“First of all, never play macho man with the market. Second, never overtrade”. – Paul Tudor Jones
Most investors prefer to do something rather than do nothing, even when that something often proves to be an unnecessary mistake, notably overtrading. Overtrading, or excessive buying and selling or churning of investments, is a mistake that can erode total returns.
It is essentially the mistake of being a ‘busy fool’ or being reactive rather than proactive. We can often believe we are being productive by continually reacting to changes in our investments when we are doing so unnecessarily.
Frequent trading often incurs additional transaction costs and increases the chances of making impulsive, ill-informed and costly decisions. Investors should adopt a disciplined approach and resist the urge to trade excessively.
It is essential to identify a well-defined strategy and stick to it, avoiding unnecessary transaction costs and potential losses. One of the main mistakes people make when trading or investing is focusing only on making very high returns in a short period.
abrdn Equity Income Trust PLC ex-dividend date abrdn European Logistics Income PLC ex-dividend date Alliance Witan PLC ex-dividend date Downing Renewables & Infrastructure Trust PLC ex-dividend date Scottish American Investment Co PLC ex-dividend date Triple Point Venture VCT PLC ex-dividend date
If you had bought after the Covid crash and simply re-invested the dividends, you are near to achieving the holy grail of investing in that you will be able to take out your stake and re-invest in another high yielder.
Current yield on RECI 9.7%, if you re-invested the capital in another Trust (for comparison purposes only) of 10.3% your yield on invested capital would be 20%.
Long term investing and if you look at the start of the chart, a good reason for booking profits and re-investing to spread the risk.
Again a simple do nothing strategy, apart from re-investing the dividends.
Is the dividend secure ?
The fcast is to flatline at the current yield of 9.7% based on todays price.
What do they do ?
Real Estate Credit Investments Limited (RECI) is a closed-ended investment company which originates and invests in real estate debt secured by commercial or residential properties in the United Kingdom and Western Europe.
RECI is externally managed by Cheyne Capital’s real estate business was formed in 2008 and currently manages $6.5bn via private funds and managed accounts. Its investments span the entire spectrum of real estate risk from senior loans, mezzanine loans, special situations to direct asset development and management.
RECI’s aim is to deliver a stable quarterly dividend with minimal portfolio volatility, across economic and credit cycles, through a levered exposure to real estate credit investments.
Investments may take different forms but are principally in:
Self-Originated Deals: predominantly bilateral senior real estate loans and bonds
Market Bonds: listed real estate debt securities such as Commercial Mortgage Backed Securities (CMBS) bonds.
Loan arranger, higher risk but loans secured on property provides some security.
Not that one though.
Real Estate Credit Investments Limited (the “Company”)
Ordinary Dividend for RECI LN (Ordinary shares)
Real Estate Credit Investments Limited announces today that it has declared a third interim dividend of 3.0 pence per Ordinary Share for the year ending 31 March 2025. The dividend is to be paid on 4 April 2025 to Ordinary Shareholders on the register at the close of business on 14 March 2025. The ex-dividend date is 13 March 2025.
How you could bank tens of thousands of dollars in yearly dividend cash for every $500,000 invested, and …
A half-million dollars is a lot of money. Unfortunately, it won’t generate much income today if you limit yourself to popular mainstream investments.
The 10-year Treasury pays around 4% as I write this. That’s not bad, historically speaking, but put your $500K in them and you’re only looking at $20,000, barely over the poverty level for a two-person household. Yikes.
And dividend-paying stocks don’t yield nearly enough. For example, Vanguard’s popular Dividend Appreciation ETF (VIG) pays around 1.7%. Sad.
When investment income falls short, retirees are often forced to sell their investments to supplement their income.
Of course, the problem here is that when capital is sold, the payout stream takes an immediate hit – so that more capital must be sold next time, and so on.
Avoid the Share Selling “Death Spiral”
Some financial advisors (who are not retired themselves, by the way) say that you can safely withdraw and spend, say, 4% of your retirement portfolio every year. Or whatever percentage they manipulate their spreadsheet to say.
Problem is, in reality, every few years you’re faced with a chart that looks like this.
Apple’s Dividend Was Fine – Its Stock Wasn’t
As you can see, the dividend (orange line above) is fine — growing, even — but you’re selling at a 25% loss!
In other words, you’re forced to sell more shares to supplement your income when they’re depressed.
Remember the benefits of dollar-cost averaging that built your portfolio? You bought regularly, and were able to buy more shares when prices were low?
In this case, you’re forced to sell more shares when prices are low.
When shares rebound, you need an even bigger gain just to get back to your original value.
The Only Reliable Retirement Solution
Instead of ever selling your stocks, you should instead make sure you live on dividends alone so that you never have to touch your capital.
This is easier said than done, and obviously the more money you have, the better off you are. But with yields still pretty low, even rich folks are having a tough time living off of interest today.
And you can actually live better than they can off of a (much) more modest nest egg if you know where to look for lesser-known, meaningful and secure yield.
I’m talking about annual income of 8%, 9% or even 10%+ so that you’re banking $50,000 (and potentially more) each year for every $500,000 you invest.
You and I both know an income stream like that is a very nice head start to a well-funded retirement.
And it’s totally scalable: Got more? Great!
We’ll keep building up your income stream, right along with your additional capital.
And you’ll never have to touch your nest egg capital – which means you won’t have to worry about or running out of money in retirement, or even the day-to-day ups and downs of the stock market.
The only thing you need to concern yourself with is the security of your dividends.
As long as your payouts are safe, who cares if your stock prices swing up or down on a given day?
Most investors know this is the right approach to retirement.
Problem is, they don’t know how to find 8%, and 10% yields to fund their lives.
And when they do find high yields, they’re not sure if these payouts are safe. Will the company or fund have enough cash flow to pay the dividends into the future?
And how sensitive are these payouts to the latest headline, Fed policy changes or unrest on the other side of the globe?
The ONE Thing You Must Remember
If I could leave you with just one nugget of investing wisdom today, it would be to NEVER overlook the incredible wealth-building power of dividends.
Few investors realize how important these unglamorous workhorses actually are.
Here’s a perfect example…
If you put $1,000 in the dividend-paying stocks of the S&P 500 back in 1973, you would have had $87,560 by 2023, or 87x your money.
But the same $1,000 in the non-dividend payers would have grown to just $8,430 — 90% less.
That’s why I’m a dividend fan.
The stock market is a fantastic wealth-building machine, but it doesn’t always go straight up!
There have been plenty of 10-year periods where the only money investors made was in dividends.
And that’s what gives us dividend investors such an edge.
When you lock in an 8%+ yield, you’re booking an income stream that’s bigger than the stock market’s long-term average return right off the bat.
Of course you can’t just buy every ticker symbol out there with a flashy yield, or you’ll get burned pretty fast.
So let’s wipe the false promises of mainstream finance from our minds and start thinking the “No Withdrawal” way…
Supermarket Income REIT plc (LSE: SUPR), the real estate investment trust with secure, inflation-linked, long-dated income from grocery property, is pleased to announce its progress against a number of key portfolio initiatives which were outlined in the announcement on 18 November 2024. These significant actions demonstrate the attractions of our high quality portfolio, our conservative valuations and our ability to recycle capital to drive earnings accretion.
Sale of Tesco, Newmarket for £63.5 million
The Company has completed the sale of Tesco, Newmarket to its operator, Tesco plc, for £63.5 million. The sale was completed at a 7.4% premium to the 30 June 2024 valuation. This sale of a large format omnichannel store at an attractive valuation, underlines the strategic importance of the Company’s assets to the supermarket operators. The passing rent of the store upon disposal was £3.5 million.
In recycling the proceeds, the Board will consider options to create accretive value for shareholders.
The Company continues to actively explore opportunities to recycle capital through individual asset sales and potential joint ventures at attractive valuations.
Lease renewals – average 4% rent to turnover[1] and 35% above MSCI rents
The Company has successfully completed three lease renewals on Tesco stores located in Bracknell, Bristol and Thetford, which were the three shortest leased Tesco stores in the Company’s portfolio. These store leases have been renewed at an average 4% rent to turnover1, 35% above MSCI’s supermarket benchmark index and 13% above the Company’s valuer’s estimated rental values (as at 30 June 2024). The leases have been extended to 15 years with annual RPI-linked rent reviews (subject to a 4% cap and a 0% floor). The regeared stores are expected to benefit from a capital value growth which will be fully reflected in the 30 June 2025 valuation.
The lease renewals demonstrate the affordable rental levels for the Company’s strong trading, large format omnichannel stores. The Company’s WAULT has increased from 11 years to 12 years[2]. The Company’s next material lease expiry is not until 2032[3].
Earnings enhancing acquisitions – nine omnichannel Carrefour supermarkets in France
The Company has continued to demonstrate its ability to deploy capital into earnings enhancing assets with an attractive spread to the cost of debt. The Company has completed the acquisition of a portfolio of a further nine omnichannel Carrefour supermarkets in France. The stores were acquired through a direct sale and leaseback transaction (“SLB”) with Carrefour, for a total purchase price of €36.7 million (excluding acquisition costs), at a portfolio net initial yield of 6.8%[4]. The Company now has 26 Carrefour stores in France, representing c. 5%[5] of its gross assets.
The nine stores, which have an average gross internal area of c. 40,000 sq ft per store, operate under the Carrefour Market brand and are all well established with long trading histories and low competition in their catchment areas. These omnichannel supermarkets form part of Carrefour’s “Drive” online grocery fulfilment network.
The SLB portfolio has been acquired on a weighted average lease term of 12 years (with a tenant-only break option in year 10), subject to annual uncapped inflation-linked rent reviews.
This acquisition was financed through a private placement with an institutional investor for €39 million of new senior unsecured notes (the “Notes”). The Notes have a maturity of seven years and a fixed rate coupon of 4.1%.
Following the placement of the Notes and receipt of proceeds from the sale of Tesco, Newmarket, the Company has a pro-forma LTV of 38%.
Nick Hewson, Chair of Supermarket Income REIT plc, commented:
“We have made significant progress on the portfolio initiatives that we set out in November 2024, which together are intended to support our earnings growth. These transactions highlight the inherent value of the portfolio, the importance of these stores for the grocery operators and our ability to crystalise value as part of our capital recycling strategy. We remain focused on continuing to make good progress with our remaining strategic initiatives, including delivering further cost savings for the Company, and we look forward to updating the market in due course.”
Real estate investment trusts (REITs) are designed to support investors in building a reliable second income.
In exchange for breaks on corporation tax, these entities must pay 90% of profits from their rental operations out in the form of dividends. Many of these property investment trusts even regularly exceed this threshold.
All dividends received are invested back into the Snowbal
The income fcast, after year ten is £15.5k
The Target is £17.2k
Increasing yearly if you have longer to re-invest the dividends.
I will publish the current Snowball portfolio next week but your portfolio should reflect the number of years before you want to withdraw your income, you don’t have to wait to retire and your risk/reward tolerance, so it should be different to the current Snowball.
Here’s my strategy to enjoy a first-class retirement with passive income from UK dividend shares
Mark Hartley outlines his long-term plan to earn a lucrative second income in retirement by investing in high-yield dividend shares.
Posted by Mark Hartley
Image source: Getty Images
When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.
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There are few things in this world more enjoyable than earning cash without lifting a finger. That’s the beauty of investing in dividend shares. The regular payments sent to shareholders feel like free money sent from above.
That’s why I’m on a life-long mission to build a steady passive income stream from dividends.
First, I must build up my portfolio’s value through the miracle of compounding returns. Initially, I can accelerate this process by reinvesting my dividends. I can further optimise my growth with a Stocks and Shares ISA, allowing me to invest up to £20,000 per year with no tax on the capital gains.
Once the pot is large enough, I can start withdrawing my dividends as income and enjoy a comfortable retirement.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
What’s the catch?
Does the above sound too good to be true? I’ll admit, it isn’t easy — but it is possible! For it to work, three things are required: patience, dedication and a market-beating portfolio of the best dividend stocks in the UK.
Choosing the right dividend stocks isn’t always easy. There are several factors to consider, like the yield, payout ratio, and dividend growth history. It’s equally important to assess the financial stability of a company by checking its debt and cash flow.
The ideal dividend stock has strong cash flow, a sustainable payout ratio, and a history of increasing dividends. A high yield is great, but only if the company can afford to maintain it.
How to build wealth with dividends
An investment of £10,000, in a portfolio yielding 7%, would generate £700 in annual dividends. Reinvesting these payouts means the portfolio would grow modestly and could double in just over 10 years.
With the contribution of a further £3,000 per year to that portfolio, it could soar beyond £70k in 10 years. In 20 years, it could be over £200k, paying dividends of £7,500 per year.
That’s the power of compounding — turning today’s dividends into tomorrow’s wealth.
Stock picking
Achieving a portfolio yielding 7% requires very careful stock picking. Long-term dividend investors tend to avoid popular, trending stocks and opt for safe, boring companies.
Gas and electricity supplier National Grid (LSE: NG.) could fit the bill. It’s often cited as one of the best UK dividend stocks and is frequently found in passive income portfolios. The shares enjoy moderately stable growth, up 108% in the past decade. But more importantly, it pays a reliable dividend with a 5.8% yield.
Recently, it’s faced the risk of losses in its efforts to meet energy transition goals. This has been compounded by higher labour expenses as a result of the new UK Budget. If expenses get too high, it may have to cut its dividend to save capital for daily operations.
As a highly-established and critical utility provider, it’s likely to remain in high demand for decades to come. It also exhibits defensive qualities, typically performing well even through economic downturns.
There are many similar UK stocks with high yields and steady dividend growth on the FTSE 100. Some examples include Legal & General, British American Tobacco, and Tritax Big Box REIT.
By reinvesting dividends now and staying patient, I’m building towards a future where my investments pay me instead of the other way around. The road to financial freedom starts with smart choices today.
Investment Companies: A Great British Success Story
Sub-scale funds leaving the market, not the only game in town in London’s investment co. space. If the no. of trusts in the FTSE100 is anything to go by, larger funds are going from strength to strength: Polar Capital Technology (PCT) and AllianceWitan (ALW), the latest to gain FTSE100 promotion. With multiple funds in the FTSE250 with multi-billion market caps, chances are they won’t be the last.
By Frank Buhagiar
The Great British Success Story label for investment companies is not referring to those halcyon days at the beginning of the decade when IPOs (Initial Public Offerings) of alternative funds investing in weird and wonderful assets such as battery energy storage projects, life sciences parks, hydrogen or even space were aplenty. Or even when Scottish Mortgage’s (SMT) share price could do no wrong and powered ever upwards – over the 10 years to 30 September 2021, SMT’s net asset value (NAV) per share increased by +1,072% versus a +275% increase in the FTSE All-World index (both in total return terms) according to the global fund’s interim management report of 08 November 2021.
No, Great British Success story refers to the here and now. That might seem somewhat out of kilter with what’s been going on in the sector these past few years. After all, not a week goes by it seems without a fund announcing plans to wind down, buy back shares, launch a tender, hold a continuation vote, cut its fees or introduce some other mechanism to tackle a gaping share price discount to net assets or to fend off the unwelcome attention of an activist investor. Fair to say a large number of these funds are on the small side, believed to be sub-scale and therefore not considered suitable by super-sized wealth managers, themselves the product of their own wave of corporate activity and consolidation.
Sub-scale funds winding up or being taken over is not the only story playing out in London’s investment company sector, however. Another is at work, one that is perhaps flying under the radar – growing representation of investment companies in London’s largest stock market indices, specifically the FTSE 100 and FTSE 250.
Take the FTSE 100. More and more funds are being promoted to the top-tier index. Polar Capital Technology (PCT), the latest to gain entry earlier this month. It’s been a relatively rapid rise for the trust. As per the Company’s press release of 3 February 2025 the fund was launched in 1996 as the Henderson Technology Trust. Management of the fund was transferred to Polar Capital in 2001. Five years later, current lead manager Ben Rogoff took over the reins. Under Rogoff and his team’s stewardship, the trust’s assets and market cap have grown to £4.6bn and £4.4bn respectively, enough to warrant inclusion in the FTSE 100.
And from the sounds of it, Rogoff sees more of the same going forwards “More than anything, our inclusion in the FTSE 100 Index reflects the extraordinary nature of technology, its ability to reinvent industries, create massive new markets and drive superior returns for investors. Technology has conquered distance, connected billions and democratised knowledge. Today, rapid innovation is propelling AI towards superhuman capability. While market fluctuations are inevitable, PCT is well positioned for the AI-era which we expect to be one of the most exciting and transformative investment opportunities of our lifetimes.”
PCT isn’t the only investment company to gain promotion to the FTSE 100 in recent months. October 2024, saw Alliance Witan (ALW) enter the index following the tie-up between two globals, Alliance and Witan, to create a £5bn plus fund. June 2024 saw LondonMetric Property (LMP) achieve the same feat after a run of acquisitions. There have been others too. The world’s oldest investment trust, F&C IT (FCIT), won promotion in September 2022. December 2020, it was the turn of Bill Ackman’s Pershing Square Holdings (PSH). A steady increase in the number of FTSE 100 investment trusts then. Today, if you include the three real estate investment trusts (REITs), there are no less than nine funds in the FTSE or to put it another way almost 10% of the UK’s number one index are investment companies:
FundMarket CapSector
3I Group (III)£39.5bn Private Equity
Alliance Witan (ALW)£5.2bn
GlobalBritish Land REIT (BLND)£3.7bnProperty
F&C (FCIT) £5.7bn
Global Land Securities (LAND)£4.3bn
PropertyLondonMetric (LMP)£3.9bn
PropertyPershing Square (PSH) £8.1bn
North AmericaPolar Capital Tech (PCT) £4.4bnTechnology
Scottish Mortgage (SMT)£13.6bn Global
And chances are, the number of investment companies in the FTSE 100 will continue to grow. That’s because there is a healthy smattering of funds with multi-billion-pound market caps in the FTSE 250 chomping at the heels of the smallest FTSE 100 companies.
There’s yet another property company, warehouse investor Tritax Big Box (BBOX), on a £3.7bn market cap. Then there is JPMorgan Global Growth & Income (JGGI) with a soon-to-be be increased £3bn market cap once its latest acquisition – Henderson International Income (HINT) – completes. If it does, that would be JGGI’s fourth acquisition in three years – JGGI single-handedly doing its bit to solve the sub-scale fund problem at the smaller end of the investment trust spectrum.
3I Infrastructure (3IN), not far behind with a £3bn market cap and that’s despite seeing its share price move from a -2.8% discount to net assets as recently as 1 August 2024 to -14% just six months later.
Petershill Partners (PHLL), another alternative fund on a £3bn-ish market cap. Shares in the Goldman Sachs-backed fund that pioneered investing in middle-market alternative asset managers were the second-best performer in the sector in 2024 with a +68.9% gain.
Flexible investor RIT Capital Partners (RCP) not far behind with its £2.7bn market cap. SMT’s stablemate Monks (MNKS) is next on £2.6bn before the first renewable Greencoat UK Wind (UKW) on £2.5bn, proving not all in the sector have the sub-scale tag.
Private equity fund, HgCapital (HGT) and infrastructure funds HICL Infrastructure (HICL) and International Public Partnerships (INPP) meanwhile all with market caps in the £2.2bn -2.3bn range.
And it’s not just alternatives, conventionals too among the largest in the FTSE 250 including City of London (CTY), JPMorgan American (JAM), Caledonian (CLDN) and Smithson (SSON), all on £2bn market caps.
There’s a whole host of names with market caps just shy of £2bn too – Allianz Technology (ATT), Mercantile (MRC), Renewables Infrastructure Group (TRIG), Templeton Emerging Markets (TEM), Murray International (MYI), Worldwide Healthcare (WWH) and Personal Assets (PNL).
Could go on, but point made – even in today’s challenging higher interest rate environment particularly for the alternatives, London is not short of large-scale investment companies. Some of these large scalers are growing with the help of acquisitions such as JGGI, others just on performance alone such as PCT.
And here’s the nub, with operating companies leaving London’s stock markets either through takeovers or going private or overseas, chances are investment company representation in the larger indices will increase in the years ahead. It’s not impossible that the investment company subsector then could one day be among the FTSE 100’s biggest. If that happens, then the Great British Success Story that is investment companies will no longer be flying under the radar but will be there for all to see.
The Results Round-Up: The week’s investment trust results
Pick-up in results this week with no fewer than six funds in the latest round-up: Brown Advisory US Smaller Companies (BASC), Herald (HRI), BlackRock Throgmorton (THRG) , Polar Capital Global Financials (PCFT), City of London (CTY) and Rights & Issues (RIII). But which fund put in the best performance with a +34.8% NAV per share return for the year?
By Frank Buhagiar
Brown Advisory US Smaller Companies (BASC) optimistic despite wild exuberance
BASC’s +5.3% net asset value (NAV) per share return for the half year, a tad off the Russell 2000’s +10.7%. Chairman Stephen White points out that much of the benchmark’s performance “was led by a narrow subgroup of more speculative or unprofitable stocks, many of which were driven by exuberance in the AI, quantum computing, and cryptocurrency sectors.” By contrast, the portfolio managers focused “on strong quality businesses and long-term compounders, that they believe will deliver truly sustainable growth, but which lagged the rally.” The portfolio managers provide examples of the Russell 2000’s “wild exuberance in certain niches”, including Rocket Lab, “a money consuming space company” which saw its share price jump +431% in the second half of 2024; and Rigetti Computing up a cool +1,326%.
White sees good times ahead, “recent developments have caused us to remain optimistic for the prospects of our portfolio. For developments read “The shift in monetary policy by the Fed in September and the first rate cuts since 2020, combined with Donald Trump’s ‘clean sweep’ presidential win and a perceived more business-friendly administration,” all of which “should be supportive for smaller companies with a more domestic bias.” And it’s not just wishful thinking it seems, as “relative performance has picked up since the half-year end.”
Winterflood: “During the period, the average weighting to Financials was c.5%, compared to the Russell 2000 Index weight of nearly 18%. The financials sector rose over 20% during this period, negatively impacting performance by c.1%.”
Herald’s (HRI) double-digit full-year return
HRI’s strong performance track record, specifically the +2,611.1% NAV per share total return since inception in February 1994, a key highlight in the fund’s full-year results. The latest numbers weren’t bad either: NAV per share total return came in at +12.1%. Easy to see why shareholders rejected the advances of activist investor Saba Capital at the recent general meeting. As for this year’s main drivers, the North America segment of the portfolio, the star of the show with a +36.3% return thanks to the AI-led tech boom. The US more than made up for a more pedestrian showing by the UK holdings which were up +3.3% – HRI’s UK stocks were held back by the weak performance of the AIM market.
Investment manager Katie Potts believes “There are a number of factors that should drive continued growth in the wider technology sector.” Artificial intelligence is one. So too, the drive to net zero which “poses some unresolved technical challenges, in particular the storage and distribution of renewable power”. Meanwhile “a geopolitically volatile world” is driving “innovation in defence and cyber security.” Opportunities abound then. But as Potts notes, after the battle with Saba “The challenge for the Company is to unite shareholders around its mandate in order that we can continue to make long-term investments in smaller quoted technology companies.” The continuation vote due to be held in March will provide an early test of that unity and also of Saba’s intentions.
Numis: “If shareholders again show support for Herald’s existing strategy and the continuation vote passes, the board will still likely need to engineer a way to facilitate an exit for Saba to remove the overhang of shares, whilst being fair to the remaining investors – which can be a difficult balance.”
BlackRock Throgmorton (THRG) outperforms during unusual year
THRG comfortably outperformed the Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index over the full year: NAV total return of +16.3%, +2.2% above the benchmark. Chairman Christopher Samuel describes the outcome as “a pleasing result for a cautiously positioned portfolio in a challenging and unusual year.” Portfolio manager Dan Whitestone has now beaten the benchmark in 9 of the last 10 years with the fund’s +130.5% NAV total return between March 2015 and 30 November 2024 not far off three times the benchmark’s +51.8%.
Whitestone admits “2024 has been one of the most difficult years to navigate”, citing outflows in the asset class and mergers and acquisitions in the UK small and mid-cap space as private equity and overseas buyers capitalised on depressed valuations and a weak currency. Thing is, “This is only good news if you own the shares.” Whitestone is finding it “hard to get too constructive on the UK small and midcap universe right now, given the domestic fiscal environment.” Having said that “a deep recession is unlikely, but our hopes for a V shaped recovery in 2025 have been squashed. Our base case now is a return to the environment of 2023, subdued demand and anaemic growth.” What to do? “Continue to invest in companies with strong balance sheets, and growing cash flows.”
Numis: “We rate the manager, Dan Whitestone, highly. The fund has a ‘quality growth’ bias, with a focus on businesses with favourable competitive positions, organic revenue growth and strong balance sheets, looking for companies with a compelling runway for growth and an asymmetric risk/ reward opportunity.”
Polar Capital Global Financials’ (PCFT) best annual investment performance
PCFT’s +34.8% NAV per share return, the best annual investment performance in the fund’s history according to Chairman Simon Cordery. The full-year performance, a tad below the benchmark’s +36.1% but strip out the 6.5% of the portfolio that is invested in fixed income securities which ‘only’ returned +12% and the investment return would have beaten the all-equity benchmark. As the investment managers point out, those stellar fund and benchmark performances down to financials being “the best performing sector of the global equity markets in the period, beating information technology into second place.” Longer-term investment performance stacks up too: NAV total return since PCFT’s reconstruction in April 2020 to 30 November 2024 stands at +129.9% compared to the benchmark’s +128.1%.
The investment managers think there could be more to come “We remain confident on the outlook for the financials sector.” The confidence is based on their view that “the investment background has fundamentally changed from the challenges of the last decade. Interest rates are ‘normalising’ and there is demand for significant investment in reshoring, defence and decarbonisation. We believe the sector will be a key beneficiary of these trends.”
Numis: “Exposure is broader than traditional banks, including exposure to payment systems and insurers and the managers are not afraid to actively manage positioning dependent upon changing market conditions. The shares currently trade on a tight discount of c.4%, which we believe largely reflects the upcoming tender offer for up to 100% of share capital at NAV less costs.”
City of London (CTY) being paid to hold on
CTY maintained its record of outperformance during the latest half year: +2.8% NAV total return versus +2.7% for the AIC UK Equity Income Sector and +1.9% for FTSE All-Share. That means CTY has now outperformed over six months, one, three and five years. Over 10 years, the +83.8% NAV total return beats the All-Share’s +81.9% but falls short of the sector’s +88.9%. Not quite a full house but close. As for what’s behind the outperformance this time round, stock and sector selection cited.
In his outlook statement Chairman Sir Laurie Magnus CBE points out that while CTY invests in UK stocks “At 31 December 2024, some 63% of the underlying sales of investee companies were made overseas. They are therefore well placed to benefit from global growth trends.” What’s more “Given the relative attraction of UK equities to their equivalents in overseas markets, especially with regard to dividend yield, it remains the case that investors in UK equities ‘are paid to hold on’. Unless of course buyers take advantage of the low valuations on offer “More takeovers can be expected from overseas companies and private equity firms while this low relative value of UK equities persists.”
Winterflood: “Share price TR +5.1%, as discount narrowed to 0.0% from -2.2%. Board is confident of 59th consecutive annual dividend increase. Ongoing charges expected to remain around 0.37% for FY25.”
Rights & Issues (RIII) sees opportunities and challenges
RIII’s +8.8% NAV per share return for the full year easily beat the FTSE All-Share’s +5.5%. Good start then for new lead manager Matt Cable who took over at the half-year stage. Looking ahead, Chairman Dr Andrew J Hosty “expects to see continued volatility in the markets. So, whilst there are some signs that energy prices, inflation and interest rates may have peaked, we are now seeing rising gilt yields and, in the UK where we focus, higher employment taxes to contend with.” All of which will generate “opportunities as well as challenges.” Expect no change then in the strategy to seek “investments in differentiated companies operated by good management teams that they believe to be fundamentally underpriced.”
Winteflood: “Share price TR +11.7%, as discount narrowed to 6.4% from 8.9%. Board considered share split to improve liquidity, but decided not to pursue following shareholder feedback.”
