TEAM plc (LON:TEAM) Chief Investment Officer Craig Farley caught up with DirectorsTalk to discuss 2025 market resilience, 20% plus returns across their multi-asset range, AI capex concerns, inflation risks, and portfolio positioning for 2026.
Q1: Last time we spoke, we talked about the investing landscape, which was received really well by investors. I want to start today, if I may, by taking a look back at 2025. It was a real rollercoaster of a year, starting negatively, but then ending with markets at an all-time high. That’s despite the high drama politics coming out of the US. What was your take on it, and how did TEAM perform?
A: So, really one of stock market resilience, global markets looked through pretty significant macro fog as this insatiable appetite for the AI theme, generally solid corporate earnings and also a ‘don’t fight the Fed’ mantra really all underpinned positive sentiment.
I think for TEAM, pleasingly, our multi-asset strategy range was able to benefit from several major drivers, which included a barbell approach to US, but also ex-US equity exposure. Really staying clear of long duration government debt and also leaning pretty hard into the precious metal sector. So, consequently, we were able to deliver 20% plus returns in sterling for our suite of conservative, balanced and growth solutions.
We’re off to a pretty good start in 2026, where we think the two most interesting developments, in our humble opinion, have been potential AI fatigue as the market starts asking tougher questions about the hyperscalers’ capex spending plans. Secondly, Trump, who has dusted off and tweaked a 200-year-old policy document first introduced by the fifth US President James Monroe to completely reshape American foreign policy under what has now become known as the Donroe Doctrine.
Q2: In such volatile times, what is the company’s approach to managing the unexpected and being able to deliver suitably risk-adjusted returns for your clients?
A2: I think really confidence in our framework and process stems from the extensive R&D project that took place all the way back in 2020. We undertook rigorous testing with our US data partners and that was performed using several decades of data and really a range of techniques to avoid really bending the rules to achieve the outcome we wanted.
Having done that and run real time for over five years, the conditions really since COVID have provided an excellent stress test involving various market regimes. So, we had the unprofitable everything rally of ‘21, the worst year for 60/40 stock bond portfolios in ‘22 and then the AI phenomenon, which has really gripped the market narrative for the last three years.
So, our multi-asset range is adaptive, it’s designed to grow and preserve wealth over the long term. So, 20% returns certainly are unlikely to be the norm and what we’re aiming for really is safe, steady, and resilient with our investment range.
Q3: I doubt there’s likely to be any let up in volatility in 2026, so what are you picking out as key factors for growth and potential risks?
A3: Maybe if we start with the risks first. I think today’s investment landscape is defined really by these shifting inflation and interest rate regimes. We’ve got constant geopolitical surprises and now an American approach to foreign policy that prioritises national security interests via confrontation and muscle flexing rather than diplomacy and alliance. So, we’re always mindful of chasing shadows here as there’s risks around every corner. We do see the ongoing disruption of the established world order as a potential hotbed for risk-off scenarios relating to critical mineral and energy security in particular.
I think the second big question is whether this projected capex spend by the big hyperscalers transpires to be the greatest misallocation of capital in history and that’s because those previous asset-light business models become very asset-heavy. Just for context, the projected AI software returns or revenues from the hyperscalers this year is around the $45 billion mark. That’s against the capex spend of approximately $650 billion, which gives you a price to sales ratio of 14 times or 1400%. So, in our minds, something has got to give.
Finally, we’re closely watching Japan’s currency and rates markets for signs of a sustained carry trade unwind and a potential repatriation of capital to Japan’s domestic fixed income and equity markets. That could have very significant spillover effects.
I think turning to the growth side, the reality really is that US federal tax receipts, which in our view are the best barometer of American growth, they grew at nearly double-digit pace in 2025. They’ve started this year in a similar fashion. So, where we’re sitting, America is already running hot in nominal growth terms. That is obviously good news for the top 10%, less so for the bottom 90% and that issue of unaffordability is becoming a thorny one for President Trump. We’d expect continued unconventional stimulus likely in the form of cheques to households as he seeks to turn around that slump in popularity ahead of really critical midterm elections in November.
If we wrap all that up together, that has the potential to deliver a secondary inflation wave later on in this cycle.
Q4: So, in terms of looking at the UK specifically, what are you hoping for or expecting?
A4: We’ve actually been steadily increasing our UK large cap exposure over the past several quarters. We understand the spectre of political risk obviously continues to loom large, but at the margin selective macro data is improving.
More importantly, this shifting narrative around the Mag 7 is driving major style rotations and really a push for both geographic and sector diversification away from AI and towards some of those old school real asset sectors and stocks.
In that regard, UK large cap index composition provides a really helpful blend of banking, asset management and insurance, healthcare, commodities, and some of those staples exposure that contrasts really nicely with the big tech.
As a final point, as we’ve already seen in 2026 and indeed this week, the UK looks to be pretty ripe pickings for global M&A activity.
Q5: Just taking all this together, how have you structured TEAM’s funds to prosper in 2026?
A5: Within our equity sleeve, our framework has been increasingly tilting, as we say, away from that US big cap tech leadership to other markets, including the likes of Japan, China, and the UK, which we’ve spoken about.
In fixed income, it’s really been a very consistent message for several years. Our preference is high quality investment grade corporate bonds in that belly of the curve. So, the three to eight year duration, which we continue to see as the sweet spot and alongside that emerging market local currency sovereign bonds. We continue to remain steadfast in our view that zero exposure to long term government debt should be the modus operandi. We still do not see clients being given adequate compensation at current yields, given the backdrop of government balance sheets.
Finally, within liquid alternatives, our current sense is that commodities, including precious metals and miners, but also some of the leading energy companies, they’re still in the foothills of a secular bull market. Alongside that, clearly macro and volatility are back, which is great news for some of these all-weather, absolute return strategies that can provide uncorrelated return streams to traditional bonds and equities, whilst bringing great diversification benefit to global multi-asset portfolios.
