For financial professionals in the UK

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

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

19 Feb 2020

In January, the UK equity market produced a total return of 3.25%, as measured by the FTSE All Share Index. The FTSE 100 Index of the largest companies and the FTSE 250 Index of medium-sized companies both produced returns in line with the FTSE All Share Index. Business confidence surveys and data from the housing market were encouraging pointers for UK economic growth. On the other hand, the emergence of the coronavirus was negative for Chinese and global growth.

For a second month running, housebuilders were notable outperformers. Persimmon and Taylor Wimpey, where City of London has stakes, were respectively best and third best performers in the FTSE 100 Index. Defence contractor BAE Systems, which is also held in the portfolio, was the second best performer. Notable laggards included BT, which is under regulatory and competitive pressure. A small stake is held in the portfolio given the potential for decent returns from building fibre to homes. Carnival, which is also held in the portfolio, had a poor month because the coronavirus is likely to have an adverse effect on demand for cruise holidays. In the medium term, demand for cruises should recover. Significant additions were made to M&G, the fund manager and life assurer, on an attractive combination of dividend yield and growth. This was partly funded by selling Aviva, the composite insurer.
The change in Chancellor of the Exchequer may indicate a more expansionary fiscal policy ahead. UK equities continue to offer an attractive dividend yield relative to the main alternatives.


Yield: The level of income on a security, typically expressed as a percentage rate.

Dividend: A payment made by a company to its shareholders. The amount is variable, and is paid as a portion of the company’s profits.

Fiscal policy: Government policy relating to setting tax rates and spending levels.

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.