For financial professionals in the UK

Fund Manager April Commentary – The City of London Investment Trust

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

14 May 2021

The UK equity market performed well during April producing a total return of 4.3%, as measured by the FTSE All Share Index. Medium-sized companies slightly outperformed with a total return of 4.9% for the FTSE 250 Mid Cap Index compared with a 4.1% total return for the FTSE 100 Index of the largest companies. In general, stocks were helped by the success of the vaccination programme leading to the reopening of the economy.

Against this background, cyclical stocks, which are more exposed to the growth rate of the economy, led the market. From City of London’s portfolio, DIY retailer, Kingfisher, and IMI, the industrial engineer, were notable outperformers. On the other hand, more defensive companies, which had held up better during the early stages of the pandemic, were relative underperformers, including Tesco and British American Tobacco from City of London’s portfolio.

During the month, additions were made to BAE Systems, the defence contractor, and life insurer Legal &  General. Both companies reported good full year results and dividends. BAE Systems benefits from a large order book of long-term contracts. Legal & General is a UK leader in annuities and protection policies and owns a large asset management business focussed on index funds. The holding in Ten Entertainment, the bowling operator, was sold after the recovery in its share price from the lows and given uncertainty about when it can resume paying dividends.

Economic growth is expected to be very strong as economies reopen given the monetary and fiscal stimulus from the authorities. The UK and other world equity markets have made substantial gains from the lows over the last 12 months. Some of the recovery in profits as economies reopen is already reflected in share price valuations. Nevertheless, the dividend yield from UK equities remains attractive relative to the main alternatives.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.


Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.


The information in this article does not qualify as an investment recommendation.


Marketing Communication.






Important information

Please read the following important information regarding funds related to this article.

Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
    Specific risks
  • If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
  • Where the Company invests in assets that are denominated in currencies other than the base currency, the currency exchange rate movements may cause the value of investments to fall as well as rise.
  • This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
  • Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
  • The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
  • The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.
  • All or part of the Company's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.