For individual investors in the UK

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

Job Curtis | Janus Henderson Investors
Job Curtis

Job Curtis

Fund Manager

17 Jun 2022

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

Macro backdrop

In May, the UK equity market returned 0.7%, as measured by the FTSE All Share Index. Large companies outperformed with the FTSE 100 Index returning 1.1% compared with a negative return of 1.1% for the FTSE 250 Index of medium-sized companies. A key factor behind the strength of the FTSE 100 was its exposure to oil, which was the best performing sector as the oil price rose 10% to $116 per barrel. The rising cost of oil led to a further rise in UK inflation as measured by the Consumer Price Index (CPI) to 9.0% in April (up from 7.0% in March). The Bank of England increased rates by a further 25 basis points to 1.0%, the highest level in 13 years, but there was a more dovish tone to its commentary given slowing UK economic growth.¹

Trust performance and activity

The City of London Investment Trust returned 1.2% in May, slightly ahead of the FTSE All Share Index which returned 0.7%.¹ Shell and BP, which are both large holdings in the portfolio although below the FTSE All Share Index weighting, were notable outperformers. The bank sector benefited from the rise in interest rates and holdings in HSBC and Barclays performed well. Sentiment turned against Segro, the owner of industrial property and warehouses in the UK and Europe. Segro has been a strong outperformer for the portfolio in recent years but was a notable casualty in May. The catalyst for the share price decline may have been Amazon revealing it had too much warehouse space in the US.

In terms of activity, we added to the holding in TotalEnergies, the international oil company headquartered in France. We also took some profits in Brewin Dolphin ahead of the completion of its takeover by Royal Bank of Canada. The proceeds were reinvested into a new holding in Rathbones, also in the wealth management sector, which has historically showed structural growth characteristics.


Given the level of inflation, it is likely that central banks will continue to raise interest rates, slowing economic growth further. Although this is a challenging backdrop for markets, interest rates are rising from a historically low level. The dividend yield on UK equities remains attractive relative to the main alternatives.

¹Source: Bloomberg as at 31 May 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. 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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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.
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