Monday Club – 13/07/26: Your weekly Wealthwise digest

Investment round-up

Wealth businesses welcome Mills Review

Wealth and advice business leaders have broadly welcomed the findings of the Financial Conduct Authority’s review into the use of artificial intelligence in financial services. The Mills Review: AI and the Future of Retail Financial Services found autonomous agents are likely to play an increasing role in the provision of investment advice and in financial regulation.

Brooks Macdonald reports turnaround

Brooks Macdonald has reported net inflows of £226m for the year to 30 June 2026, compared with the £396m of net outflows seen the previous year. The turnaround was attributed to the success of the firm’s ‘Reignite Growth’ strategy. Funds under management and advice now sits at £21.7bn.

HVPE comes under Saba attack

Saba Capital has doubled its holding in HarbourVest Global Private Equity (HVPE) to 10%, strengthening its position ahead of this week’s continuation vote. The position largely comprises of swap derivatives held by Saba funds, including the Dublin-based Saba Capital Investment Trusts ETF launched last year.

IPO market revives in UK

The London Stock Exchange saw a marked uptick in proceeds from initial public offerings in the first six months of 2026, increasing 215% year-on-year. According to EY-Parthenon’s latest IPO analysis, the London Stock Exchange recorded seven new listings in the first half of 2026 – three on the main market and four on AIM – raising £577m.

Golden Prospect trust appoints Baker Steel as manager

Golden Prospect Precious Metals has appointed Baker Steel Capital Managers as its new investment manager and AIFM, opting not to follow its former portfolio managers to Tufton Investment Management. The appointment is expected to take effect during the third quarter of 2026.

L&G launches global ETF

L&G has launched the L&G WTW Global Equity Diversified UCITS ETF, which will provide exposure to a custom-made index from MSCI – the WTW Global Equity Diversified Index. The ETF is designed to give investors access to institutional-level investment strategies in a cost-effective way.

Vanguard launches four US ETFs

Vanguard has launched four US ETFs, including small and midcap options. The Vanguard Russell 2000 US Small-Cap UCITS ETF and Vanguard Russell US Mid-Cap UCITS ETF will both cost investors 0.2% per year, while the Vanguard Russell 1000 US Value UCITS ETF and Vanguard Russell 1000 US Growth UCITS ETF will have an ongoing charges figure of 0.16%.

In focus: UK v K

The fortunes of global stockmarkets are starkly contrasted by the trajectory of two top-10 players. In one corner is South Korea, an-AI focused market, flying high on the fortunes of its memory and semiconductor companies. In the other is the UK, a long-term laggard with little in the way of exciting tech exposure to entice investors. No major surprise, then, that South Korea recently took the UK’s spot as the eighth largest stockmarket in the world.

The fortunes of the South Korean market are built on two memory behemoths – Samsung and SK Hynix – which together account for more than 40% of the KOSPI benchmark index. The pair have boomed on the back of soaring demand for memory to power AI, with Samsung’s share price up 307% over the last year and 3,022% over five years.

“As of last year, the two companies together accounted for roughly 70% and 50% of global DRAM [Dynamic Random Access Memory] and NAND [NAND Flash Memory] revenue, respectively,” says Eunice Hong, investment manager, emerging equities at Barings. “These technologies are fundamental to AI-driven computing, with DRAM enabling high-speed processing and NAND supporting large-scale data storage.”

According to Niamh Brodie-Machur, chief investment officer at Fidelity, Korean businesses’ gains have come from earnings revisions rather than a re-rating of the shares. “Capacity utilisation has increased to the point where there is now restricted supply and therefore the companies have seen massive earnings revisions,” she explains. “They are still on lower multiples – single digits – in recognition of their cyclicality. Our team sees those supply constraints continuing.”

Korea has become a byword for share-price volatility, however, thanks to a market that is hugely concentrated. At the same time, the country has allowed the use of highly leveraged ETFs by domestic investors, which has heightened swings. Market moves of 5% to 10% in a single day are not unusual, and the KOSPI index fell more than 20% between mid-June and early July.

In a bid to address this market volatility, South Korea’s government has started to review possible curbs on single-stock leveraged exchange-traded funds tied to Samsung Electronics and SK Hynix. A regulatory official told Korean media that additional listings of single-stock leveraged ETFs were “effectively off the table”, adding: “The priority now is to cool the overheated market.” Notes Brodie-Machur: “From a risk and oversight perspective, this is something that we need to watch. The volatility is one element. The other is the correlations between subsectors.”

While global institutions such as the IMF, the World Bank and FTSE Russell attribute South Korea ‘developed market’ status, most index providers continue to see it as an emerging economy – for example, only last month, Korea retained its emerging market classification from MSCI. At the time, the group said the limited convertibility of the Korean won in the offshore currency markets remained a key barrier to reclassification.

For its part, the UK stockmarket sits at the other end of the spectrum – its major problem a lack of any enthusiasm among investors rather than too much. Indeed, the market has been declining in relevance for several decades.

“I started in this industry in 1989,” says Clive Beagles, manager on the JOHCM UK Equity Income Fund. “The UK was 15% of the world index and the second largest equity market in the world. Every international investor had to have an allocation to the UK because it was important. It was an honour to be listed in the UK. That figure dropped to about 10% around the turn of the century and has progressively gone down. As of now, the UK is about 3.5% of the MSCI World index.”

In many ways, though, the UK appears a more robust and diverse index than Korea. Some 43% of the FTSE All-Share may be spread across its top 10 holdings but, rather than being focused on a single sector, this percentage takes in banks, oil and gas, pharmaceuticals, industrials and tobacco. Financials are the dominant sector across the index yet still only form around 30% of its market capitalisation.

For some, the UK stockmarket’s weakness is simply a natural consequence of the declining relevance of the country more generally – although plenty of the criticisms levelled at the UK could apply equally to Korea or, for that matter, Taiwan.

Take political risk – in 2024/25 a constitutional crisis resulted in the impeachment and removal of Korea’s then president Yoon Suk Yeol. The country also remains some way behind the UK economically: it is the world’s 15th largest economy – the UK is 5th – with around half the GDP of the UK.

Equally, it is worth remembering Korea’s limitations. Its ‘Value Up’ initiative has certainly helped drive up share prices – but that should also remind investors that, until recently, corporate governance was pretty weak. The UK corporate governance regime remains robust. Furthermore, given the ‘Value Up’ initiative demonstrated how government intervention can improve market participation, it is worth bearing in mind the Mansion House accords could yet achieve something similar for the UK.

A key difference between the pair may be the extent to which each population is willing to back its domestic market. Beagles points out the UK has an “incredibly low” domestic pension fund participation rate, adding: “It is the only major developed market that is underweight its own domestic equity market”. He points out retail investors would rather stick money in cash ISAs – the home for around £40bn to £60bn of UK savings every year.

In contrast, Korean domestic investors have been enthusiastic supporters of their own market. Goldman Sachs reported in April that the introduction of ‘Reshoring Investment Accounts’ had encouraged Korean investors back to their own market. It pointed out that retail investors have been the largest net buyers in 2026 with $15bn (£11.2bn) in inflows, compared with domestic institutional investors and foreign investors.

Nevertheless, there are some dangerous precedents for Korea – perhaps the salient example here being Scandinavia. At its peak, Nokia accounted for more than 70% of the Nasdaq Helsinki stock exchange, only to miss the handset revolution. The Danish market meanwhile has around 40% in Novo Nordisk, which has left it vulnerable to every bump in the road experienced by the healthcare giant.

One final consideration for investors is whether Korea, having long been on the cusp, is eventually promoted to ‘developed market’ status. If this should happen, the UK and Korea will have to compete more directly for a share of global flows – inevitably weakening the former’s already-tenuous grip on passive money. The UK has much to recommend it over Korea but global investors seem unlikely to be in the mood to listen.

Read more on this from the FT here and also from the FT here