F&C Investment Trust strong NVA but underperforms against benchmark

F&C Investment Trust strong NVA but underperforms against benchmark

Investment trust and equity management company F&C Investment Trust PLC (LON: FCIT) have posted their best NAV returns for twenty years, but said they missed the benchmark set by the existing record because of slow recovery of private equity valuations.

The Company stated that its Net Asset Value total return gained 14.4% during the first half, representing the strongest returns for over two decades. However, the company noted that this lagged behind its benchmark of 16.4%, with markets recovering from what the Group described as the ‘sharp falls seen in the latter part of 2018’.

The Group stated that the recovery witnessed in global equities had yet to fully filter through to private equities, and subsequently the -1.4% returns of their Private Equity portfolio were ‘detrimental’ to the overall returns of their investment portfolio. In the long run, the F&C Investment Trust expects private equity to continue enhancing its returns.

The Company also told investors that gearing stood at 6.9%, the latest issue of debt has a blended rate of 2.2% and Beatrice Hollond will succeed Simon Fraser as Chairman upon his retirement, effective 31 December 2019.

F&C Investment Trust comments

Paul Niven, Fund Manager of FCIT, said:

“Equity markets remain supported by reasonable valuations and fundamentals and investors have so far viewed the more accommodative stance recently taken by policymakers as positive, despite increased risks. In any event we will adhere to our strategy of holding concentrated individual portfolios that are managed, as a whole and on a sustainable basis, to provide global diversification, lower volatility and lower risk with the aim of achieving outperformance and real rises in dividends over the longer term.”

Incumbent chairman, Simon Fraser, said:

“The political and economic backdrop can be expected to remain uncertain, particularly for the UK given the unclear outcome of the Brexit negotiations. As ever, there will be opportunities for FCIT.  As a closed-ended listed investment company, we are not constrained by asset sales to meet redemptions. Our share capital structure gives us the flexibility to take a longer term view and stay invested while taking advantage of illiquidity throughout normal and volatile markets. Our debt profile is now highly diversified by maturity and we have locked in borrowing at historically low rates of interest. This and our Ongoing Charges figure of 0.65% leaves us very well positioned to continue the delivery of long-term growth in capital and income for our shareholders.”

Investor notes

The Company’s shares have rallied 0.65% or 4.69p since the update, up to 727.69p a share 29/07/19 12:04 BST. The Group’s dividend yield currently stands at 1.52%.

Elsewhere in asset and investment management, there have been updates from; River and Mercantile Group PLC (LON: RIV), Brewin Dolphin Holdings plc (LON: BRW), Hansard Global plc (LON: HSD), AJ Bell PLC (LON: AJB) and Intermediate Capital Group plc (LON: ICP).