Defined contribution (DC) master trusts reported a rebound in growth-phase strategy returns over Q2 2026, as easing geopolitical tensions and falling oil prices improved investor sentiment, Isio has revealed.

Isio’s latest quarterly analysis of the investment performance and asset allocation of 14 UK DC master trust providers found that all growth-phase strategies delivered positive quarterly returns, ranging from 11.9 per cent to 19.8 per cent, despite a volatile start to 2026.

In contrast, Q1 2026 delivered returns ranging from 0.9 per cent to -4.5 per cent.

Additionally, longer-term returns were strong, ranging from 21.1 per cent to 34.3 per cent over one year and 14.3 per cent to 22.7 per cent on an annualised three-year basis.

Isio said the findings highlighted how maintaining exposure to growth assets through periods of short-term volatility can support stronger long-term member outcomes.

Differences in performance, Isio said, reflected variations in equity allocations, regional and sector exposure, and the extent of private market investment.

The analysis also found that emerging market equities outperformed developed markets, UK equities underperformed the US and Europe, while credit markets delivered positive returns despite ongoing interest rate uncertainty.

Commenting on the analysis, Isio head of DC master trust research, Mark Powley, said: “Q2 was a reminder of how quickly market conditions can change.

“What’s notable is that providers have generally maintained a disciplined, long-term approach rather than reacting to short-term market movements.

“Members who remain invested are better positioned to participate when markets recover, while attempting to time those turning points remains extremely difficult.”

The analysis also revealed that at-retirement strategies delivered positive returns across all time periods.

Powley commented: “We also continue to see the importance of diversification at retirement.

“Equity exposure remains an important driver of returns, but it does not explain the full range of outcomes. Regional positioning, fixed income, alternatives and implementation decisions all matter as providers balance capital preservation with the need for continued growth.”

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