The City of London Investment Trust plc – Half-Year Results
The City of London Investment Trust Portfolio Manager, Job Curtis, discusses portfolio performance over the last 6 months, where the portfolio management team has been finding opportunities in the UK market, and how the portfolio is positioned to face the looming recession.
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Performance
Despite continuing turbulence in global markets and a brief period of unprecedented political volatility in the UK, the Company’s Net Asset Value (NAV) total return increased 4.5%. While this was slightly behind the FTSE All-Share Index (+5.1%) and AIC UK Equity Income average (+5.1%), it was ahead of the IA UK Equity Income OEIC sector average (+3.8%). In addition, two interim dividends of 5.00p each have been declared so far during this financial year.
Outlook
The Company’s diverse portfolio, strong cash flow and revenue reserve gives the Board confidence that it will be able, inline with its objective to provide shareholders with long-term income and capital growth, to increase the total annual dividend for the fifty seventh consecutive year. The dividend yield premium of UK equities over bank deposits and 10-year Gilts has narrowed, but equities offer the prospect of dividend growth and can therefore provide some element of hedge against inflation.
Related insights
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. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.
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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Important information
Please read the following important information regarding funds related to this article.
- 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.
Specific risks
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