Dear reader,
July was the month the AI selloff turned serious. What looked like a wobble in June became something closer to a rout. Micron dropped 13% in a single session. Intel fell 21% in seven trading days. Asia had it worse: Korea’s market briefly plunged 10% and tripped its circuit breakers, and Samsung fell 7% in a day despite reporting operating profits up more than 1,800% on a year earlier. That was the strange part. The earnings were fine. It was the faith that cracked. By month end, the AI-focused hedge fund Situational Awareness had needed rescuing by rival Citadel, the sort of forced selling that shows up when a crowded trade starts to unwind.
None of that is what this portfolio owns, and that is rather the point. While the market argued about whether the AI boom had gone too far, the money leaving it had to land somewhere. For a second month running, it landed where this book already sits: value, income, real assets, the unglamorous corners the market spent two years ignoring.
Closer to home, London was having none of the drama. The FTSE 100 set fresh records in July, touching an intraday high above 10,978, carried as ever by its globally-earning giants in mining, energy and defence, with Rolls-Royce and BAE to the fore. The domestic FTSE 250 lagged, as it has all year, though our own mid-caps had a good month regardless.
For an income portfolio, one number still matters more than the rest, and on 30 July the Bank of England set it again. It held Bank Rate at 3.75%, but the vote told the real story: 6-3, with three members now wanting to hike, up from two in June. A year ago the only argument was how fast the Bank would cut. Now a third of the committee wants to go the other way. Inflation had actually cooled, to 2.6%; the worry was the forecast. Renewed tension in the Middle East pushed energy prices back up through July, and the Bank now expects inflation to peak near 3.2% by the fourth quarter. June’s ceasefire optimism did not survive the summer.
"Value stocks... appear set to turn the tides in 2026."
So rates stay put, probably deep into 2027. The rate-sensitive parts of the portfolio, the renewables, the infrastructure trusts, the REITs, would rather see cuts. They will keep earning without them. The discounts are still wide and the income still lands. The next decision is 17 September, with no new Monetary Policy Report until November.
And through all of it, the portfolio did what it is built to do. While the headlines argued about record highs and hawkish votes, the holdings quietly got on with paying us, and this time the market was moving towards the book rather than away from it. More on exactly which names below.
July research highlights
Alongside the portfolio update, July was another busy month for research on Corfe Capital. Here’s everything published this month, well worth a read if any slipped past you:
💼 Rathbones (LON: RAT): Down 17% in a day, now yielding 6%. Gift or warning? — 7 July
🛢️ What Trump’s Iran Strikes Mean for UK Investors — 9 July
📚 WHSmith (LON: SMWH): Down 64% in a year. Too cheap to ignore? — 15 July
🏭 Rotork (LON: ROR): The £4.1bn ABB bid, and why it became a target. — 17 July
🏢 Mitie (LON: MTO): A 47% takeover premium, and the shares still sit below the offer. — 21 July
🏠 Persimmon (LON: PSN): Trading for less than its own land. Is this the bottom? — 23 July
🥖 Greggs (LON: GRG): H1 results, and what the three-year picture really shows. — 30 July
Sector Commentary
Sector allocation as of end of July 2026, 24 holdings across 7 sectors.
Property & Healthcare REITs (23% of portfolio) was the standout again, and remains the largest sleeve in the book. After the valuation reset of the past few years, UK commercial property looks to have found a floor, and money is slowly coming back to a sector the market had spent a long time avoiding. Offices are the quiet surprise, with return-to-office mandates pushing occupiers back towards the best space and supporting the large-cap London landlords. Healthcare property is the stronger structural story: institutional buyers are chasing long, inflation-linked leases and the demographics behind them, and sector deal volumes last year were the highest since 2012. With the base rate stuck at 3.75%, it is the income doing the work here while values recover slowly.
Infrastructure & Credit (22% of portfolio) remains the backbone of the portfolio, and the story here has not really changed. The listed infrastructure trusts still trade at wide discounts to the value of their assets, a hangover from higher-for-longer rates that has been slow to clear. What might finally close the gap is corporate action, buybacks, asset sales at or above book value, the occasional takeover approach, rather than a change of heart from the Bank of England. The income itself is contracted and inflation-linked. The re-rating can wait on sentiment; the income does not.
Other / Diversified (16% of portfolio) was the best and worst of the book again, though the bigger story sits above the stock level, in the takeover wave sweeping UK plc. Announced bids for London-listed companies have run to around £60bn this year, with overseas and private-equity buyers behind most of it, drawn by valuations they think far too cheap. Two of this month’s research pieces were about exactly that. For a book full of unloved, cash-generative UK names, a market where someone keeps turning up to pay a 40%-plus premium is a decent backdrop to own. Within the sleeve, the standout jumped on strong results, a discount retailer carried on recovering, and the long-standing commodity laggard kept disappointing.
Renewable Energy (13% of portfolio) had a firmer month after a quiet June, and nudged up to a slightly larger slice of the book. This is still the portfolio’s most rate-sensitive sector, and the one most geared to any eventual shift from the Bank. The wide discounts dogging the renewable-infrastructure trusts are the same higher-for-longer story as their infrastructure cousins, though one overhang has at least lifted: the government’s decision to keep a single national power price, rather than move to zonal pricing, has taken a lump of policy uncertainty off the table. Asset sales in the sector have generally gone through at or above book value, which tells you the holdings are worth more than the share prices say. If rates begin to turn in 2027, there is real re-rating to come here.
Technology (12% of portfolio) eased back a fraction as the largest of the tech holdings took a breather, which given what happened elsewhere in tech is no bad thing. The global AI trade had a genuinely rough month, with a brutal sell-off in US and Asian chip stocks and a high-profile AI hedge fund that had to be bailed out. Investors are finally asking hard questions about the money being poured into AI infrastructure. None of that is what this portfolio owns. The technology here is UK-listed and sensibly valued, the sort of quality mid-cap that benefits when the hype drains out of the sector and people go looking for value again.
Investment Trusts — Global & Regional Income (10% of portfolio) was steady after a strong recent run. The wider trust sector is quietly healing: the average UK investment trust discount has narrowed to under 10% for the first time since 2022, helped by record buybacks, a run of mergers, and activist investors leaning on boards. The high single-digit yields in this sleeve keep landing quarterly whatever the discount does. The sleeve still earns its place, giving the book useful diversification away from an increasingly two-speed domestic picture.
Financial Services (3% of portfolio) had a mixed month, which is unusual for such a small sleeve. The value rotation is a tailwind for the diversified financials and insurers, and one holding carried on the strong run it has been on all year. The asset managers are the harder story: the industry is still fighting outflows and consolidating to cope, and one of the asset managers gave back all of June’s bounce despite a perfectly decent quarterly update. This is the sort of sleeve that turns first when sentiment shifts, in either direction.
Portfolio Performance
July was a strong month, and a broad one. The winners were spread across the book this time rather than bunched into a few names. Property led again as UK real estate stayed in favour, and the single best result of the month came from Greggs, on the back of results. The laggards were few, and bar one they were familiar.
The blended yield across the book sits at around 6.5%, down a touch from the high sixes as recovering prices trimmed running yields. A good problem to have. The capital came back and the income kept landing.
