Developed Equities
18.4%
|
|
EM Equities
149.0%
|
Gold
7.7%
|
Gold
12.8%
|
Hedge Funds
-2.7%
|
Gold
18.0%
|
Corporate Bonds
10.4%
|
Hedge Funds
3.8%
|
Gold
-0.7%
|
Corporate Bonds
9.6%
|
Oil
9.4%
|
Corporate Bonds
10.3%
|
|
UK Property
38.0%
|
UK Property
4.4%
|
Corporate Bonds
9.1%
|
Gold
-2.8%
|
Corporate Bonds
11.5%
|
Government Bonds
9.5%
|
Cash
0.1%
|
Hedge Funds
-2.3%
|
Cash
4.8%
|
Hedge Funds
5.6%
|
Hedge Funds
7.9%
|
|
Corporate Bonds
33.4%
|
Corporate Bonds
4.3%
|
Government Bonds
7.3%
|
Corporate Bonds
-3.6%
|
Government Bonds
5.6%
|
UK Property
7.0%
|
EM Equities
-0.2%
|
EM Equities
-15.5%
|
Hedge Funds
4.4%
|
Cash
5.2%
|
Government Bonds
6.8%
|
|
Hedge Funds
31.9%
|
Government Bonds
1.7%
|
Hedge Funds
3.2%
|
Developed Equities
-7.4%
|
Hedge Funds
4.7%
|
Hedge Funds
2.9%
|
Corporate Bonds
-2.9%
|
Developed Equities
-16.0%
|
Government Bonds
4.2%
|
UK Property
4.3%
|
Cash
4.3%
|
|
Cash
19.5%
|
Hedge Funds
1.1%
|
UK Property
1.8%
|
EM Equities
-10.1%
|
UK Property
1.4%
|
Cash
0.2%
|
Gold
-4.3%
|
Corporate Bonds
-16.7%
|
Oil
-0.9%
|
Corporate Bonds
1.1%
|
UK Property
1.0%
|
|
Government Bonds
3.9%
|
Cash
0.4%
|
Cash
0.3%
|
Oil
-14.9%
|
Cash
0.8%
|
Oil
-31.5%
|
Government Bonds
-6.6%
|
Government Bonds
-17.5%
|
UK Property
-1.8%
|
Government Bonds
-3.6%
|
Oil
-6.8%
|
2025 Review
Financial markets in 2025 closed out a strong year, with most major asset classes delivering positive returns. The upbeat tone was well supported by resilient global growth and a steady decline in inflation, which continued to move back toward levels that no longer pose meaningful challenges for central banks. Another defining theme of the year was the continued fiscal excess of Western governments. In the United States, the administration briefly flirted with reining in spending through Elon Musk’s “DOGE” proposal, but it quickly became clear that the idea lacked political appeal. As the initiative was rolled back, fiscal policy once again leaned towards expansion, offering further support to growth assets while presenting bond investors with yet another source of frustration.
Precious metals were the standout asset class throughout 2025 with gold and silver delivering impressive returns of 62% and 120% respectively. Both benefited from renewed safe-haven demand as well as an intensifying narrative around currency debasement amid persistently aggressive government spending. Equities, meanwhile, still enjoyed a respectable year, though a long-standing pattern was overturned as several international markets outperformed the United States. The UK market delivered a very strong performance (25%), successfully shaking off lingering political headwinds. European markets also finished the year higher (20%), supported by Germany’s announcement of unprecedented increases in public spending, which lifted sentiment across the region. Emerging markets also delivered a strong performance (31%), driven in large part by a renewed resurgence in the Chinese stock market. Although slightly behind global peers, the U.S. market ended the year positively at 17%, buoyed by robust earnings growth in technology and AI-related companies. Currency markets were similarly eventful. The US dollar weakened by 9% against a basket of major currencies, undermined by a series of unpredictable policy decisions that eroded its traditional safe-haven status. In turn, the euro delivered a robust gain of 12%, helping UK investors, and the British pound also appreciated 7% against the USD. Bond markets delivered a mixed performance, with yields swinging higher and lower throughout the year before settling close to where they began 2025, resulting in only modest overall returns.
Another defining trend this year has been the continued easing of monetary policy by major central banks as policy rates continued to be reduced from 2024 highs. The European Central Bank moved most decisively, delivering 1% worth of cuts that lowered its policy rate to 2.15%. In the United States, the Federal Reserve also pivoted toward easing, reducing rates from 4.5% to 3.75% amid a combination of political pressure from the Trump administration and gradually softening economic data. Meanwhile, the Bank of England followed suit by reducing policy rates by 1% to 3.75% as policymakers balanced an easing economy with lingering uncertainty around the path for inflation after government policies which have pushed up the cost of labour. This ultimately proved positive for markets.
Despite the broadly constructive backdrop, markets were not without bouts of volatility. One of the year’s most dramatic moments came with January’s DeepSeek episode, when markets abruptly realised that a Chinese company had built a highly capable AI model at a fraction of the cost the industry had expected. This discovery undermined a key assumption supporting equity valuations, that the leading AI firms would maintain an unchallenged technological edge. The result was a rapid, broad-based repricing across the sector, with markets falling aggressively. Further turbulence followed President Trump’s unorthodox decision to upend decades of geopolitical strategy by imposing sweeping new tariffs. Equity markets fell over 10%, but the most striking reaction came from the U.S. dollar, which, unusually for a global reserve currency behaved more like that of an emerging market, tumbling against all major currency pairs. Despite these brief periods of stress, it ultimately paid to stay invested, as markets ended the year having shrugged off both episodes.
Key themes for 2026
AI Marches On
Recent years have demonstrated to the world that artificial intelligence (AI) adoption has profound societal and economic implications, and this extraordinary force has been a key driver behind three consecutive years of strong equity market performance, especially in the US. Buoyed by the potential for leaps in productivity, the scale and speed of capital investment involved in building out this technology is unprecedented. Those companies who can profit from this, e.g. those involved in the semiconductor supply chain, have been justly rewarded with impressive share price performance. Although valuations in the US have expanded to near record levels, the earnings growth underpinning market performance has also been strong.
Take NVIDIA, a designer of high-performance chips, as an example. Since the beginning of 2023 its share price has expanded over 11 times, becoming the first public company to be valued at more than $5tn, but it now trades on a lower valuation as measured by the price-to-earnings multiple than it did three years ago due to high earnings growth. Indeed, it is estimated that, in totality, investments in data centres and computing infrastructure accounted for half of US GDP growth in the first half of 2025.
For investors, there are exciting opportunities. The large technology companies can use their scale to benefit from this enormous spending, both in terms of affording this investment and the corresponding productivity returns. Moreover, construction and energy firms can benefit from the buildout of energy hungry data centres. AI adoption should ultimately benefit the wider economy and those non-technology companies who adopt it.
US Policy Tailwinds, and Risks
Despite AI remaining the hottest topic, there are interesting factors for investors to consider in the more conventional world of economic policy.
Starting with fiscal policy, one of the key stories of 2025 was the inability (or unwillingness) of the Trump Administration to rein in government spending. Fiscal largess supports the US consumer and corporate earnings. For example, President Trump has floated the idea of a $2,000 Tariff Dividend paid by the US Government to each citizen and tax rebates for consumers are already planned for early this year.
Monetary policy should also provide a tailwind. Trump has been clear that he wants to revamp the Federal Reserve (Fed) with the goal of lowering interest rates. The most obvious manifestation of this will be the appointment of a new Fed Chairman in January who is willing to sway the committee towards further rate cuts.
Whilst, in our view, both are a positive for asset prices over the next year, there are some longer-term risks. We have never observed deficits or rate cuts of this magnitude outside of a recession. Instead, the economy remains robust with above target inflation, and it could be that excessive stimulus stokes inflation or leads to renewed concerns about the sustainability of US Government debt and the credibility of US institutions. The current policy environment also disproportionately benefits asset owning wealthy Americans (a phenomenon known as the K-shaped economy), increasing inequality – over the longer term this could have dramatic and unpredictable implications for asset markets and politics.
Global Megatrends Remain Intact
In the North Capital investment team, we believe it can also be useful to think above our short-term tactical thinking and consider those narratives and themes we believe could be transformative for society and financial assets. In 2026 we believe that these megatrends remain intact and we provide a discussion of some examples below.
Ageing populations will continue to have significant implications for labour markets and government spending. Clearly, as populations age, workforces shrink, pushing up wages and limiting how much countries can produce. Some offset is possible via immigration or technology driven productivity increases. Ageing also creates greater demands on government in areas such as health and social care. From an investment perspective we believe this could create opportunities in those healthcare names who capitalise on this. It is worth noting that, in some economies, the opposite is true – emerging markets (EM) such as India, Mexico, or the UAE should capitalise on the growing wealth of their high working-age populations, creating opportunities for those willing to invest in EM consumer companies.
Geopolitical instability is another megatrend we expect to persist, accelerated by the unpredictability of the Trump led US. As such we have seen major increases in defence spending, most notably in Europe where NATO members have agreed to spend 5% of GDP on defence by 2035, but also internationally in regions such as Latin America, East and South Asia, and the Middle East. We believe this presents an investment opportunity – as such we have made the decision to add exposure to defence names to our Global Megatrends portfolio.
Keep Monitoring Non-US Markets
With economic and financial news flow continuously dominated by the goings on in the US, investors would be wise to remember that, there remains a broad and high-quality opportunity set outside the Fifty States.
Starting with Continental Europe, in GBP terms this was the best performing equity region in 2025 and, gladly for us, it has also been our most preferred equity region. We remain overweight as we go into 2026 as the region has multiple tailwinds. The continent’s largest economy, Germany, has embarked on a historic fiscal expansion program as it attempts to shore up confidence in its manufacturing economy. Moreover, the European Central Bank (ECB) lowered borrowing costs more quickly than the UK or the US. The full stimulative effect of rate cuts can take months to filter through the economy and so we believe this remains a unique positive for the region going into 2026. Equity valuations remain relatively low, and we are seeing initiatives, such as Dutch pension reforms, which should encourage individual investors to hold more equities while foreign interest remains high.
Opportunities also exist in emerging markets and Japan, both of which outperformed the US in 2025 for Sterling investors. There is a thriving and growing technology sector in China and a flourishing equity market, IPO activity in Hong Kong was ahead of the US in 2025. In India reforms to labour markets should spur economic development whilst consumer wealth continues to grow. In Japan, corporate governance improvements continue, albeit there is a headwind due to the possibility of rate hikes from the Bank of Japan and less attractive starting valuations following strong performance.
2026 Investment Outlook and Portfolio Positioning
Tailwinds Over Turbulence: 2026 Base Case
Assets make further gains in 2026
- AI capital expenditure is surging, with broadening opportunities for investment returns
- Government spending will remain elevated, supporting jobs and wages
- Central banks are likely to cut policy rates further, providing support to borrowers
Risks suggest turbulent periods are likely
- Inflation may prove more persistent than expected, exacerbating stretched budgets for low-income workers
- Geopolitical relationships are unstable, raising the potential for conflict or instability
- Valuations are high, in some areas
North Capital Portfolio Positioning - Equities
Our view persists that there are multiple tailwinds for stocks in 2026. As noted above, AI capital expenditure and government spending are high and expected to remain so. Additionally, in the US, the softening in job creation numbers over recent months gives the Fed ample rationale for cutting interest rates further. More investment and lower borrowing costs are a good combination for continuing to support consumer spending and corporate profits.
Capital expenditure on AI has increased markedly and is contributing significantly to global growth. Much of the investment is being made by giant (and very profitable) technology companies using cash rather than debt, reducing the risk of adverse consequences if returns do not materialise quickly. While the capital expenditure is directly beneficial to companies in the enabling layer (e.g. semiconductor equipment), we expect the pool of winning companies to expand over the coming years as we move from the build out phase of AI to greater adoption by companies to catalyse productivity improvements and expansion.
We firmly believe we are still in the early phase of the AI revolution. The US is a key beneficiary of the AI theme due to the concentration of technology companies in the region and, therefore, we are happy to maintain a neutral weight in the US despite high valuations. Notwithstanding, we believe this is a tailwind that can support companies across regions as AI adoption broadens. As this cycle plays out, it is likely that there will be disruption in the jobs market. However, we don’t expect an overnight shift, and it is also possible that jobs will be created in areas that don’t exist yet.
Government expenditure demands, for example on pensions and healthcare, are high and demographics trends are likely to keep pressure on budgets. This spending brings the risk of higher inflation, and it means that overall government debt levels, which are already elevated, may rise further. The deficit may fall modestly as tariff revenues start to provide a positive impulse, but the extension of the 2017 Tax Cuts and Jobs Act works in the opposite direction. Estimates of both vary significantly but, given attempts to cut government spending were short-lived, it seems reasonable to assume that US government spending will remain elevated. Government excess is running at a lower proportion of GDP in Europe but is expected to increase. This follows an agreement at NATO to increase defence spending to 5% of GDP over the next decade and a pledge by Germany’s new government to make more funds available for infrastructure investment after years of neglect. This cements a shift towards a growth friendly policy backdrop in Europe which we believe justifies our overweight position in European stocks and, by extension, the Euro.
Similarly to Europe, government spending is expected to increase in Japan because the new Prime Minister (PM) has a pro-growth agenda. Meanwhile, corporate governance reforms are continuing but interest rate hikes create a headwind and bring the potential for volatility to the Japanese stock market – therefore, we remain neutral on Japanese stocks. We also have a neutral allocation to emerging markets although we do acknowledge that drivers have improved with earnings growth broadening and the existence of positive narratives such as Korea’s efforts to improve corporate governance, labour market reforms in India and Taiwan’s dominance in the manufacturing of semiconductors.
We have a strategic overweight to the UK stock market as the sector mix – which includes a high proportion of consumer staples, financials and materials – offers diversification within a global portfolio. From a tactical perspective, we remain neutral. Changes in government policy (such as rising employment costs) could weigh on foreign investment and the currency but we balance this against the positive impulse that likely follows Bank of England interest rate cuts. UK housebuilding stocks, for example, could benefit significantly from lower interest rates.
Globally (outside Japan where policy rates are still extremely low), central banks are leaning towards further rate cuts, providing support to borrowers and supporting stocks. Although inflation is above target in the US and UK, the focus has shifted towards the labour market as job growth has softened. This is expected to weigh on wage growth and ultimately dampen inflation pressures over the medium term – factors that should encourage more interest rate cuts. Additionally, Fed Chair Powell’s term ends in May 2026, and it seems likely that the next chair will be aligned with President Trump’s preference for lower rates. Many believe that the current methodology used to forecast inflation, which relies on historic data models, is not fit for purpose any longer, and the future impact of AI led productivity gains should be incorporated – ultimately leading to lower estimates of future inflation. This would justify lower interest rates, putting more money in the pockets of borrowers and providing a boost to corporate profits.
North Capital Portfolio Positioning – Fixed Income
Ongoing growth in government debt means continuing elevated levels of bond issuance, raising questions about where buyers will come from and the impact this could have on bond yields (which will rise, and push up the cost of servicing government debt, if bond supply rises without a commensurate rise in demand). Although we prefer short-dated bonds, as described below, we believe there are various steps authorities can take to ensure long-dated bond yields are contained:
Cut policy rates
This will keep short-dated bond yields low but the impact on longer-dated bonds will probably be limited.
Skew bond issuance towards short maturities
Less issuance at longer maturities means fewer buyers are needed at this sensitive area, so works to contain long-dated yields. The US Treasury and the UK Treasury have already adjusted to this approach.
Central bank bond purchases
During the aftermath of the Global Financial Crisis, central banks purchased bonds to keep rates low and support economic activity (a tool referred to as quantitative easing). In 2022, central banks in the US and UK began selling these bonds but this selling has now slowed in the UK and ceased in the US. Quantitative easing is a tool that could be restarted.
Attract more buyers
Regulatory changes could be used to attract new buyers. For example, altering the rules related to holding different assets could entice banks or pension funds to own more bonds while tax incentives could allure foreign investors.
Any interventions undertaken to contain bond yields may act to weaken the relevant domestic currency, due to lower interest rates, and put upward pressure on inflation, as imported goods become more expensive – we see this as a reason to favour gold.
Within the Fixed Income landscape there is a lot of variation, and we believe that being selective can greatly improve resilience and returns. Although we believe that longer-dated bond yields will be contained, as described above, we think that, within Fixed Income the best return opportunities come from short-dated bonds which are likely to benefit most from interest rate cuts. Within this sector, we favour inflation-linked bonds as we see risks that inflation will sit above target in the near term. We are also overweight corporate relative to government bonds, and we favour more niche allocations like short-dated high-yield and asset backed securities (ABS).
We expect broadening earnings growth and rate cuts to provide ongoing support and believe the risks inherent in bluntly allocating to high yield bonds are considerably reduced by limiting the maturity and allocating via selective, high conviction managers. The credit quality of the high yield universe has also improved over time as many companies remain private for prolonged periods and, therefore, don’t enter the universe until more established. Meanwhile, ABS offers a higher yield relative to equivalent quality corporate bonds. Furthermore, as we believe the fluctuating market narrative provides fertile ground for active managers, we favour allocating selectively to managers with robust processes and proven track records.
North Capital Portfolio Positioning – Real Assets
Real assets offer diversification within a multi-asset portfolio, particularly important in an environment where inflation has reduced the defensive properties of government bonds. Gold dominates our real asset allocation at present.
Although gold prices reached an all-time high in 2025, we believe that strong drivers remain. Gold has historically proved to be a valuable diversifier during both weak growth and high inflation shocks. Its limited supply differentiates it from many other assets, particularly in the current environment where inflation is above target in the US and the Federal Reserve are cutting interest rates.
International central banks are purchasing gold, partly to diversify their reserves away from holding so many US bonds, and this demand seems likely to continue as long as geopolitical tensions and government spending (and bond issuance) remain high.
Market Risks and Diversification
As described above, there were a couple of turbulent periods last year when AI newcomer Deepseek emerged in January and when Trump unveiled huge tariffs in April. However, markets operated mostly in a low volatility regime.
To the extent that this indicates that investors are not expecting disruption, this may mean we are likely to see some spikes in volatility if or when the unexpected occurs. However, unless we see fundamental changes to the market backdrop, we believe it is best to take a longer-term view and stay invested.
Given a backdrop of fiscal stimulus, further rate cuts, and tariffs we believe the global economy may see more upside inflation surprises. Inflation pressures alone are not directly problematic for stock markets so long as central banks do not change their stance and increase rates.
However, there are risks to growth too. Some cohorts are struggling more than others – US wage growth has slowed to below inflation for low-income workers and credit card delinquencies have risen to the highest level in 14 years.
Rate cuts would help but if consumer default rates rise sufficiently then banks will start to rein in lending which, in turn, will weaken spending, investment and corporate profits.
Global trade tensions related to US tariffs have reduced and, although many peace agreement details remain uncertain, tensions in the Middle East appear to have softened considerably. However, uncertainty and protectionism remain features of the economic and investing landscape. Specific concerns are many and varied but the upshot for asset markets of a spike in hostilities could be very disruptive, particularly for risky assets.
There is no denying that stock valuations screen as expensive in the US with the index having a price-to-earnings ratio well above its long-term average.
High valuations present the risk of a sharp pullback if a trigger arises – for example, any evidence that the reality of AI investment won’t live up to expectations could be difficult for stock markets to digest.
Evaluation of risks reminds us that maintaining diversification within portfolios, is important. Our strategic overweight to UK stocks, where valuations are undemanding, and tactical overweight positions in short-dated bonds (which tend to exhibit low volatility) and gold are expected to smooth returns over time.
We are neutral risk.
We are neutral Defensive Assets, with a focus on specific allocations.
We are neutral cash.
We are neutral Fixed Income. Our bias remains to short duration bonds, active funds and selective high yield.
Elevated cash rates, and expected interest rate cuts in 2026, provide support to short-dated bonds while longer duration bonds are less attractive due to inflation risks and an ongoing heavy supply of bonds. We have a preference towards active funds, because ongoing fluctuations in the market narrative provides ample opportunities for managers. In particular, we favour active short-dated high yield and high-quality asset-backed funds with attractive yields. We also see inflation-linked bonds as attractive as inflation pricing remains subdued relative to wage growth and services inflation.
We are neutral Growth Assets.
We are overweight Equities relative to Real Assets
We are overweight equities as we see multiple reasons for stocks to make further gains in 2026. Capital expenditure on AI has increased markedly and is still elevated. This is expected to continue and is directly beneficial to companies in the semiconductor sector but we expect the pool of winning companies to expand as we move from the build out phase of AI to greater adoption by companies to catalyse productivity improvements and expansion. The US is a key beneficiary of this theme due to the concentration of technology companies in the region and, therefore, we maintain a neutral weight despite high valuations. In addition, government spending remains high. We expect this spending to support jobs and earnings and, therefore, we are overweight Equities relative to Real Assets. In Europe, in particular, we expect government spending to rise, providing a growth friendly backdrop and, therefore, we are overweight European stocks. We hold a strategic overweight to UK stocks as the sector mix - which includes a high proportion of consumer staples, financials and material - offers diversification within a global portfolio. We hold selective exposure to high-quality active managers within our Global and Emerging Markets exposure.
We are underweight Real Assets relative to Equities.
Real assets offer attractive diversification within a multi-asset portfolio and are, therefore, good for smoothing returns over the long-term. We have an overweight allocation to gold as we believe that its limited supply and low correlation to traditional assets make it attractive while the desire for central banks to diversify their reserves away from US assets, as a result of global uncertainties, should continue to underpin demand. We are underweight Broad Commodities as we believe Equities offer greater return.
Noteworthy
Edinburgh Restaurants, a Year in Review
Last January, Edinburgh was crowned the UK’s “Most Exciting Food Destination” by the Good Food Guide. Within a month, two more of Edinburgh’s restaurants (LYLA & AVERY) were awarded Michelin Stars, at a ceremony held in Scotland for the first time. Remarkably, Edinburgh now boasts more Michelin red plaques than any other UK city outside London. For food lovers lucky enough to live here, including some of the North Capital team, 2025 delivered a wealth of exciting new openings to explore.
As a team, our highlight was Barry Fish which serves some of the city’s finest seafood in an amazingly welcoming and laid-back restaurant on the Shore. Pictured is their signature Trout Pastrami dish. On Broughton Street, Vinette took the place of closing Fhior and offers a European menu in a lively, buzzy setting. The restaurant replaced Aizle in Stuart Ralston’s lineup of eateries which also includes Noto, LYLA, and Tipo. In Leith, Dogstar, a collaboration between Nauticus bar and James Murray (ex-Timberyard), opened its doors to deliver a refined gastropub experience with a focus on game. Other stand out additions include the highly creative, farm to table Moss in Stockbridge, and the cosy, Irish inspired café, Norah down in Newhaven. It would be remiss not to mention George Brown, a newly opened ex-factory space in Leith, now transformed into a venue serving pizza, seafood and wine by some of Edinburgh’s leading restauranteurs.
It seems sensible to hope and expect this trend of new openings to extend into 2026 and beyond, further cementing Edinburgh’s place as Scotland’s culinary capital and a foodie destination.
Is Cinema Dying?
Netflix has made an $82 billion offer to purchase Warner Bros Discovery (WB), the owner of Warner Bros, HBO, and one of the largest film and television catalogues – think Casablanca, The Shawshank Redemption, or 2001: A Space Odyssey. Paramount, another of WB’s competitors, has responded in turn with a larger all-cash hostile bid, triggering a scramble for control of one of Hollywood’s last major legacy studios.
These bids arrive in an industry already marked by mergers and a growing reliance on established intellectual property (the tenth Fast and Furious comes to mind). The current slate of films echoes that of the 80s, where studios reorganised themselves around blockbusters to shore up their balance sheets. The consolidation of WB would risk tightening that dynamic further, with mid-budget films and independent gambles falling out of favour for low-risk, high-yield projects.
Antitrust hawks in Washington and Brussels are now reviewing whether the scale of either takeover concentrates market power in a way that affects, not only in terms of corporate control but also, the cultural ecosystem itself.
While cinema is not disappearing, it is being reshaped. The question is less whether it survives, and more what form it takes when fewer companies decide what gets made, how it is released and where audiences are expected to watch.
Goodbye Golf, Hello Padel?
With a number of sports attracting an uptick in participation since the Covid-19 pandemic, there is one that has seen an increase so large that it is hard not to take notice.
Believed to have been invented in Mexico in 1968 after Enrique Corcuera converted his squash court, Padel has exploded onto the world scene with participation numbers in the UK alone increasing from 15,000 in 2022-23 to 400,000 adults and juniors playing at least once in the 12 months to the end of 2024.
This explosion in numbers has seen Powerleague, the original provider of 5-a-side football pitches, invest £2.2 million in the creation of new padel courts at 3 of its Scottish clubs – Paisley, Portobello and Sighthill.
Acenta Group, which builds and supports clubs in the industry, saw its share price increase 22.5% in 2025.
Positioning itself as a social, easily accessible sport that is enjoyable to play regardless of skill level, could Padel take over from Golf as the leading sport in the industry? Only time will tell but the North Capital office is certainly enjoying the competitive and social nature of the sport when time allows.
Uranium Has Gone Nuclear
While large US technology companies have dominated the attention of market commentators over the past three years, the uranium sector has been quietly gaining momentum beneath the surface. Over this period the asset class, made up of uranium miners and companies active in the nuclear energy industry, has delivered returns approaching three times those of global equity markets. This has been driven by the increased demand for electricity as the AI revolution requires substantial energy.
At the same time, attitudes toward nuclear energy have shifted materially. Long standing negative perceptions, largely shaped by high profile disasters such as Chernobyl and Three Mile Island, have begun to fade. In their place, nuclear power is increasingly viewed as a pragmatic solution to a pressing global challenge, meeting rising energy demand while transitioning away from coal and gas fired generation. Although renewable energy sources continue to expand rapidly, they remain intermittent by nature and therefore require a reliable, low carbon baseload power source which nuclear energy uniquely satisfies. Combined with years of underinvestment in uranium supply, these structural tailwinds have created a compelling long-term backdrop for the sector which investors have been taking advantage of.
