Investment Trusts  

Emerging markets help F&C trust deliver dividend

Emerging markets help F&C trust deliver dividend

Strong returns from the emerging markets segment of the Foreign and Colonial Investment Trust helped the vehicle deliver a return of 9.1 per cent in the first half of 2017.

The AIC Global sector against which the trust is benchmarked, achieved a total return of 10.8 per cent during the first half of this year.

Simon Fraser, chairman of the trust, said: “Within our portfolio we saw particular strength from emerging markets, which posted a gain of 18.9 per cent, outperforming the market index.

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"Our European equities strategy also posted strong absolute returns, of 12.7 per cent, broadly in line with market returns.

"Elsewhere on the portfolio we delivered excess returns over market comparators with strong performance from our growth oriented strategy in US equities helping North American holdings to a 7 per cent return.

"Our global strategies also exceeded benchmark returns with our multi-manager funds and holdings in smaller companies both delivering good relative returns.

"All strategies delivered good absolute levels of return and most exceeded benchmarks. Private equity posted a relatively modest gain of 2.3% partly reflecting a lag in pricing of these investments”

Mr Fraser added private equity is an area where the trust has made “a number of new commitments” over the period in question.

The trust chairman said the board intends to pay a  higher dividend in real terms this year than last.

The first interim dividend of 2017, which will be paid on 1st August, is 2.5p.

Mr Fraser added while the outlook for the global economy and equity markets has “brightened” during the year, both in terms of the economy as a whole and corporate earnings.

He is less keen on the outlook for the UK, describing the economy  as an “outlier”.

He said: “The picture here appears challenging with a squeeze in real incomes underway and increased political uncertainty.”   

Paul Niven, manager of the Foreign and Colonial Investment Trust, said: “Optimism over the economic outlook may have retraced some of the bullish sentiment seen in recent months but, in my view, the trend remains positive.

"Importantly for equity investors, corporate earnings are showing increased vigour, and this strength is helping to push global equity markets on to new record highs. The combination of low inflation levels, supported by improving earnings momentum along with a synchronised economic upturn is helping to fuel optimism on the corporate outlook.”

The Foreign & Colonial Investment Trust trades at a discount to net assets of 7 per cent, according to data from the Association of Investment Companies. 

david.thorpe@ft.com