In this week’s episode, Laura Thomas is joined by Job Curtis, fund manager of City of London Investment Trust, and Laura Foll, who co-manages Henderson Opportunities Trust, Lowland Investment Company and Law Debenture with James Henderson.
Laura and Job each discuss where their trusts stand as markets have bounced back, and when they each expect to see pre-COVID levels again. They also explore which sectors are seeing the most growth at this time as well as how dividends have fared this year.
A financial statement that summarises a company's assets, liabilities and shareholders' equity at a particular point in time. Each segment gives investors an idea as to what the company owns and owes, as well as the amount invested by shareholders. It is called a balance sheet because of the accounting equation: assets = liabilities + shareholders’ equity.
A financial market in which the prices of securities are falling. A generally accepted definition is a fall of 20% or more in an index over at least a two-month period. The opposite of a bull market.
Blue chip stocks
Stocks in a widely known, well-established, and financially stable company, with typically a long record of reliable and stable growth.
A payment made by a company to its shareholders. The amount is variable, and is paid as a portion of the company’s profits.
The fluctuation of the economy between expansion (growth) and contraction (recession). It is influenced by many factors including household, government and business spending, trade, technology and central bank policy.
Government policy relating to setting tax rates and spending levels. It is separate from monetary policy, which is typically set by a central bank. Fiscal austerity refers to raising taxes and/or cutting spending in an attempt to reduce government debt. Fiscal expansion (or ‘stimulus’) refers to an increase in government spending and/or a reduction in taxes.
A measure of a company’s leverage that shows how far its operations are funded by lenders versus shareholders. It is a measure of the debt level of a company. Within investment trusts it refers to how much money the trust borrows for investment purposes.
Large capitalisation stocks (large caps)
Larger companies as defined by market capitalisation (total market value of a company calculated by multiplying the number of shares in issue by the current price of the shares) tend to be easily bought or sold in the market (highly liquid).
The ability to buy or sell a particular security or asset in the market. Assets that can be easily traded in the market (without causing a major price move) are referred to as ‘liquid’.
The policies of a central bank, aimed at influencing the level of inflation and growth in an economy. It includes controlling interest rates and the supply of money. Monetary stimulus refers to a central bank increasing the supply of money and lowering borrowing costs. Monetary tightening refers to central bank activity aimed at curbing inflation and slowing down growth in the economy by raising interest rates and reducing the supply of money. See also fiscal policy.
A grouping of financial assets such as equities, bonds and cash. Also often called a ‘fund’.
To hold a lower weighting of an individual security, asset class, sector, or geographical region than a portfolio’s benchmark.
Value investors search for companies that they believe are undervalued by the market, and therefore expect their share price to increase. One of the favoured techniques is to buy companies with low price to earnings (P/E) ratios. See also growth investing.
For a full list of terms, please see our glossary.