Investment Companies News
City of London is capital
Cherry Reynard, 30/08/07 16:05
The City of London investment trust reaped the benefits of both gearing and stock selection as it outperformed its benchmark and the FTSE All Share for the year to 30 June.
Net asset value grew 21%, against a 20.3% return from its FTSE All Share benchmark (with a 4% cap on the weighting of any individual company). The actual FTSE All-Share rose 18.3%. The trust also increased its dividend by 10% to 10.3p per share and it forecasts a further increase of 10.3% for the current year.
City of London is managed by Job Curtis at Henderson. No performance fee is payable this year as the outperformance did not completely offset the previous year’s underperformance. The investment management fee and other non interest expenses were slightly down at 0.42% compared with 0.44% last year.
The trust’s overweight position in real estate stocks boosted performance in the first half of the year, but knocked returns in the second half despite some profit-taking. Currently, financials are the largest position in the fund at 25.4%. HSBC, Lloyds TSB and Barclays all feature in the top 10 holdings.
Curtis also favours consumer goods (17.4% of the portfolio) and oil and gas (10.7%). BP is the largest single holding at 4.7%.
Chairman Simon de Zoete says that the trust’s relatively defensive portfolio and low gearing should provide some protection against volatile markets. He believes that now the market has pulled back up, the downside risk has been reduced.
The shares moved up 4.25p to 293.5p today. The discount has bounced around this year. It is now 6.5%, which is at the lower end of its range, having reached 10.9% earlier in the year.