Case study CT Global Managed Trust

CT global have two Portfolios CMPG and CMPGI

The trust of interest is CMPGI as it pays a dividend.

ACTIVITY BREAKDOWN
Top 10 Holdings

Name Holdings
Law Debenture Corp (The) PLC 4.7%
NB Private Equity Partners Class A Ord 4.6%
JPMorgan Global Growth & Income PLC 3.9%
Murray International Ord 3.9%
3i Infrastructure Ord 3.5%
Greencoat UK Wind 3.4%
Mercantile Ord 3.4%
Scottish American Ord 3.4%
Merchants Trust Ord 3.4%
Henderson International Income Ord 3.2%

U would have a holding in each of the above.

Dividend

Income Shares – Financial Highlights and Performance Summary for the Six Months

·      Dividend yield of 6.5% at 30 November 2023, compared to the yield on the FTSE All-Share Index of 4.0%. Dividends are paid quarterly.

·      Net asset value total return per Income share of -2.9% for the six months, underperforming the total return of the FTSE All-Share Index of +1.6% by -4.5% points.

Revenue and Dividends

The Company’s net revenue return for the six months was £2.12 million which is equivalent to 4.19p per Income share (compared to 4.01p per Income share for the corresponding period in 2022). Income shareholders are entitled to all the dividends paid by the Company. The second half of the financial year will see the impact of the removal of dividends by Digital 9 Infrastructure and Hipgnosis Songs Fund referred to above. However, these will not impact the Board’s dividend intentions for the financial year as the Company enjoys significant distributable reserves that can be used to overcome any temporary or extraordinary revenue shortfalls.

As I referenced in the 31 May 2023 Annual Report and Financial Statements, in the absence of unforeseen circumstances, it was (and it remains) the Board’s intention to pay four quarterly interim dividends, each of at least 1.80p per Income share so that the aggregate dividends for the financial year to 31 May 2024 will be at least 7.20p per Income share (2023: 7.20p per Income share).

To date, a first and second interim dividend in respect of the year to 31 May 2024 have been announced and paid, each at a rate of 1.80p per Income share (1.67p per Income share in the corresponding periods in the year to 31 May 2023).

The minimum intended total dividend for the financial year of 7.20p per Income share represents a yield on the Income share price at 30 November 2023 of 6.5% which was materially higher than the yield of 4.0% on the FTSE All-Share Index at the same date.

The Income Portfolio was particularly affected by the adverse environment for investment companies in the alternatives sub-sector and this was a key factor in the portfolio lagging the benchmark. The best performers included CC Japan Income & Growth Trust which had a 9% rise in its share price. Although the Tokyo market performed well, much of the rise was diluted for UK investors due to a weakening of the yen relative to sterling; however, the value orientated style of the manager helped the trust to outperform. Private equity trust NB Private Equity Partners has been a long-term outperformer for the Income Portfolio, and this continued with a 10% rise in its share price. Another consistent outperformer has been JPMorgan Global Growth & Income which continued to do well with a 8% rise in its share price. The main detractors were Digital 9 Infrastructure with a 48% fall in the share price. This was a disappointment as the trust has some valuable assets, but too much debt led to a removal of the dividend and was behind the share price decline. Another high profile detractor was Hipgnosis Songs Fund whose share price fell by 16%, at least in part due to it also removing its dividend, though in addition there have been governance, accounting and debt level concerns too. Impact Healthcare REIT, a specialist healthcare property REIT, experienced a 16% fall in its share price. This was a case of higher interest rates being reflected in a modest decline in the net asset value which caused the shares to move to a wider discount. Encouragingly the dividend was raised by 3.5%. 

Positive

If the Trust buys a clunker such as SONG it’s less detrimental in a bigger

portfolio.