James Henderson has vowed to continue investing as he has done over the past five years, despite a stark underperformance in his Lowland investment trust.
The £438m trust has underperformed over one, three and five years, returning 25 per cent over the past five years, compared with 30 per cent for the average trust in the AIC UK Equity Income sector in the same time period.
But despite the underperformance there are no plans to change the way the trust invests.
In the annual results of the trust, published on the stock exchange yesterday afternoon (December 9), its chairman wrote: “Lowland has now underperformed the benchmark over five years, whilst over ten and twenty years, performance remains robust.
"The strategy and positioning of the portfolio is always subject to board discussion and review, but it is fair to say that this discussion is more robust during a period of prolonged difficulty.
"The board is firmly of the view that it is important to stick to the investment style which has served shareholders well over the long term.
"We believe that inconsistency of approach is the enemy of long-term value creation.”
In his comments Mr Henderson, the fund manager, wrote the underperformance was the result of poor returns from smaller company investments.
He said it was the result of the value style of investing being out of favour, as well as investors selling off smaller companies because they want to have plenty of liquidity in their portfolios in the wake of the problems experienced by fund manager Neil Woodford with his smaller company investments.
The trust trades at a discount to its net assets of 8.3 per cent.
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