Performance at month end with net income reinvested
| One Month | Three Months | Six Months | One Year | Three Years | Five Years | |
| Net asset value | -6.3% | -8.1% | -6.5% | 6.0% | 10.6% | 62.4% |
| Share price | -11.9% | -13.2% | -13.5% | 0.4% | 13.6% | 68.6% |
| Russell 1000 Value Index | -6.8% | -8.0% | -6.3% | 4.7% | 8.9% | 58.2% |
Source: BlackRock
| At month end | |
| Net asset value – capital only: | 169.19p |
| Net asset value – cum income: | 170.85p |
| Share price: | 166.00p |
| Discount to cum income NAV: | 2.8% |
| Net yield¹: | 4.8% |
| Total assets including current year revenue: | £138.7m |
| Gearing: | Nil |
| Options overwrite: | 16.4% |
| Ordinary shares in issue²: | 81,204,044 |
| Ongoing charges³: | 1.1% |
¹ Based on four quarterly interim dividends of 2.00p per share declared on 5 March 2019, 8 May 2019, 6 August 2019 and 7 November 2019 for the year ended 31 October 2019 and based on the share price as at close of business on 29 February 2020.
² Excluding 19,157,261 ordinary shares held in treasury.
³ Ongoing charges represent the management fee and all other operating expenses excluding interest as a % of average shareholders’ funds for the year ended 31 October 2019.
| Benchmark Sector Analysis | Total Assets (%) |
| Financials | 25.0 |
| Health Care | 17.3 |
| Information Technology | 8.8 |
| Energy | 8.3 |
| Industrials | 7.9 |
| Consumer Staples | 7.2 |
| Communication Services | 7.1 |
| Consumer Discretionary | 5.5 |
| Utilities | 2.5 |
| Materials | 1.3 |
| Net current assets | 9.1 |
| —– | |
| 100.0 | |
| ===== |
| Country Analysis | Total Assets (%) |
| United States | 68.8 |
| United Kingdom | 6.2 |
| Netherlands | 4.0 |
| Ireland | 2.7 |
| Germany | 2.6 |
| Switzerland | 2.2 |
| France | 2.2 |
| Japan | 1.3 |
| Canada | 0.5 |
| Norway | 0.4 |
| Net current assets | 9.1 |
| —– | |
| 100.0 | |
| ===== |
Ten Largest Investments | ||
| Company | Country of Risk | Total Assets (%) |
| Verizon Communications | USA | 4.0 |
| JPMorgan Chase | USA | 3.8 |
| Citigroup | USA | 3.1 |
| Wells Fargo | USA | 3.0 |
| Bank of America | USA | 2.6 |
| Medtronic | Ireland | 2.4 |
| Williams Companies | USA | 2.2 |
| Anthem | USA | 2.1 |
| Koninklijke Philips | Netherlands | 2.1 |
| Comcast Corporation | USA | 1.9 |
Tony DeSpirito, Franco Tapia and David Zhao, representing the Investment Manager, noted:
For the one-month period ended 29 February 2020, the Company’s NAV decreased by 6.3% and the share price by 11.9% (all in sterling). The Company’s benchmark, the Russell 1000 Value Index, returned -6.8% for the period.
A sharp February sell-off in U.S. stocks was felt across the portfolio, with all eleven global industry classification standard (GICS) sectors in the benchmark index declining during the month. The portfolio’s cash position, which averaged at 9.3%, contributed significantly to relative performance amid declining stock prices. Cash remains a source of stability in the portfolio and a tool to control the portfolio’s level of market risk. Stock selection in information technology (IT) also boosted relative returns, including selection decisions in IT services and our overweight exposure to the software industry. Lastly, allocation decisions in utilities contributed modestly to relative performance.
The largest detractor from relative performance was stock selection in the consumer staples sector. Selection decisions in the tobacco industry and a lack of exposure to food & staples retailing weighed on relative returns. In financials, stock selection and an overweight to the banks and insurance industries hurt relative results. Other notable detractors included stock selection and allocation decisions in the communication services and materials sectors.
The portfolio’s option overwriting strategy contributed to relative performance in February.
Transactions/Options
Transactions: In February, the portfolio initiated a new position in Fox and added to existing positions in Sanofi and Johnson & Johnson. Conversely, we exited our positions in Bristol-Myers Squibb and UnitedHealth.
Options: As of 29 February 2020, the Company’s options exposure was 16.4% and the delta of the options was 87.6.
Positioning
As of the period end, the Company’s largest overweight positions relative to the benchmark were in the health care, information technology and financials sectors. The Company’s largest underweight positions relative to the benchmark were in the real estate, utilities and materials sectors.
Source: BlackRock. Data as of 29 February 2020.
