For financial professionals in the UK

Fund Manager February Commentary – The City of London Investment Trust

Mid Cap Equities Investing in Smart Growth
Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

11 Mar 2021

The UK equity market made solid gains in February, with a total return of 2.0%, as measured by the FTSE All Share Index. A key factor was the optimism engendered by the vaccination programme. The more domestic FTSE 250 Index of medium-sized companies outperformed with a total return of 3.4%. The FTSE 100 Index of the largest companies returned 1.6% with the rise in sterling having a negative translation effect on overseas profits.

A notable feature was the rise in bond yields both in the UK and overseas. While the unprecedented policy stimulus will stimulate economic growth when the lockdown ends, there are some fears of an uplift in inflation. City of London has decided to take advantage of the historically low level of interest rates and announced a £30 million borrowing, for 25 years, at a 2.67% annual interest rate.

The banks sector outperformed with rising bond yields and expectations of better economic growth being positive factors. In addition, the authorities have allowed the banks to pay dividends, unlike in 2020. City of London’s holdings in Barclays and Lloyds were among its best performers in February. Pharmaceutical group, GlaxoSmithKline, whose full year results disappointed, indicated a dividend cut next year when the company splits into two parts. A reduction was made in City of London’s holding. Additions were made to existing holdings, such as Direct Line Insurance, Persimmon, the housebuilder, and Tate & Lyle.

The season for UK companies reporting full year results has overall met expectations with some positive dividend surprises, especially from the mining sector where City of London has large holdings in Rio Tinto, BHP and Anglo American. As economic growth improves from the second quarter both in the UK and overseas, it should be a supportive background for company profits and dividends.


Bond yield: The level of income on a security, typically expressed as a percentage rate. Note, lower bond yields mean higher prices and vice versa.

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.