Temple Bar investment trust: a new best-seller

Rising inflation expectations have contributed to a surge in bond yields and a growing acceptance that interest rates will stay higher for longer. This type of environment tends to favour value over growth as an investment style, as the more immediate returns generated by value stocks are less heavily discounted than those expected further into the future. 

A fund that has long been synonymous with this strategy is the Temple Bar investment trust, which was a new addition to the best-seller list in August. Since Redwheel was appointed manager in October 2020, it has built an impressive track record, beating the benchmark by almost 100%.¹ Please remember past performance is not a reliable indicator of future returns.

• Read: Top 10 best-selling inevstment trusts in August

Despite the strong performance, Redwheel believes the portfolio remains undervalued. At around 11 times earnings, it is trading at a meaningful discount to the wider UK market and at roughly half of the multiple of global stock equity indices.²

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Objective and approach

Temple Bar aims to provide growth in income and capital to achieve a long-term total return greater than that of the FTSE All-Share index. Most of the portfolio will typically be selected from the mid and large caps of the FTSE 350, although up to 30% can be invested in shares listed outside the UK.³

Managers Nick Purves and Ian Lance of Redwheel employ a value investing strategy, targeting out-of-favour stocks that are trading below their true worth. They believe that good quality, undervalued companies offer the best potential for attractive long-term returns.⁴

In order to avoid value traps – stocks that are cheap for a reason – they look for businesses with strong cash flows and robust balance sheets. These qualities give them confidence that a company can survive through a prolonged period of lower profitability caused by stock-specific issues or an unexpected downturn in the economy.⁵

The portfolio

At the end of August, the ten largest holdings accounted for 40.8% of assets and included WPP, BT, Shell and Marks & Spencer. The concentrated 40-stock portfolio was most heavily weighted towards Communications, Financials, Consumer Staples and Consumer Discretionary, all of which were more than 12%.⁶

Temple Bar top 10 holdings

1. WPP
2. BT
3. Shell 
4. Marks & Spencer
5. BP
6. NatWest
7. Aviva
8. ITV
9. Smith & Nephew
10. Aberdeen

Source: Temple Bar investment trust factsheet, 31 August 2026

Purves and Lance focus on long-term fundamentals, although fluctuations in sentiment can create attractive value opportunities. As a result, seven new positions were initiated in the first half of the year, including Land Securities and Kraft Heinz, with the purchases largely funded by profit taking elsewhere.⁷

A key differentiator is the trust’s 28.2% investment outside of the UK, close to the 30% limit, with the main allocations being the US, France and Hong Kong.⁸ The Board is considering whether to increase the cap further.⁹

Reliable and growing source of income

Temple Bar’s focus on cash-generative businesses creates a resilient income stream, with four quarterly dividends of 3.9p per share scheduled for the 2026 financial year. Please note that this income is not guaranteed. This represents a 4% increase on 2025 and gives the trust a prospective yield of 3.8%.¹⁰

Revenue per share for the six months to the end of June was 7.9p, covering the 7.8p of distributions. The Board continues to maintain a progressive dividend policy, supported by a three pence per annum contribution from capital reserves, equivalent to 0.75p per quarter.¹¹

Performance

In the half year to 30 June, the NAV total return was 5.4%, a slight underperformance compared with the 7.2% achieved by the FTSE All-Share index. Year-to-date, however, the NAV has increased by 15%, ahead of the benchmark’s 11% gain.¹²

The longer-term record since Redwheel took over the management on 30 October

2020 is impressive. In the period to the end of June 2026, the NAV total return was 216%, almost 100% higher than the 118% posted by the index.¹³

Broker Peel Hunt says Temple Bar has delivered one of the strongest NAV and share price returns of the UK Equity Income peer group over the last one, three, and five years. They also point out that the ability to invest overseas is likely to be one of the most material potential drivers of relative performance against the FTSE All-Share.¹⁴

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. This investment trust invests in overseas markets and so the value of investments can be affected by changes in currency exchange rates. The shares in Temple Bar investment trust are listed on the London Stock Exchange and their price is affected by supply and demand. The trust can gain additional exposure to the market, known as gearing, potentially increasing volatility. Before investing, please read the relevant key information document which contains important information about the fund. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.