For financial professionals in the UK

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

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager

17 Feb 2022
3 minute read

During January, the UK equity market produced a negative total return of 0.3%. There was a sharp divergence of performance between the FTSE 100 Index of the largest companies, which returned 1.1%, and the FTSE 250 Index of medium-sized companies, which produced a negative return of 6.5%. The FTSE 100 benefited from the strong performances of BP and Shell with the Brent oil price rising over the month by 16% to $89/bbl. The banks sector also performed well against a background of rising interest rates, with HSBC a notable outperformer. A further sector behind the FTSE 100’s outperformance was telecommunications service providers, with Vodafone rising on hopes of merger possibilities for some of its European interests. Finally, the tobacco sector outperformed, displaying defensive qualities, with British American Tobacco and Imperial Brands among the leaders over the month1.

City of London is predominantly invested in large companies and has shareholdings in Shell, BP, HSBC, Vodafone, British American Tobacco and Imperial Brands. On the other hand, an underperforming part of the portfolio over the month were the housebuilders, with the Government holding talks to pay for defective cladding. City of London has stakes in Persimmon, Taylor Wimpey and Berkeley and it would appear that these companies have provided for any defective cladding that they are directly responsible for and the outlook for demand for new homes remains robust.

During the month, a new holding was bought in Wincanton, the logistics company, which reported strong trading across its business. Some profits were taken in BHP, the miner which has left the UK indices to be fully represented in Australia, but the majority of the holding remains in City of London’s portfolio.

Companies benefited from strong economic growth in the UK and overseas in 2021, leading to profit and dividend growth. Inflation, which was described by central banks as “transitory”, has proved to be more persistent than expected. The rise in interest rates and bond yields has been a challenge for equity markets. The UK equity market had an attractive dividend yield relative to the main alternatives.

1Bloomberg as at 31/01/2022

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.


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