Investment Companies News

Wins research suggests the Lowland Investment trust may struggle to retain its premium rating given manager James Henderson’s dip in relative performance this year.

Wins rates Henderson highly, as his long-term track record is exceptional, but believes his Henderson Opportunities fund may provide more scope for long-term growth. It is currently trading on a discount of 15.6% to net asset value, compared to 0.5% for Lowland.

Henderson had been bearish on the market earlier in the year, reducing gearing and increasing exposure to more defensive sectors such as insurers. But he believes the market has over-reacted to the current economic problems, which is generating opportunities for value investors. He has increased gearing to 10% and been adding banks and housebuilders selectively. Positions in small cap have also been added on weakness.

This is typical of Henderson’s contrarian, value-based approach. Lowland has a significant mid/small cap bias, with over 50% invested outside the FTSE 100. Costs are charged to income rather than capital. The fund’s yield is therefore lower than its peer group at 2.4%.

Lowland’s long-term track record is sound. Its net asset value is up 226% over 10 years, compared to an 89% return from the FTSE All-Share. Wins said that stockpicking has been consistently strong. More recently, however, the trust’s exposure to small cap and underweight position in miners has left it lagging the index.