L1 Treasury manages the liquidity and financial investments of L1 Investment Holdings. When the Group makes strategic investments, L1 Treasury provides the necessary funds; when investments are sold or dividends are received, it manages the available funds through a portfolio of financial investments across public and private equity, fixed income, real estate, direct lending, hedge funds and credit funds.
The CIO of L1 Treasury is responsible for implementing the investment strategy within the risk limits and parameters set by L1 Treasury’s Investment and Risk Committee. The Committee includes executives of the L1 Group as well as non-executive members.
Portfolio construction
L1 Treasury’s mandate includes both liquidity and return objectives. In constructing the portfolio, L1 Treasury therefore pursues a “barbell” strategy, whereby a portfolio of cash and liquid securities is complemented by less liquid, higher-yielding investments such as direct loans, funds and real estate.
The loan book combines large loans provided directly by L1 Treasury to borrowers, usually secured by real or financial assets, with smaller loans typically provided through lending platforms. These lending platforms are specialist lending businesses for which we are the sole, or at least the largest, funder and in which we may have an equity interest.
Funds Investments are generally in third party hedge funds, which we mostly access through fund-of-funds providers. We aim to maintain a well-diversified portfolio of funds and strategies.
Market background
2025 was a year defined by uncertainty and volatility. The new US administration renewed the “America First” agenda, including protectionist trade and tariff policies, competition with China on
AI, tighter immigration restrictions, deregulation, support for fossil fuels and large tax cuts financed by increasing deficits. The “Liberation Day” announcement in April 2025 shocked markets as the US imposed trade tariffs at a level not seen since the 1930s.
Despite these challenges, US corporate earnings were a bright spot in 2025: 80% of companies in the S&P 500 index reported earnings ahead of expectations in both Q2 and Q3, reinforcing the market view that political turmoil had limited impact on company earnings. Large US technology companies continued to report strong earnings and revenue growth.
US monetary policy shifted towards easing in 2025, with the Federal Reserve implementing three 25bps interest rate cuts and lowering the federal funds rate to a range of 3.5% to 3.75%. In Europe, the European Central Bank implemented four 25bps interest rate cuts, reducing its deposit facility rate from 3.00% to 2.00%. The Bank of England also reduced interest rates by 1.00%, from 4.75% to 3.75%.
Despite heightened geopolitical uncertainty, trade tariffs and higher deficits, risk-on sentiment drove an “everything rally”. 2025 was the first year since the pandemic in which all major asset classes delivered positive returns.
Precious metals were the standout asset class of 2025. Gold dominated headlines as international central banks continued to diversify their reserve holdings and gold exchange-traded funds saw strong inflows, resulting in a 65% price rally over the year. Consequently, the USD was under pressure, with EUR and GBP appreciating by around 13% and 8%, respectively, during the same period.
The S&P 500, Nasdaq 100 and European Stoxx 50 indices increased by 17.9%, 21.2% and 21.2%, respectively, over the year. The 10-year US Treasury yield declined by 40.3bps, while the 5-year CDX High Yield Index spread widened marginally by 5.0bps in 2025.
Performance review
L1 Treasury’s portfolio recorded a solid performance of 6.72% gross returns in 2025, despite holding significant cash balances that dampened returns. This compares with implied returns of 7.89% and 9.47% for the two benchmarks used by L1 Treasury over the same period. Both benchmarks have a higher embedded market beta, while L1 Treasury focuses on lower volatility and a higher Sharpe ratio. All investment strategies delivered positive returns during 2025.
L1 Treasury’s portfolio was actively managed throughout 2025. CLO exposure was deliberately reduced from $2.8bn to $2.3bn. We invested $710mn in the hedge fund portfolio through commitments to blue-chip credit long/short and multi-strategy funds. In direct investments, notable activity included the sale of a £48mn real estate investment (Mitchells & Butlers’ Birmingham HQ) and the sale of Octane, the L1-owned mortgage company, in March 2026, both at a significant profit. In January 2026, Treasury also co-invested $200mn in preferred and common equity in a leading global data services provider.
As in previous years, L1 Treasury produced its returns while managing significant capital flows. In 2025, L1 Treasury recorded $910mn of inflows and $1,520mn of outflows. These net capital outflows, together with portfolio performance and expenses, resulted in L1 Treasury’s assets under management reducing from $6,735mn to $6,514mn.
L1 Treasury’s highly experienced global team
The L1 Treasury team is international, with employees from 13 nationalities operating across the UK and Luxembourg and, going forward, the UAE. The team is highly experienced and includes the capabilities expected of an institutional asset management company, from risk management and investment professionals to technology and infrastructure experts.