For financial professionals in the UK

The City of London Investment Trust Fund Manager Commentary – August 2022

Job Curtis, Portfolio Manager of The City of London Investment Trust, provides an update on the Trust, highlighting factors currently affecting the UK market, the key drivers of performance in August, and outlines recent portfolio activity.

Job Curtis | Janus Henderson Investors
Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

14 Oct 2022
3 minute read

Macro backdrop

The FTSE All-Share Index produced a negative total return of 1.7% as high inflation stoked fears of a recession. July’s Consumer Price Index (CPI) rose to 10% for the first time in over 40 years. In response, the Bank of England (BoE) hiked interest rates to 1.75% -the highest level since 2008. Concerns over UK economic growth, combined with a hawkish update from the US Federal Reserve (Fed), caused sterling to fall over 4.5% compared with the US dollar during the month.¹

Trust performance and activity

The Trust’s net asset value fell 1.7% in August, while the FTSE All-Share Index also fell 1.7%.¹

Persimmon, the house building company, was a notable detractor over the month as its share price reacted adversely to higher interest rates. The position has been maintained given Persimmon’s large land bank which is available for the construction of family homes around the UK. The defensive attributes of tobacco companies, where profits have tended to be resilient in recessions, found favour during the month as Imperial Brands and British American Tobacco were among the best contributors. Conversely, banks have been benefiting from the positive effect of rising interest rates on their net interest margins and so the fund’s underweight position in HSBC was a detractor.

In terms of activity, we added to the Trust’s position in NatWest. We also added to the position in Rathbones, the private client wealth manager, as a replacement for Brewin Dolphin, which is in the process of being taken over by Royal Bank of Canada.


The macroeconomic outlook is difficult with central banks needing to raise interest rates in the UK and overseas to counter inflation. In addition, the effect of inflation on consumer spending and on cost pressures for companies adds to the uncertainty. Markets will probably need some visibility that inflation and interest rates are peaking before a sustained rally can be achieved. Our portfolio is diversified with some two-thirds of investee company sales coming from overseas, while the dividend yield from UK equities remains attractive relative to the main alternatives.

¹Bloomberg as at 31 August 2022 CTY August 2022 Glossary Expand

Dividend yield – The dividend yield, expressed as a percentage, is a financial ratio (dividend/price) that shows how much a company pays out in dividends each year relative to its stock price.

Inflation – The rate at which the prices of goods and services are rising in an economy. The CPI and RPI are two common measures. The opposite of deflation.

Net Asset Value (NAV) – The total value of a fund’s assets less its liabilities.

Recession – A recession is a significant, widespread, and prolonged downturn in economic activity. A popular rule of thumb is that two consecutive quarters of decline in gross domestic product (GDP) constitute a recession. Recessions typically produce declines in economic output, consumer demand, and employment.

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.
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  • Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
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