An ill wind
How the US-Iran conflict has affected Ian Cowie's portfolio
In addition to the human cost of armed conflict between America and Iran, which began on 28 February 2026, the global economy has also been adversely affected by the restricted supply of oil, liquefied natural gas (LNG) and other commodities. But, less obviously, conflict can produce winners as well as losers.
While we must all hope the bloodshed ends soon, investment trusts can diminish risk by diversification and investing internationally can obtain exposure to capital growth and income, wherever they may arise. It’s an ill wind that blows no good and some funds in which I am a shareholder have actually benefited from restricted access to the Gulf and the Suez Canal, caused by conflict in the Middle East.
“…The global economy has also been adversely affected by the restricted supply of oil, liquefied natural gas (LNG) and other commodities. But, less obviously, conflict can produce winners as well as losers.”
For example, the ship leasing specialist, Tufton Assets (stock market ticker: SHPP) has delivered a share price total return of 22% in the seven months since America and Israel attacked Iran. The explanation is that Iranian attacks on international shipping in the Strait of Hormuz and more recent Houthi attacks in the Bab el-Mandeb Strait have pushed up freight rates.
Nicolas Tirogalas, chief executive of Tufton Investment Management, which manages SHPP, said: “The net effect of the conflict is that shipping is now having to go further, taking longer routes to avoid the Strait of Hormuz, and that means more of our fleet is in use more of the time, which adds to demand.
“This is reflected in shipping earnings, such as with SHPP, where the second quarter of 2026 had the highest earnings in the last five years.”
These earnings helped SHPP distribute over 7.3% dividend income, which has increased by an annual average of nearly 6.3% over the last five years. Despite all that, shares in this global maritime fund continue to be priced 13% below their net asset value (NAV).
Closer to home, restricted supplies of oil and LNG from the Middle East have reminded many governments about the importance of energy security and self-reliance, including producing our own renewable power. As its name suggests, Greencoat UK Wind (UKW) owns and operates offshore and onshore wind farms to produce electricity in Britain.
“Closer to home, restricted supplies of oil and LNG from the Middle East have reminded many governments about the importance of energy security and self-reliance, including producing our own renewable power.”
This fund’s total assets of more than £3.9 billion currently generate 5.5 terawatt hours - or 5,500 gigawatt hours - of electricity. That’s enough to power 2.2 million homes and meet about 2% of the UK’s total electricity needs.
UKW has produced a share price total return of 25% since the most recent conflict in the Middle East began. Better still, from the point of view of this old boy with one eye on paying for an enjoyable retirement, UKW yields dividend income of 9.4% which has increased by an annual average of 7.9% over the last five years.
It is important to be aware that dividends are not guaranteed and can be cut or cancelled without notice. But if UKW could sustain that rate of ascent, shareholders’ income would double in less than a decade. Here and now, its shares continue to be priced 15% below their NAV.
Despite all the drama of conflict in the Middle East, quiet technological innovation and many businesses around the world continue as usual. The AIC’s Global sector produced a total return of 16% since last February.
“Despite all the drama of conflict in the Middle East, quiet technological innovation and many businesses around the world continue as usual. The AIC’s Global sector produced a total return of 16% since last February.”
Scottish Mortgage Trust (SMT), where I became a shareholder in March after an American hedge fund gained control of Edinburgh Worldwide (EWI), delivered a total return of 27% since the most recent war in Iran began. SMT benefits from its biggest asset being the high profile billionaire, Elon Musk’s extraterrestrial venture, Space Exploration Technologies or SpaceX.
Similarly, shares in Seraphim Space Investment Trust (SSIT) have more than trebled since I paid 53p for them in March last year, including a 25% total return since February. About three quarters of Seraphim’s NAV is defence-related, with two thirds based in Europe including the UK, so it benefits from continental rearmament as the Ukraine war continues. This investment trust is now the third most valuable holding in my forever fund.
Elsewhere, Polar Capital Technology (PCT), where I have been a shareholder for more than a decade, continued to gain from a wide range of innovation, including artificial intelligence (AI), and produced a total return of 35% since February.
While violent conflict dominates the headlines there are plenty of reasons to be fearful. But investment trusts’ tried-and-tested ability to diminish risk by diversification should help shareholders survive these crises and hope for happier times ahead.
Performance data from 02/03/26 to 22/09/26, other data as at 28/09/26.
Ian Cowie is a shareholder in Greencoat UK Wind (UKW), Polar Capital Technology (PCT), Scottish Mortgage (SMT), Seraphim Space Investment Trust (SSIT) and Tufton Assets (SHPP) as part of a globally diversified portfolio of investment trusts and other shares. You can read more about his investments at iancowie.co.uk
