May Commentary: City of London

12/06/2017

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​UK equities produced a total return of 4.4% in May as measured by the FTSE All Share Index. Sterling weakened with its trade weighted index down 2.2% on the narrowing opinion polls ahead of the general election. As a result, large, international companies outperformed and the FTSE 100 Index produced a total return of 4.9%. In contrast, the more domestically focussed FTSE Mid 250 Index of medium-sized companies produced a total return of 2.2%.


The best performing sector was mobile telecoms where the Trust’s large holding in Vodafone reported results that were well received by investors. The pharmaceutical sector was also a notable outperformer. City of London has stakes in GlaxoSmithKline and AstraZeneca but is under represented relative to the market average. The mining sector, where the Trust is also underweight, was a significant under performer with commodity prices under pressure.


During the month, the holding in the student accommodation REIT, GCP Student Living, was sold on a premium to its net asset value and after strong share price performance. The proceeds were partly reinvested in the IPO of PRS REIT which specialises in private sector, rented, residential accommodation.


The result of the general election has added to the uncertain outlook. But the UK consumer proved to be resilient after the Brexit referendum and monetary policy is likely to remain stimulative. City of London’s portfolio is predominantly invested in large, global companies which are benefiting from economic growth around the world. The dividend yield from UK equities remains attractive relative to the main alternatives.

Glossary

IPO - Initial public offering or stock market launch is a type of public offering in which shares of a company usually are sold to institutional investors that in turn, sell to the general public, on a securities exchange, for the first time.

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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