The City of London Investment Trust Fund Manager Commentary – October 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 October, and outlines recent portfolio activity.
2 minute read
From January, The City of London Investment Trust’s Commentary will be merged into the Factsheet. The new, and improved, merged Factsheet document will still be accessible via the ‘Quicklinks’ and ‘Documents’ sections on the City of London Investment Trust’s webpage.
The Company’s net asset value was up 3.3%, slightly ahead of the FTSE All Share Index return of 3.1%.
We sold the holding in Haleon, the consumer health care company, given its low dividend yield while the company reduces its debt. Some of the proceeds were reinvested in Sanofi, the pharmaceutical company headquartered in France. We also sold the holding in Synthomer, the chemical company, with its dividend suspended due to its high level of debt caused by an acquisition made in 2021. The proceeds were reinvested in medium-sized companies Marshalls in the building materials sector and Wincanton in the logistics sector. We also made an addition to NatWest in view of its guided return on equity and discount to book value.
Monetary tightening remains a headwind for equity markets. We think the dividend yield of UK equities is attractive compared with the average of world equities.
1Source: Bloomberg as at 31 October 2022
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.
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.
Monetary Policy tightening – Tight, or contractionary monetary policy is a course of action undertaken by a central bank such as the Federal Reserve to slow down overheated economic growth, to constrict spending in an economy that is seen to be accelerating too quickly, or to curb inflation when it is rising too fast.
Net Asset Value – The total value of a fund’s assets less its liabilities.
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