City of London Investment Group Reports 4% FuM Growth and Strong Emerging Markets Outperformance in H2 2025

CLIG H2 2025: FuM up 4% to $11.2 billion as Emerging Markets lead the pack

City of London Investment Group (CLIG) has kicked off 2026 with a solid update. Funds under Management (FuM) rose 4% to $11.2 billion at 31 December 2025, with further momentum into the new year – $11.6 billion as of 15 January 2026. That lift came despite net client outflows, thanks to buoyant markets and decent investment performance across key strategies.

For context, FuM is the total value of assets the Group manages for clients. It is the engine room for management fees, so direction of travel matters.

Market backdrop: risk-on returns, with equities strong and gold glittering

The second half of 2025 was friendly for risk assets. Global equities, as measured by MSCI ACWI TR, returned 11.4%. Bonds barely budged, up 0.8% on the Bloomberg Global Aggregate. Commodities were split – gold surged 30.7% while Brent oil fell 4.6%. In short, a supportive backdrop for equity-heavy strategies and for closed-end funds (CEFs) where discounts narrowed.

Strategy performance: EM outperformance and a Listed Private Equity standout

CLIM delivered strong relative returns in a few places, with Emerging Markets (EM) and Listed Private Equity the clear winners. KIM strategies broadly tracked benchmarks with small variances.

CLIM strategy scorecard – net of fees

• Emerging Markets: +19.2% vs +13.8% benchmark – outperformance of 540 bps (basis points – hundredths of a percent). Helped by allocations to Vietnam, underweight India, and broad CEF discount narrowing.
• International Equity: +11.9% vs +12.3% – underperformance of 40 bps, with UK and European small-caps a drag despite discount narrowing.
• Opportunistic Value: +5.0% vs +5.9% – underperformance of 90 bps, as alternative fund NAVs lagged and equity underweights hurt versus the blended benchmark.
• Listed Private Equity: +20.1% vs +3.9% – outperformance of 1,620 bps, boosted by a major corporate action in its largest holding and ongoing NAV delivery across the universe.

Quick jargon check: a closed-end fund (CEF) is an investment company listed on an exchange that can trade at a premium or discount to its net asset value (NAV – the value of underlying holdings). When discounts narrow, shareholders typically benefit.

KIM strategy scorecard – steady as she goes

• Growth Balanced: +8.0% vs +7.9% – outperformance of 10 bps.
• Conservative Balanced: +6.3% vs +6.2% – outperformance of 10 bps.
• Tax-Sensitive Fixed Income: +4.3% vs +4.6% – underperformance of 30 bps.
• Taxable Fixed Income: +3.1% vs +2.9% – outperformance of 20 bps.
• Cash Management: +2.0% vs +2.3% – underperformance of 30 bps.
• Equities: +10.1% vs +11.3% – underperformance of 120 bps.

Fixed income and equity commentary: the moving parts

On the bond side, the 10-year US Treasury yield fell 6 bps, while 10-year AAA munis dropped 48 bps. Within KIM’s fixed income strategies, municipal bond CEFs were a tailwind as NAVs rose and discounts narrowed. Preferreds and senior notes issued by CEFs and BDCs also helped. Pre-acquisition SPACs lagged due to shorter duration versus the benchmark.

Equities-wise, international beat US over the half – 12.3% vs 10.8%. Equity CEFs modestly underperformed because of weaker NAVs, and a slight overweight to US stocks detracted against the benchmark. Notably, KIM’s five-year numbers remain strong, with Taxable Fixed Income and Tax-Sensitive Fixed Income outperforming their benchmarks by 4.91% and 2.80% annually, respectively.

Flows: FuM higher despite $853 million net outflows

Here’s the rub. While markets lifted asset values, client money moved out on net. The Group recorded $853 million of net outflows in the period, mainly from CLIM EM, International Equity and KIM Growth Balanced. This was driven by:

• Portfolio rebalancing as strong performance took weightings above targets.
• Structural changes – funded pension plans moving to liability-matching, consultant changes for OCIO clients, shifts to passive strategies, and cash needs for capital projects.

It wasn’t one-way traffic. CLIM still saw $100 million of gross inflows, mainly into EM and International Equity, and KIM recorded $147 million of gross inflows across Taxable and Tax-Sensitive Fixed Income and Growth Balanced. Management also note most strategies are above year-end FuM levels thanks to positive market conditions in early January.

Key numbers at a glance

Metric	Figure	Comment
FuM at 30 Jun 2025	$10.8 billion	Group starting point
FuM at 31 Dec 2025	$11.2 billion	Table shows $11,236 million (estimate)
FuM at 15 Jan 2026	$11.6 billion	Post-period continuation
Market/investment impact	+$1,275 million	Second-half uplift
Net flows (Group)	-$853 million	Outflows outweighed inflows
Gross inflows	$247 million	CLIM $100m; KIM $147m
CLIM FuM change	$6,837m to $7,134m	Net flows -$739m; markets +$1,036m
KIM FuM change	$3,977m to $4,102m	Net flows -$114m; markets +$239m
EM strategy performance	+19.2%	Benchmark +13.8% – outperformance +540 bps
Listed Private Equity	+20.1%	Benchmark +3.9% – outperformance +1,620 bps

Why this update matters for shareholders

FuM is up, and that is the primary driver for fee revenue. The early January number – $11.6 billion – suggests the firm entered 2026 with a tailwind. On the flip side, $853 million of net outflows is a reminder that client behaviour can offset performance, particularly after strong markets when rebalancing kicks in or when institutional mandates restructure.

The quality of performance is notable. EM outperformance of 540 bps and strong Listed Private Equity returns, aided by corporate actions and discount moves, demonstrate CLIM’s closed-end fund toolkit working as intended. KIM’s long-term fixed income record adds credibility even if short-term equity CEFs lagged. If discount volatility persists – and it often does – that can create both risk and opportunity for CLIG’s specialist approach.

What’s missing? Revenue, profit, margins and dividends are not disclosed in this trading update. Today is about FuM, performance, and flows. The next formal results will need to fill in the earnings picture.

What to watch next

• Flows stabilisation: do outflows ease as 2026 progresses, especially in CLIM EM and International Equity?
• CEF discount landscape: continued narrowing supports returns; widening would be a headwind.
• Corporate actions: Listed Private Equity just benefited from one – more could unlock value where wide discounts persist.
• Asset mix shifts: any move toward passive mandates or liability-matching in pensions can push outflows, while demand for EM and fixed income income-generating strategies could offset.

Overall, this is a constructive update. Markets did the heavy lifting, the investment teams added measurable alpha across several sleeves, and the Group starts 2026 with FuM momentum. The main watch-out is net flows – if those normalise, the operational gearing to higher markets should show through more clearly in the numbers when results arrive.