September Commentary - City of London

15/10/2018

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​The UK equity market produced a total return of 0.7% in September as measured by the FTSE All Share Index. There was a marked divergence between the performance of the FTSE 100 Index of the largest companies which returned 1.2% and  the more domestically focused FTSE 250 Index of medium-sized companies which produced a negative return of 1.6%. The oil and mining sectors, which are well represented in the FTSE 100 Index, performed well given the strength of commodity prices against a background of global growth. City of London has large holdings in Royal Dutch Shell and BP in oil and in Rio Tinto and BHP Billiton in mining but overall is underweight relative to the Index in the two sectors.


A notably underperforming sector in September was electricity where SSE had a profits warning due to gas trading positions but the holding was retained given the long-term prospects for its networks and renewable electricity generation businesses. Additions continued to be made to the relatively recently purchased holdings of Carnival, the leading owner and operator of cruise ships, and St James’s Place, the provider of financial services and advice. The holding in Supermarket Income was sold on a premium to its net asset value and given better relative value elsewhere in the real estate sector.


Companies continue to benefit from growing demand in the UK and overseas and should be able to grow their dividends. The dividend yield of the UK equity market remains attractive relative to the main alternatives.

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. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

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.

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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.

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Specific risks

  • Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.
  • This trust is suitable to be used as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this trust.
  • The trust could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the trust.
  • If a trust's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio diversified across more countries.
  • The return on your investment is directly related to the prevailing market price of the trust’s shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the trust. As a result losses (or gains) may be higher or lower than those of the trust’s assets.
  • 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.
  • 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.
  • The trust may use gearing as part of its investment strategy. If the trust utilises its ability to gear, the profits and losses incured by the trust can be greater than those of a trust that does not use gearing.
  • All or part of the trust'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.

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