July Commentary: City of London



​UK equities produced a total return of 1.2% in July as measured by the FTSE All Share Index. The more domestically focussed FTSE Mid 250 Index of medium-sized companies outperformed with a return of 2.4% compared with a return of 0.9% for the FTSE 100 Index. Among the largest companies, two sectors stood out for significant weakness. Tobacco fell on initial proposals by the FDA of the US to regulate nicotine. While it is likely that there will be significant challenges in achieving nicotine regulation and so short-term profits for tobacco companies will be unaffected, it does also highlight risks in the sector. Over the last year some profits have been taken in City of London’s holding in British American Tobacco and the weighting has been reduced to level with the market average. The other weak sector was pharmaceuticals where AstraZeneca had a disappointing result from its trial of a new cancer drug.

The best performing major sector was mining where commodity prices have benefited from the robust economic growth in China. Mining companies have been generating significant levels of cash, reducing debt and restoring dividends. Additions were made to City of London’s existing holdings of Rio Tinto and BHP Billiton and a new holding was bought in Anglo American on above average dividend yields.

Although the growth rate of the UK economy has dropped in the first half of 2017, it still remains in positive territory. Overseas, growth is more robust and the economic background should generally be supportive for equities.The dividend yield on UK equities remains attractive relative to 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), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (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. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

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

Risk rating




Important message

Fund name changes

Please note that from the 15 December 2017 funds previously named Janus or Henderson have been renamed Janus Henderson. This change aligns our product names with our name, Janus Henderson Investors, following the merger of Janus Capital and Henderson Global Investors in May 2017.

This name change does not impact on the management of the underlying funds and investors and advisers are not required to take any action. This does not affect Janus Henderson’s range of investment trusts.