The City of London Investment Trust: full-year results 2025
The City of London Investment Trust (CTY) has released its results for the full-year 2025. Dive into the details and discover how we're performing by watching a video from our fund manager, Job Curtis, as he discusses the results and provides further insights.
4 minute watch
Dividend
A variable discretionary payment made by a company to its shareholders.
Hedge
A trading strategy that involves taking an offsetting position to another investment that will lose value as the primary investment gains and vice versa. These positions are used to reduce or manage various risk factors and limit the probability of overall loss in a portfolio. Various techniques may be used, including derivatives.
Inflation
The rate at which the prices of goods and services are rising in an economy. The consumer price index (CPI) and retail price index (RPI) are two common measures; the opposite of deflation.
Interest rates
The amount charged for borrowing money, shown as a percentage of the amount owed. Base interest rates (the Bank Rate) are generally set by central banks, such as the Federal Reserve in the US or Bank of England in the UK, and influence the interest rates that lenders charge to access their own lending or saving.
Net asset value (NAV) total return (investment trusts):
The theoretical total return on shareholders’ funds per share reflecting the change in Net Asset Value (NAV) assuming that dividends paid to shareholders were reinvested at NAV at the time the shares were quoted ex-dividend. A way of measuring investment management performance of investment trusts which is not affected by movements in discounts/premiums.
Overweight
Having a larger exposure to an individual security, asset class, sector, or geographical region than a relevant benchmark, such as an index.
Portfolio
A grouping of financial assets such as equities, bonds, commodities, properties or cash. Also often called a ‘fund’.
Share price total return (investment trusts)
The theoretical total return to the investor assuming that all dividends received were reinvested in the shares of the company at the time the shares were quoted ex-dividend. Transaction costs are not taken into account.
Tariffs
A tax or duty imposed by a government on goods imported from other countries.
Important information
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Performance
I’m pleased to report a good year for City of London over the last 12 months. Our net asset value total return was 16.8%, which was ahead of the UK market as measured by the FTSE All-Share index, which went up by 11.2%. In addition, we increased our dividend by 3.4%. This is the 59th year in a row we’ve increased our dividend, every year since 1966.
Performance drivers
So what’s behind the performance over the last 12 months? I’d like to highlight some of the stock selection, in particular in the financial sector, when in banks we were overweight. We moved overweight about 18 months ago for the first time since before the financial crisis, and this has proved to be a good move with the higher interest rate environment being very helpful to the banking sector, in particular in the funds they hedge out for 5 years or so, and as those hedges roll over, they’ve been able to lock in at much higher interest rates than in the recent past. In particular, in the banking sector, NatWest was a very successful holding for us. Also in financials, M&G, which is a mixture of fund management and life insurance, was a strong performer over the 12 months with a highly attractive dividend yield. Looking outside financials, Imperial Brands, the tobacco company, which is very cheaply rated, had a strong year and produced consistent earnings and dividend growth. Talking about another sector, pharmaceuticals here more mixed. In AstraZeneca, which we hold, we’re actually underweight in and so that benefited our performance relative to the index. On the other hand, we hold Merck, which is an American-listed pharmaceutical company which detracted from performance. Another sector with more mixed performance was aerospace and defence, another very strong year from BAE Systems, the major UK defence contractor, but Rolls-Royce, which we don’t hold, also performed well, so that cost us a bit against the index.
Portfolio changes
So what are the main changes we made in terms of stocks over the year? Well, Direct Line, the insurer, got taken over, and rather than taking Aviva shares, we already hold Aviva, we bought Admiral, which is another motor insurer. We bought TP ICAP, which is an intermediary in financial markets, also within the financial groups. Another sector where we actually increased our holdings was Real Estate Investment Trusts, where we felt that the discounts to net asset value, which are very large, and high dividend yields, were very attractive. And so we added to existing holdings in British land and land securities. In utilities, we reduced our holdings somewhat from an overweight position. But remaining still slightly overweight, and in particular we sold Pennon, which is a UK water utility based mainly in the southwest of England.
Outlook
Let’s think about the outlook. Obviously there’s some big changes going on in the world, in particular, tariffs have been imposed from the US, and these tariffs are the highest we’ve seen in the whole of the post-Second World War era, so this is a big change, and really we wait to see how the full impact of these tariffs on economies generally and companies. In terms of the UK, we have seen some cuts in interest rates, but inflation remains quite sticky, so I think we may wait to see inflation fall back more to the government’s target before we get more substantial cuts in interest rates. However, our portfolio, although predominantly UK listed companies, some 60% of the underlying sales of our companies are from overseas, so we’re well diversified. And I’m very confident that companies in our portfolio, I think they’re well positioned to deliver on City of London’s objective of total return, increasing income and capital appreciation. Thank you.
4 minute watch