The Results Round-Up: The week’s investment trust results

Lots of festive cheer in this week’s roundup with JPMorgan Japanese JFJ reporting a +24.2% NAV total return; Ecofin Global Utilities and Infrastructure EGL an even better +25.9% NAV per share total return; and Jupiter Green (JGC) clocking up a +19.3% share price total return. Global Smaller Companies Trust (GSCT) couldn’t match those heady numbers but that’s largely down to a cautious approach.

By Frank Buhagiar

JPMorgan Japanese (JFJ) a quarter up

JFJ reported a +24.2% net asset value (NAV) total return for the full year, e outstripping the benchmark’s +10.3%. The outperformance, no one-off either with the fund outperforming over five and ten years: +5.5% annualised five-year NAV total return (benchmark +5.1%); and +10.5% annualised ten-year NAV total return (benchmark +8.4%).

What makes this year’s eye-catching performance even more impressive is that the fund successfully completed a merger with JPMorgan Japanese Smaller Cos., pushing the combined fund’s net assets up to around £1bn. No taking the eye off the ball here then. In terms of performance, the Portfolio Managers believe there’s more to come “The transformation underway in Japan has, in our view, only just begun. The gains to be realised from corporate governance reforms and other structural changes will be much more significant than those we have seen to date.” Shares finished a little lower on the day, investors deciding to take some profits off the table after such a strong year perhaps.

Winterflood: “Outperformance attributed to enhanced focus on companies embracing corporate governance reform and market rotation towards growth as Yen appreciated near the end of the financial year. Private equity investors are increasingly active in Japan, and the managers ‘have never seen inbound M&A on this scale’.”

Numis: “We believe the outperformance is impressive given that ‘value’ has outperformed ‘growth’ in Japan over much of this period. The managers appear to have been rewarded for tweaks to their approach to be more valuation aware, whilst still focusing on high quality companies, with strong market positions, balance sheets and cash flow generation.”

Investec: “The manager has a distinct investment philosophy which features a high conviction and unconstrained approach, and the identification of high-quality growth companies that can compound earnings sustainably over the long term. The manager has said that the biggest reason to invest in Japan is improving corporate governance. Meanwhile, Japan appears to have finally crossed a critical inflation threshold. This is a very constructive backdrop, and we reaffirm our Buy recommendation.”

Ecofin Global Utilities and Infrastructure (EGL) a quarter up too

EGL put in a full-year p that technology-focused funds would be proud of: NAV per share increased +25.9% on a total return basis while share price total return was +24.8%. The utility investor beat comparable global sector indices as well as general equity benchmarks such as the FTSE All-Share and MSCI World indices. NAV and share price total returns since inception eight years ago are now up to +10.2% and +11.8% per annum respectively. According to Chairman David Simpson “The portfolio was well positioned for the recovery in share valuations of utilities and the resurgence in interest in nuclear power.”

Sounds like the portfolio continues to be well-placed for the future too “We believe that the total return prospects for the Company’s portfolio are very encouraging while the broad array of the sub-sectors in which we invest gives investors excellent portfolio diversification.” Shares took a well-deserved breather on the day of the results, finishing a penny lighter at 175p.

Winterflood: “Positive performance was seen across the utility, environmental services and transportation infrastructure portfolio segments and was especially strong in the US. Stock selection was beneficial, with the portfolio well positioned for the recovery in share valuations of utilities and the resurgence in interest in nuclear power. Increasing power demand and infrastructure CapEx are driving earnings growth for portfolio companies, while valuation multiples for these essential assets businesses remain low.”

The Global Smaller Companies Trust (GSCT) proceeding with caution

GSCT’s +2.7% NAV total return for the half year c match the benchmark’s +5.7%. The fund’s focus is to invest in high quality, well-managed, soundly financed and profitable companies. That ought to come in handy should the lead manager’s warning that complacency is setting in proves to be right “There are many uncertainties today, yet we have seen the valuation of equities expand and spreads on corporate bonds narrow. It looks like complacency is setting in and so we think it is right to proceed with caution but to take advantage of any opportunities that present themselves.” Market appears to have heeded the fund manager’s words of caution with the shares finishing the day 1.8p lower at 166p.

Winterflood: “Asset allocation had little effect on relative performance, with attribution from overweight in UK offset by underweight in North America.”

Jupiter Green (JGC), going out on a high?

JGC’s half-year results overshadowed by the company’s announcement that it is proposing a scheme of reconstruction. Under the proposals, shareholders would have the choice of rolling over their investment into units in Jupiter Ecology Fund, a unit trust that invests in “the same underlying environmental solutions themes as the Company managed by the same investment team at Jupiter” or electing for an uncapped cash exit at a modest discount to NAV. If approved by shareholders at a soon-to-be-called general meeting, the proposals would be expected to take effect in Q1 2025. That means this could well e JGC’s fina Half-year Report. If that’s the case, then the fund is going out with something of a bang. During the six-month period, share price total return came in at +19.3%. NAV total return, a little more sedate at +2.5% but that was still better than MSCI World Small Cap (£) Index’s -0.8%. Market liked what it heard, shares closed up 5p on the day at 233p.

Numis: “It is unsurprising to see the fund winding up, given it is sub-scale (c.£40m market cap) and that the Board had been reviewing strategic options since July. The shares currently trade on a c.10% discount to NAV.”

Winterflood: “We commend the Board for offering an appropriate rollover vehicle for those wanting to stay invested in the strategy.”

These are my top FTSE 250 REITs for earning passive income from dividends

The 90% profit distribution rule applied to REITs makes them an attractive option for dividend investors. Here are two of my favourites from the FTSE 250.

Posted by

Mark Hartley

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.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

The FTSE 250 is awash with real estate investment trusts (REITs), a popular choice among investors looking for stable dividend income.

REITs are similar to property investment trusts in that they provide exposure to the housing market. For investors lacking the funds to buy property directly, they’re an easily accessible alternative.

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.

Compounding via dividends

While there are many different ways to build a portfolio aimed at income investing, dividends usually play a role. By reinvesting dividends regularly, growth can be achieved by compounding returns.

REIT dividends tend to be consistent and reliable because the trusts are required to return 90% of profits to shareholders. For UK investors looking to earn passive income, that makes them an obvious choice.

To qualify, the shares must be bought before the ex-dividend date. However, dividends can be cut at any time before this date, so future payments are never guaranteed. 

How much passive income can I earn from REITs?

While it’s impossible to say exactly how much passive income can be earned, aiming for a high dividend yield is a good start . This is the amount of the investment that is paid as dividends.

I generally aim to maintain an average yield of around 6%. A rising yield could be offset by a falling price so it’s important to pick well-established REITs with low price volatility.

Two of my favourites are Primary Health  (LSE: PHP) and PRS REIT (LSE: PRSR), with 7.5% and 3.5% yields, respectively. They offer exposure to different sides of the market, helping me achieve a balance of yield and price growth. 

Primary Health

Primary Health was my first REIT and it’s served me well. It has an attractive 7.5% yield and has been increasing dividends for over 20 years at a rate of 3.2% on average.

As the name suggests, it primarily focuses on managing and developing healthcare facilities such as GP surgeries, medical centres, and clinics. But years of high interest rates have stifled investment, dampening UK property stocks.

The expectation of increased NHS investment under the new Labour government gave it a boost in July. But the October budget put a damper on things, with stifling tax hikes hurting the property market.

It’s now down 45% from a high of £1.67 in August 2021. A similar drop occurred in 2007, with a 127% recovery in the following decade. No guarantee it’ll happen, but I plan to buy more of the shares in anticipation.

PRS REIT

A relative newcomer, PRS REIT has only been paying dividends for seven years. They’ve remained steady at 4p per share after being cut from 5p in 2020. Unlike Primary Health, the trust has enjoyed solid growth, up 31% this year but with only a 3.75% yield.

PRS stands for Private Rented Sector, indicating the focus on family homes for rent. The sector enjoyed renewed growth this decade as more people look to rent rather than buy. 

However, if interest rates start rising again it could hurt the REIT’s performance. Since it uses debt to finance new acquisitions, higher borrowing costs would push up expenses. And if the economy slumps again, it could reduce tenants’ ability to pay rent.

But with a price-to-earnings (P/E) ratio of 6.2, it currently looks like good value. If the economy holds strong in the new year, I plan to buy more of the shares.

£11,000 in savings? Investors could consider targeting £5,979 a year of passive income with this FTSE 250 high-yield gem!

This FTSE 250 firm currently delivers a yield of more than double the index’s average, which could generate very sizeable passive income over time.

Posted by

Simon Watkins

ITV

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.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. 

Shares in FTSE 250 broadcaster ITV (LSE: ITV) are down 18% from their 22 July 12-month traded high of 88p.

This has boosted its return to 6.9% as a stock’s yield moves in the opposite direction to its share price. By comparison, the FTSE 250’s average yield is just 3.3%.

Analysts forecast the dividends will rise in 2025 and 2026 to 5.04p and 5.17p, respectively. Therefore, the yields would increase to 7% and 7.2%.

Supercharging passive income

The average UK savings amount is £11,000. So, investors considering using this to invest in ITV shares would make £759 in first-year dividends. On the same 6.9% average yield, this would rise to £7,590 after 10 years and to £22,770 after 30 years.

However, this passive income could be much greater using ‘dividend compounding’.

In ITV’s case, using this common investment technique on the same average yield would produce dividends of £10,888, not £7,590, after 10 years. And after 30 years on the same basis, this would rise to £75,658 rather than £22,770 !

Adding in the initial £11,000 investment and the ITV shares could be generating £5,979 a year in passive income by that point. That is, as long as it maintains its yield and the share price does not suffer catastrophic losses.

How does the share price look?

I only buy shares that look undervalued compared to similar stocks. For passive income shares, this reduces the chance of my dividend gains being erased by share price losses should I ever sell them. And conversely, of course, it increases the possibility of my making a profit on share price gains.

My first step in ascertaining whether a share is undervalued is comparing it to other stocks using measurements I trust.

Starting with the price-to-earnings ratio, ITV currently trades at just 6.3. This is bottom of its competitor group, which averages 8.4.

This comprises Métropole Télévision at 6.5, Vivendi at 6.7, MFE-Mediaforeurope at 10, and RTL Group at 10.4.

So, ITV looks very undervalued on this measure..

To work out what this may mean in share price terms, I ran a discounted cash flow valuation using other analysts’ figures and my own.

This shows ITV shares are 68% undervalued at their present 72p price. M

They may go lower or higher than that, given the vagaries of the market, of course. But it confirms to me that they seem underpriced.

Will I buy the stock?

A risk here is that the sector in which ITV operates is extremely competitive. This may squeeze its profit margins over time. Another risk is the sub-£1 share price, which increases the effects of price volatility in a stock. Each one-penny drop in ITV’s share price represents nearly 1.4% of its entire value.

However, for an investor at an earlier stage of their investment cycle than me (I am 50+ years old now), this high-yield stock may well be worth considering.

BARCLAYS CUTS ASSURA GROUP PRICE TARGET TO 44 (47) PENCE – ‘OVERWEIGHT’

Whilst everyday is a good day, including weekends and holidays, to have a dividend re-investment plan, some days are much better than others.

thaiofficepro.co.th
Fioravanti69753@gmail.com
204.217.128.7

Please let me know if you’re looking for a writer for your blog. You have some really good posts and I believe I would be a good asset. If you ever want to take some of the load off, I’d absolutely love to write some material for your blog in exchange for a link back to mine.

Please blast me an e-mail if interested. Many thanks !

£££££££££££££

Until the New Year, any new information is scarce, so if anyone want’s to contribute any articles for publication on the blog, next week would be a good time to post.

Currently there is xd income of £1,578 and cash of £770. The most probable destination for the cash is AGR, which would add to the Snowball another £190.00 of income. But as always best to DYOR.

GRS but GR.

QuotedData’s Real Estate Monthly Roundup – December 2024

Richard Williams

Winners and losers in November 2024

Best performing funds in price terms	(%)
Alpha Real Trust	9.5
Globalworth Real Estate	8.5
Residential Secure Income	5.3
IWG	4.5
Custodian Property Income REIT	3.2
Grainger	3.1
Value & Indexed Property Income Trust	1.9
Hammerson	1.8
Workspace Group	1.8
Supermarket Income REIT	1.3

Source: Bloomberg, Marten & Co

Worst performing funds in price terms	(%)
Grit Real Estate Income Group	(17.6)
CLS Holdings	(12.3)
Life Science REIT	(12.2)
Conygar Investment Company	(11.5)
Big Yellow Group	(11.3)
Real Estate Investors	(8.8)
Safestore	(8.0)
Ground Rents Income Fund	(7.6)
Target Healthcare REIT	(7.4)
Urban Logistics REIT	(7.3)

Source: Bloomberg, Marten & Co

Best performing funds

Real estate share prices settled somewhat in November but were still down 1.4% on average having declined almost 5% in October, as the impact of the budget raised the potential for a higher-for-longer interest rates environment. There was an eclectic mix of positive share price movers in the month, led by real estate debt specialist Alpha Real Trust. Post month end, the company announced that it would seek to delist, offering minority shareholders a tender offer at NAV. Residential Secure Income saw its share price trend upwards for a second consecutive month after announcing a proposed managed wind-down in October. Custodian Property Income REIT’s quarterly valuation update shows that values may have turned a corner (see the valuation moves section below), highlighting that its shares may be too cheap. Hammerson’s continued operational and balance sheet strengthening, including the launch of a £140m share buyback programme, seems to be gaining traction with investors. The reaction to the proposed change in the basis of Supermarket Income REIT’s management fee (from NAV to share price – see corporate news section) has been surprisingly muted.

Worst performing funds

Potentially higher-for-longer interest rates resulted in many of the highly leveraged or rate sensitive companies suffer once again. Grit Real Estate Income Group, which has a high cost of borrowing, continued to lose value as its share price plummeted another 17.6% over the month, and it has halved in size over the 11 months of 2024. The African real estate developer and investor now has an astonishingly low market cap of around £50m, despite owning a freshly capitalised development partner with lucrative US Embassy-backed diplomatic housing projects in the pipeline. Fellow perennial 2024 share price victims CLS Holdings and Life Science REIT also recorded double-digit declines in November. Office landlord CLS faces a tricky few months with several loans due to mature in 2025. Meanwhile, interest rate hedges in place on debt that Life Science REIT is using to develop its flagship scheme expire next year. The two self-storage operators, Big Yellow and Safestore, both suffered as fears for subdued economic growth and a floundering housing market grew. Ground Rents Income Fund made significant progress in its strategy to sell down assets with the sale of its largest holding (see the news section).  

Valuation moves

Company	Sector	NAV move (%)	Period	Comments
Care REIT	Healthcare	0.6	Quarter to 30 Sept 24	1.0% like-for-like increase in property portfolio valuation to £672.1m
Custodian Property Income REIT	Diversified	0.4	Quarter to 30 Sept 24	Value of the company’s portfolio was £582.4m, an increase of 0.5% on a like-for-like basis
abrdn European Logistics Income	Europe	(0.3)	Quarter to 30 Sept 24	Portfolio valuation remained stable at €607.5m
Triple Point Social Housing REIT	Residential	(1.4)	Quarter to 30 Sept 24	0.9% decrease in the valuation of the company’s property portfolio
abrdn Property Income Trust	Diversified	(11.3)	Quarter to 30 Sept 24	Reduction reflects price agreed on sale of company’s portfolio
AEW UK REIT	Diversified	6.2	Half-year to 30 Sept 24	Value of portfolio up 2.3% to £215.6m
Warehouse REIT	Industrial	2.5	Half-year to 30 Sept 24	Like-for-like portfolio valuation up 2.3% to £811.3m
LondonMetric Property	Logistics	2.1	Half-year to 30 Sept 24	0.7% property valuation increase to £6.2bn
Land Securities	Diversified	1.4	Half-year to 30 Sept 24	Portfolio valuation up 0.9% to £9,957m
Sirius Real Estate	Europe	1.2	Half-year to 30 Sept 24	Marginal valuation uplift to €2,349.0m
Schroder REIT	Diversified	1.0	Half-year to 30 Sept 24	Portfolio valuation increased by 0.9% to £465.5m
British Land	Diversified	0.9	Half-year to 30 Sept 24	Values up 0.2% to £8,867m
Alpha Real Trust	Debt	0.7	Half-year to 30 Sept 24	Uplift in earnings from high return debt
Picton Property	Diversified	0.3	Half-year to 30 Sept 24	Like-for-like portfolio valuation increase of 0.8% to £721m
Assura Group	Healthcare	0.2	Half-year to 30 Sept 24	Portfolio valued at £3.1bn following private hospital portfolio buy. Remainder of portfolio flat
Helical	Offices	0.0	Half-year to 30 Sept 24	Valuation uplift of 1.3% to £371.9m
Urban Logistics REIT	Logistics	(1.4)	Half-year to 30 Sept 24	Value of portfolio up 0.2% on like-for-like basis to £1.14bn

Source: Marten & Co