The volatility was triggered by higher-than-expected US inflation data. This was followed by more negative economic forecasts concerning the UK and Germany, as well as new Covid-19 restrictions in China.

But a correction also creates opportunities. In fact, in my opinion, despite the fiscal tightening around the world over the past week, the economic situation hasn’t changed, particularly in the UK. It’s still pretty negative.

However, I’m investing for the long run. So, here are three UK-listed shares I’m looking at adding to my portfolio.

International Airlines Group

IAG (LSE:IAG) is down a staggering 44% over the past 12 months. And, like others, I thought the worst was behind airlines in 2021.

Looking at my portfolio, my decision to buy IAG a few months ago looks like an investment mistake on paper.

But, in the long run, I think the airline group — which includes British Airways — will prove a sound buy.

For one, IAG’s market capitalisation is £5.5bn, but the enterprise value stands at £16.15bn. The market cap takes into account the high amount debt held by the company and the perception of the market. But you’d expect the enterprise value and market cap to be closer.

Demand for travel is also particularly high right now. The issue is around staffing and travel disruption. Come the end of July, we’ll see how well IAG performed in Q2, but my expectation is that the impact of well-publicised travel disruption has been overdone.

Baillie Gifford Japan Trust

The Baillie Gifford Japan Trust (LSE:BGFD) is a publicly traded investment trust, focusing exclusively on Japan. It is run by the same asset management firm as the Scottish Mortgage Investment Trust.

This is a growth-focused fund, and that explains why it’s fallen particularly heavily over the past year.

But there are several reasons why I’m optimistic here.

Firstly, inflation isn’t hitting Japan in the same way it’s hitting the rest of the world. Inflation stood at 1.9% in May. That’s below the 2% target.

Secondly, the Bank of Japan hasn’t increased rates. It’s keeping borrowing costs down to help Japan’s economy recover after the pandemic. This should be good for Baillie Gifford’s growth-focused portfolio.

Finally, Japan might be better positioned to deal with the scarcity we’re seeing globally. But don’t just take my word for it, there’s plenty of material to support this.

Bank of Georgia

I invested in the Bank of Georgia (LSE:BGEO) when Russia invaded Ukraine, despite the bank’s share price collapsing.

But it’s been a good investment so far, and I still think it’s got further to go, despite being down 7.5% this week.

The bank has been going from strength to strength, as has the Georgian economy. The economy grew by a further 14.4% in Q1 despite the war in Ukraine.

Profits doubled in 2021 and 2022 looks like it should be another strong year. Peer TBC Bank has recently announced a 46% YOY increase Q1 profits.

On the back of a stellar 2021, Georgia’s second largest bank has a P/E ratio of just four.

For me, Georgia is a great growth market. Stable, democratic, and I believe Tbilisi is one of the coolest places in Europe!

While this proposed stopgap measure wouldn’t move the needle on the major issues that are important to both sides, it does propose limiting future tariff increases and includes some Chinese concessions, like increasing purchases of US agricultural produce.

Still, given the fact that the Chinese proposal does not address key US demands like intellectual property rights, it’s easy to see why the market is skeptical and waiting to see what happens next. 

Elsewhere, the Bank of England commented on the risk of a no-deal Brexit, saying that although the UK financial system is in a better position to withstand the shock today than it was several months ago, investors and consumers would still see significant price fluctuations, adding that “financial stability is not the same as market stability”.

GVC Holdings

One of the biggest winners today was sports betting operator GVC Holdings (LSE: GVC), which is up 6.4% on the day. The group, which owns bookmakers Ladbrokes and Coral, reported an improved earnings forecast for the second time in three months. In today’s trading update, management said that revenue had increased by 12% year on year for the period 1 July to 30 September, even though the 2018 FIFA World Cup took place over the same time last year. The full-year earnings guidance was upgraded from £650m-£670m to £670m-£680m. 

Interestingly, these improved results come at the same time that the group is closing down many of its brick-and-mortar locations – 41 this quarter. The long-term plan is to close 900 retail locations in a strategy that will see the group shift to a primarily online model. Net gaming revenue for GVC’s online segment rose 14% year on year, highlighting the wisdom of this switch.

Baillie Gifford Japan

Investment trust Baillie Gifford Japan (LSE: BGFD) reported a fall in net asset value of 5% for the year ended 31 August. Although the stock has remained essentially flat on the day, I think this is an interesting development, given the composition of Baillie’s portfolio. It’s biggest holding is Softbank, a Japanese holding company that has very large stakes in both Uber and WeWork. 

Uber has slumped in the months following its much-publicised IPO earlier this year, while WeWork has made headlines due to the collapse of its own IPO plans. Both companies continue to haemorrhage money, and have led many to question Softbank’s CEO Masayoshi Son. 

Softbank only represents around 6.2% of Baillie’s Japanese portfolio, but the high-profile nature of this investment suggests that there could be a lot more to come than today’s small stock price move would suggest.  

HG Sauce

HG Capital Trust (LSE: HGT) gives you exposure to a fast-growing portfolio of more than 30 unquoted investments, primarily in technology and technology-enabled services across Europe, plus two renewable energy funds. This is a racy remit and HG aims to deliver a return in excess of the FTSE All-Share over the longer run. It has delivered in style, with a historic return of 1.6 times the index, and long-term annual compound growth of 10.4% a year over the last decade.

Last month, HG Capital Trust posted a 12.1% rise in net asset value in the six months to 31 August against 5.5% on the All-Share. Today’s update shows the share price rising a meaty 16.9% over the past 12 months. It now has £674m under management and a market cap of £609m, which leaves it trading at an attractive 9.6% discount to net asset value.

In Capital we Trust

Even investors who like to make their own direct equity choices should consider a trust like this, because it gives you a broad spread of under-the-radar stocks. HG is a private equity firm that targets middle-market buyouts primarily in European technology, media and telecomunications. Top holdings include Visma, IRIS, Sovos Compliance, CogitalGroup, Mitratech and other relative minnows. The fund is 50% invested in the UK, but also has 19% exposure to Scandinavia, as well as Northern Europe and the US.

On a cumulative basis, this fund will have more than doubled your money over five years, according to TrustNet.com. It also offers a dividend yield of 3.65%, which is attractive. This is a very nice portfolio diversifier that has proven its merits over the longer run.

Big in Japan

For further diversification, have you considered Japan? After a long, cold winter Japan-focused funds have been making hay in the rising sun, and few more so than Baillie Gifford Japan Trust (LSE: BGFD). Over five years, it has produced a cumulative return of 275%, Trustnet shows, while its benchmark Japan Equities index returned ‘only’ 175% over the same period.

Perhaps this is to be expected, given that the trust invests in medium-to-smaller-sized Japanese companies, which will often outpace the wider market during strong growth periods. But it still opens up an exciting new area that many investors may have overlooked. Latest performance figures for the year to 31 August are hugely impressive. During this time, the trust’s net asset value rose 27.6%, while the benchmark index gained 18.8%. In this period the company’s share price increased a thumping 37.5%.

There are a few potential hiccups. The fund has been managed by Sarah Whitley since 1991, but she is due to retire in April after 27 years. Also, it trades at a premium of 4.51%, a tribute to its recent stonking growth. Finally, you are coming late to the Japanese recovery party, which cannot go on forever. However, Baillie Gifford Japan Trust still looks a great way to plug any regional gap in your portfolio.

If you’re unsure of which investment trusts to consider, then you might want to start out by taking a look at these top-performing trusts.

Long-term growth

For investors looking for long-term growth, I reckon the Lindsell Train Investment Trust (LSE: LTI) is worth a closer look. Shares in the investment trust have delivered a total return of 241% over the past five years, allowing it to easily beat the Morningstar Global Investment Trust category performance of 130%.

The Lindsell Train Investment Trust seeks to maximise long-term total return by investing in global equities and other Lindsell Train funds. But what’s unusual about this investment trust is that it also owns a significant minority stake in its investment manager, Lindsell Train Limited. This 24.3% stake in the investment management company co-founded by Michael Lindsell and Nick Train accounts for 37.9% of the value of its portfolio.

With such a large position in a single unquoted investment, investors in the trust are highly exposed to fluctuations in the valuation of that single company. And although its position in Lindsell Train Limited has no doubt played a big role in the fund’s recent outperformance, the opposite can also happen in the future.

Nevertheless, many investors seem confident that the fund will continue to deliver market-beating returns, as shares in the investment trust currently trade at a 25% premium to its net asset value of £680.03 per share.

Japan

The Baillie Gifford Japan Trust (LSE: BGFD) is a standout performer in the Japanese category, with a five-year return of 248%, compared to the average investment trust peer performance of 176%.

The fund has been managed by Sarah Whitley since 1991 and primarily focuses on medium-to-smaller-sized Japanese companies. Despite sluggish economic growth in that country, Whitley reckons there are still good opportunities for many stocks in her portfolio.

She likes to pick stocks with above average growth prospects and top holdings include Softbank (3.6%), Yaskawa Electric (2.9%), Misumi (2.8%), Start Today (2.8%) and Persol Holding (2.5%).

Sector focus

As technology disruption continues to impact the business landscape, the technology sector has proven to be a consistent market leader in recent years. With this in mind, the Allianz Technology Trust (LSE: ATT) is a solid pick for investors expecting further significant gains.

Over the past five years, the trust has delivered a cumulative performance of 217%, earning it a top-quartile ranking in the technology sector category. Many well-known tech brands dominate its portfolio, including Amazon (6.6%), Apple (6.2%) and Facebook (4.3%) — its top three positions. But the fund also holds big positions in lesser known names, such as cloud computing firm Workday (3.7%) and payments solutions company Square (3.2%).

And as expected, the US is by far its largest geographical exposure, representing just over 80% of total assets. This is followed by China (6.6%), France (3.0%) and South Korea (2.7%).