UK equities resilient to begin the year
Key takeaways:
- The City of London Investment Trust has performed well to begin the year as investors hunt for bargains in the UK market. Oil and mining companies have benefitted from higher commodity prices, whilst the strength in financials reflects rising interest rate expectations.
- Valuations in the UK market remain cheap compared to global peers and takeover bids from overseas companies reflect this. However, headwinds remain, including worsening geopolitical tensions and the prospect of higher interest rates to curb soaring inflation.
- Decarbonising the planet will be neither straightforward nor quick. However, oil and mining companies will have a big part to play in the transition towards cleaner energy sources.
Job Curtis, Portfolio Manager of The City of London Investment Trust, reflects on factors that affected performance during the first quarter and looks at the role oil and mining companies might play in decarbonization and electrification. Job also provides his outlook for UK dividends in the coming months.
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. 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.
Marketing Communication.
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
Key takeaways:
- The City of London Investment Trust has performed well to begin the year as investors hunt for bargains in the UK market. Oil and mining companies have benefitted from higher commodity prices, whilst the strength in financials reflects rising interest rate expectations.
- Valuations in the UK market remain cheap compared to global peers and takeover bids from overseas companies reflect this. However, headwinds remain, including worsening geopolitical tensions and the prospect of higher interest rates to curb soaring inflation.
- Decarbonising the planet will be neither straightforward nor quick. However, oil and mining companies will have a big part to play in the transition towards cleaner energy sources.