Investment Companies News

Angela Lascelles, investment manager of the Value and Income Trust, believes equities markets currently offer an ‘exciting opportunity’ to get fully invested.

Lascelles says she believes negative sentiment usually offers a good buying opportunity and market commentators are particularly gloomy at the moment. She also believes the fundamentals continue to appeal despite the rout.

She says: 'We were expecting GDP to come in at 2.5-3%. UBS has just downgraded its estimates to 2.9%. Companies are steadily increasing their earnings. Even retail focused stocks such as Topps Tiles are producing good profits growth and yield.

'The UK is a global market with lots of overseas exposure. The consumer may be under pressure, but it’s not the biggest part of the market. The market has a yield of 3%, dividend growth of 10% and is on a price to earnings ratio of 13x historic earnings and around 12x prospective earnings. Its relative value against gilts and cash looks good.'

The Value and Growth trust is around £175m in size, including a £55m allocation to property. Lascelles runs the equity portion with a concentrated portfolio of 30 to 35 companies. The portfolio is normally tilted to smaller and mid cap companies, though this has changed recently as the FTSE 100 has underperformed snd presented buying opportunities. The trust does not invest in companies that do not pay a dividend.

Lascelles focuses on three types of stocks: unrecognised growth stocks; cheap stable businesses; and utility-type companies for income. They focus on the quality and durability of the cash flows and the company’s potential for growth.

The largest holding – VT Group – is also the stock Lascelles considers one of her greatest successes. She says: 'We always try to buy growth stocks that are rated as income stocks. Vosper Thornycroft has made a successful transition from a shipbuilding group to a support services group and the news just keeps getting better and better.'

Lascelles other favourites include Legal & General, BT, HBOS and Kelda.

Lascelles was a founder of OLIM, which was bought by Close Brothers in 2000. Matthew Oakeshott, joint founder of OLIM, manages the property portion of the portfolio. The group believes property is not as attractive as equities and therefore the trust currently has a lower weighting in property.

The trust has been a solid long-term performer. In its last set of results, its total return was 17.9%, compared with a return from its FTSE All-Share benchmark of 10.9% for the year to 31 March. It currently trades on a discount to NAV of 6.7%.