For financial professionals in the UK

Fund manager February commentary – The City of London Investment Trust plc

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

12 Mar 2020

The spread of the coronavirus from China to many other countries, including those as diverse as Italy, South Korea and Iran, weighed on markets in February. Economies were likely to be adversely affected by a drop in demand, especially travel related, as well as supply disruptions. The UK equity market, as measured by the FTSE All Share Index, produced a negative total return of 8.9%. The FTSE 100 Index of the largest companies slightly underperformed, with a negative total return of 9.0%, compared with the FTSE 250 Index of medium-sized companies which produced a negative total return of 8.5%. Government bond yields fell with the 10 Year Gilt yield ending the month at 0.4% indicating caution on growth prospects.

Utilities, which are largely unaffected by moves in economic activity, were among the best performers and City of London benefited from its stakes in SSE and National Grid. In contrast, the oil sector was an underperformer, reflecting the weak oil price. City of London has large holdings in Royal Dutch Shell and BP but is under represented relative to the size of those companies in the FTSE All Share Index. Within their global sector, both companies are, in our view, relatively well positioned given their integrated operations in refining and marketing as well as oil and gas production. During the month, additions were made to several of City of London’s existing stakes but there were no purchases of new holdings and no complete sales.

The policy response to the coronavirus has been robust with a 0.5% cut in interest rates in the US and the UK. In addition, the UK Budget set out an expanding deficit. Although there is bound to be short term share price volatility, UK equities continue to offer an attractive dividend yield 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.