For financial professionals in the UK

Fund manager July commentary – The City of London Investment Trust

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

13 Aug 2020

During July, the UK equity market produced a negative return of 3.6%, as measured by the FTSE All Share Index. The more domestically focussed FTSE 250 Index of medium- sized companies outperformed with a negative return of 1.0% compared with a negative return of 4.2% for the FTSE 100 Index of the largest UK listed companies. One factor behind the underperformance of the FTSE 100 was the weakness of the US dollar, which fell by 5.6% over the month against sterling. In general, the FTSE 100 companies have greater exposure to the US dollar.
Both UK listed tobacco stocks, British American Tobacco and Imperial Brands, which are held in City of London’s portfolio, were notable underperformers in July. In our view, both companies offer attractive dividend yields covered by their cash flows. Specialist chemical company, Croda International, which announced good half year results was a notable outperformer among City of London’s holdings.
As widely expected, BP cut is dividend (by 50%) when it announced its half year results. Elsewhere, the news was more pleasing with dividends restored from several companies in City of London’s portfolio, including BAE Systems, IMI and Direct Line. As visibility in the stability of dividends improves, the dividend yield of UK equities, which is higher than the main alternatives, should in our view gain in attraction for investors.

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.

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.