For financial professionals in the UK

Fund Manager January Commentary – The City of London Investment Trust

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

15 Feb 2021

During January, UK equities gave up some of their gains from the previous two months with the country in its third lockdown. The FTSE 100 Index of the largest companies produced a negative total return of 0.8%, slightly outperforming the FTSE 250 Index of medium-sized companies which produced a negative total return of 1.2%. The FTSE All Share Index produced a negative total return of 0.8%.

Trading for food retailers is likely to be resilient given they remain open unlike pubs, restaurants and non-essential retailers. Additions were made to City of London’s stakes in Tesco and Wm Morrison. The life insurance sector was a notable underperformer, partly due to Prudential’s announcement of more capital being needed for its US subsidiary, Jackson National. A reduction was made in the City of London’s holding in Prudential but additions were made to Phoenix, the life insurer, and M&G, the financial services company with life insurance interests.

The lockdown is likely to lead to a contraction in UK growth in the first quarter of 2021. The outlook for the rest of the year is more positive with the economy reopening, helped by the roll out of the vaccines. Given the amount of monetary and fiscal stimulus and the high level of personal savings, growth could surprise to the upside in the second half of the year, which would provide a supportive background for company profits and dividends.


Fiscal stimulus: Government policy relating to setting tax rates and spending levels. It is separate from monetary policy, which is typically set by a central bank. Fiscal austerity refers to raising taxes and/or cutting spending in an attempt to reduce government debt. Fiscal expansion (or ‘stimulus’) refers to an increase in government spending and/or a reduction in taxes.

Monetary stimulus: The policies of a central bank, aimed at influencing the level of inflation and growth in an economy. It includes controlling interest rates and the supply of money.

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.