February Commentary: City of London

06/03/2017

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​In February, the UK equity market returned 3.1%, as measured by the FTSE All Share Index. A flattening trend  in oil and other commodity prices led to some profit taking in the oil and mining sectors after the strong performance over the preceding 12 months. The best performing sector was personal goods where Unilever received a takeover approach from Kraft Heinz of the US. Unilever has been a top ten holding in City of London’s portfolio for many years and has a consistent record of growth in profits and dividends. Given Unilever’s leading brands, the relative strength of its balance sheet and its large presence in emerging markets, its prospects as an independent company are good.

The UK results season for companies with December financial year- ends has so far gone satisfactorily. Particularly pleasing was a 13% increase in the dividend for Lloyds Banking and further additions were made to the holding. On the other hand, Legal & General was sold on concern about the costs of writing annuities. A new holding was purchased in UK retailer DFS Furniture on a share price valuation which appears to undervalue significantly this cash generative business.

Robust economic growth in the UK and overseas should underpin growth in company profits and dividends. The dividend yield from UK equities remains attractive compared with the main alternatives.

Past performance is not a guide to future performance. 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.


Important information

Please read the following important information regarding funds related to this article.

The City of London Investment Trust plc

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.

Past performance is not a guide to future performance. 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. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored.

Specific risks

  • Where the trust invests in assets which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise
  • If a fund is a specialist country-specific or geographic regional fund, the investment carries greater risk than a more internationally diversified portfolio
  • Not all the investments in this portfolio are made in Sterling, so exchange rates could affect the value of and income from your investment

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