For financial professionals in the UK

Fund manager June commentary – The City of London Investment Trust

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

14 Jul 2020

The UK equity market produced a total return in June of 1.5%, as measured by the FTSE All Share Index. The FTSE 100 Index of the largest companies outperformed with a total return of 1.7%. The FTSE 250 Index of medium-sized companies, which is more domestically focussed, produced a total return of 0.6%. Despite the unwinding of the lockdown, the travel & leisure sector was a notable under performer. It has been slower to emerge from the lockdown than other parts of the economy with pubs and restaurants not opening until July and social distancing is likely to have an adverse impact on profitability. City of London is under represented in travel & leisure relative to the market average.

The water and electricity utilities had a good reporting season in May and June with dividends in line with market expectations. A new holding was bought for City of London in Pennon, which is the water utility covering Devon and Cornwall. It has recently sold its Viridor waste business which has given it options for capital returns and acquisitions. City of London holding in Sainsbury was sold with it disappointingly not having paid a final dividend. It was effectively replaced by the purchase in May of Tesco which is in a stronger competitive position in the UK food retail market and is paying its dividend.

Governments and central banks in the UK, US and Europe are engaged in unprecedented fiscal and monetary stimulus to counter the effects of the lockdowns and social distancing. Some parts of the UK economy are recovering strongly following the sharp fall in March and April. In our view, those companies that are able to pay growing dividends are attractive for investors given low bond yields and bank deposit rates.



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.

Monetary stimulus: policies of a central bank, aimed at influencing the level of inflation and growth in an economy.

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.