The £2.7bn Foreign & Colonial Investment trust has defied tricky markets as its net asset value per share reached a record high at the end of June.
According to the trust’s six-month results, ending 30 June, the NAV per share hit £5.12.
The trust also announced it was on track to deliver its 46th consecutive year of dividend increases, as its total net return per share rose by more than a quarter during the six months.
While the company’s total return per share stood at 7.7 per cent, which compared favourably to sector peers, it lagged the FTSE All World benchmark return of 12 per cent.
Chairman Simon Fraser said uncertainty over Brexit led to a general widening in discounts across investment trusts, with the company’s discount widening to 11.2 per cent.
Periodic bouts of investor optimism and fear are likely to continue to be a feature of markets. Simon FraserHe said he thought “periodic bouts” of investor optimism and fear are likely to continue to be a feature of markets.
However, despite short terms challenges, Mr Fraser said fund manager Paul Niven remains focused on its objective of growing capital and income over the longer term.
“Another real rise in dividends is planned for 2016, which would be the forty-sixth consecutive annual increase.”
The portfolio is largely invested in overseas assets and was helped by sterling’s weakness.
Holdings in emerging markets holdings posted the strongest returns for the period, at 25.4 per cent, followed by private equity at 13.7 per cent, generating net cash flow of £36m.
Holdings in Europe, not including the UK, was the only area to perform negatively during the period, with a fall of 0.6 per cent.
The trust also took advantage of low interest rates over the period by extending the maturity of its borrowings and it introduced £75m of long-term sterling denominated funding.
Mr Niven said he continues to see opportunities in global equity markets, even though equity markets are no longer significantly undervalued.
He said the trust’s diversified approach across listed equity and private equity sectors means the trust is “well placed” to create returns in choppy markets.
Blair Cann, senior partner at M Thurlow & Co, said: “This investment trust has slipped under my radar but the results seem to be fairly impressive.
“Looking at the fund fact sheet it is currently 43 per cent in American equities.
“It is worth keeping an eye on, but for anyone coming to me looking for a successful spread of international equities with a concentration in American equities, I would still recommend the Fundsmith Equity fund whose performance is even more spectacular.”
katherine.denham@ft.com
