F&C Investment Trust PLC (LON:FCIT) today announced its results for the six months ended 30 June 2019.
· FCIT’s share price was 701.0 pence representing a total return of 11.7%.
· FCIT’s Net Asset Value (“NAV”) total return gained 14.4%, delivering the strongest first half NAV returns for over twenty years.
· The NAV total return nevertheless lagged the exceptional 16.4% return from FCIT’s benchmark, the FTSE All-World Index, with markets fully recovering from the sharp falls seen in the latter part of 2018.
· The sharp recovery in the public equity markets has yet to feed through to valuations in the private equity market and therefore the Private Equity portfolio returns of -1.4% were detrimental to the relative returns of the total investment portfolio. This was the single largest contributor to the underperformance against the benchmark. Private Equity has a strong record of delivering higher returns than listed equities in FCIT’s portfolio and is expected to continue to enhance returns over the long term.
· The first interim dividend will be 2.9 pence per share while another above-inflation rise is planned for the 2019 total dividend. This will mark the 49th consecutive annual increase.
· For much of the period the shares traded at a premium to NAV and 1.4m shares were reissued from Treasury. The shares moved from a discount of 1.5% to 4.0% by the end of the period and a small number were bought back, consistent with the policy of pursuing a sustainably low deviation between the share price and NAV per share.
· Gearing was 6.9% at the end of the period and continues to contribute positively to performance. Advantage has been taken of low interest rates to fix more borrowings through long-term private placement loans. At the end of June, £150m was drawn down in tranches of maturities ranging between 7 to 40 years. The blended rate of this latest issue of debt is 2.2% and it takes the average rate on borrowings down below 2.5%.
· Beatrice Hollond will succeed Simon Fraser as Chairman on his retirement from the Board with effect from 31 December 2019.
Commenting on the markets, Paul Niven, Fund Manager of FCIT, said:
“Equity markets remain supported by reasonable valuations and fundamentals and investors have so far viewed the more accommodative stance recently taken by policymakers as positive, despite increased risks. In any event we will adhere to our strategy of holding concentrated individual portfolios that are managed, as a whole and on a sustainable basis, to provide global diversification, lower volatility and lower risk with the aim of achieving outperformance and real rises in dividends over the longer term.”
The Chairman, Simon Fraser, said:
“The political and economic backdrop can be expected to remain uncertain, particularly for the UK given the unclear outcome of the Brexit negotiations. As ever, there will be opportunities for FCIT. As a closed-ended listed investment company, we are not constrained by asset sales to meet redemptions. Our share capital structure gives us the flexibility to take a longer term view and stay invested while taking advantage of illiquidity throughout normal and volatile markets. Our debt profile is now highly diversified by maturity and we have locked in borrowing at historically low rates of interest. This and our Ongoing Charges figure of 0.65% leaves us very well positioned to continue the delivery of long-term growth in capital and income for our shareholders.”
