The Results Round-Up – The Week’s Investment Trust Results
Which fund has generated a 4,733% NAV per share total return since its inception in 1995? And will AVI Global Trust’s focus on the unfashionable pay off in the long run?

The Results Round-Up – The Week’s Investment Trust Results
Which fund has generated a 4,733% NAV per share total return since its inception in 1995? And will AVI Global Trust’s focus on the unfashionable pay off in the long run?

The Results Round-Up – The Week’s Investment Trust Results
Which fund has generated a 4,733% NAV per share total return since its inception in 1995? And will AVI Global Trust’s focus on the unfashionable pay off in the long run?

By
Frank Buhagiar
07 Jun

JPMorgan European Growth & Income (JEGI) cautiously optimistic
JEGI’s total return on net assets for the year came in at +16.8% (debt at fair value), outperforming the benchmark’s +12.7%. A tick in the box for JEGI’s investment process which, as the Investment Manager’s Review explains, focuses on ‘companies with improving operational momentum, higher quality characteristics, and lower valuations.’ And even though not all investments held satisfy all three criteria, in aggregate the portfolio does. Among the fund’s successes over the period, Novo Nordisk, thanks to its all-conquering diabetes and obesity businesses.

And the investment managers cite improving consumer confidence and moderating inflation in Europe as reasons why they are cautiously optimistic for the future. What’s more, valuations are cheap. Chair, Rita Dhut notes ‘Europe has truly world class companies attractively valued particularly in relation to the US equity market.’ In other words, the US without the froth.

JPMorgan: ‘JEGI’s relative NAV TR has continued to trend upwards representing an improvement in relative performance since a trough in mid-2020. If we look at the AIC Europe peer group on a rolling five-year basis (to 31/5/24) in NAV TR terms JEGI ranks 4 of 7 but on a rolling three-year basis it ranks 1 of 7 reflecting this improvement. JEGI’s 4% of NAV dividend policy means it has the highest yield of its peer group.’

Winterflood:’JEGI has generated long-term outperformance against the benchmark, testament to the approach, and we view the fund as offering solid core exposure to European equities.’

AVI Global Trust (AGT) focusing on the unfashionable parts
AGT’s+16% share price total return for the half year just missed out on the benchmark’s +16.1% (NAV total return was +13.9%). Decent outcome bearing in mind the Investment Manager’s broad-based approach. This generally sees the fund invest in stocks which, according to Chairman, Graham Kitchen, ‘combine growth prospects with attractive share price valuations’. Because of this, AGT tends to avoid the fashionable parts of the market and instead focuses on the less fashionable areas. One such area is closed-end funds. The Investment Managers have been increasing exposure to the sector over the last 18 months because, in their view, there is ‘a structural lack of interest in such companies, almost entirely for non-fundamental reasons, and we believe this to be an attractive opportunity set with discounts at wide levels’.

Numis: ‘We believe that AVI Global (£1,090m market cap) has an interesting and differentiated mandate. AVI typically focuses on overlooked and under-researched stocks that offer attractive value with a potential catalyst to narrow the discount and works actively to improve corporate governance to unlock value. Further, AGT’s portfolio is trading on c.32% discount, on a look-through basis, and believe that this offers a compelling entry point.’

Biotech Growth Trust’s (BIOG) win-win
BIOG had a good year – NAV per share return came in at +26.5% while the share price total return fared even better at +27.5%. By contrast, the Nasdaq Biotechnology Index (sterling adjusted) couldn’t get into double figures, up just 5% on the year. A tick in the box for the fund’s overweight exposure to small and mid-cap stocks. But, while encouraged by the strong performance, Chair, Roger Yates, acknowledges that ‘there is still some way to go before the Company fully recovers its relative and absolute losses from the past two years.’

Helpfully, Yates thinks there’s more growth to come in the global biotech industry thanks to ‘ground-breaking innovations and new technologies improving and saving lives, creating value for shareholders and, ultimately, driving performance.’

JPMorgan: ‘BIOG has been top of the peer group in share price TR terms. We remain Overweight.’

Winterflood: ‘The managers believe that improved performance has room to run after long drawdown; 15% of US listed Biotech continues to trade at market caps below net cash on balance sheet.’

Edinburgh Worldwide (EWI) taking the long-term view
EWI’s+13.6% share price gain over the latest half year, double the NAV per share return of +6.4%. Neither could match the benchmark’s +15.0% gain however. Chair, Jonathan Simpson-Dent, points out that because the fund invests in companies ‘that are addressing a variety of societal and business problems, utilising innovations and technology to address these challenges’, the portfolio managers’ investment horizon is ‘by necessity, long-term by the standards of the investment management industry’. That long-term focus has worked against EWI this time round, as higher interest rates have hit valuations and put off many private companies from coming to the public markets.

The portfolio managers add that with the mega-caps hogging the limelight, ‘our preferred hunting ground hasn’t had the attention it deserves and has been arguably shunned by many.’ Things might be changing though. If nothing else, because some of the themes have likely been pushed quite far.

Numis: ‘We believe that expectations for rates is likely to continue to be volatile and for sentiment to improve, we believe the portfolio needs to deliver on operational milestones and deliver the growth that the manager is expecting to drive longer time value, independent of interest rates.’

Worldwide Healthcare (WWH) sticking to the plan
WWH’s full-year+12% NAV per share total return, comfortably ahead of the MSCI World Health Care Index’s +10.9% (sterling adjusted). During the year the fund maintained its strategic overweight in biotech stocks, particularly emerging biotech. As at year end, 29% of the portfolio was invested in biotech, 20.7% above the benchmark.

Long-term numbers stack up too. Although the healthcare investor’s +45.8% return over five years is some way off the benchmark’s +68.3%, since the fund’s inception in 1995 to 31 March 2024, NAV per share total return stands at +4,733%. That compares to the benchmark’s +2,438%. And with several tailwinds behind the sector – global demographics, aging populations, persistent demand and continuing innovation – the sector looks to be set fair. No surprise then that the managers are sticking with the long-term investment strategy. If it aint broke, don’t fix it.

Numis: ‘The fund has a solid long-term track record through stock-picking based on fundamental research, and it has typically been less volatile than most of the listed peer group.’

JPMorgan Indian (JII) focusing on quality
JII’s+6.2% total return on net assets fell short of the MSCI India’s +14.7% for the half year. Chairman, Jeremy Whitley, puts the underperformance down to a quality issue. ‘In broad terms this underperformance is attributable to lower quality sectors of the market doing well, whereas your Portfolio Managers have favoured higher quality corporate names, a number of whose share prices have disappointed.’ The Portfolio Managers will however continue to focus on quality, as they believe ‘it will provide greater exposure to India’s growth story and lift performance over time.’

Numis: ‘The shares currently trade on a c.18% discount to NAV, which largely reflects disappointed performance under several iterations of management. That said, we believe there is limited downside given share buybacks and a performance triggered tender for 25% of share capital at NAV less costs.’

Barings Emerging EMEA Opportunities (BEMO) emerging on the other side
BEMO had a strong first half, +13.2% NAV total return easily trumping the benchmark’s +5.8%. Chair, Frances Daley, sounds relieved: ‘After the turmoil of the past two years, it is a pleasure to be able to report positive results’. For turmoil, read the fund having to write down the value of its Russian assets to zero. Looking ahead, Daley highlights how valuations in emerging equities look attractive, particularly when compared to developed markets, so much so that current levels suggest ‘investor expectations for the asset class remain overly depressed.’ This, Daley believes, has the potential to generate ‘increasing interest in the asset class in general and EMEA markets in particular.’

Winterflood: ‘Russian assets in portfolio continue to be valued at zero but Board remains focused on how to preserve, create and realise value from these assets. 3 Russian companies exited during HY (Magnit, X5 and TCS), releasing £2.3m of value back to BEMO.

Foresight Sustainable Forestry receives a cash offer, abrdn Property Income shareholders vote for a new investment policy and Edinburgh cuts its fees. Which fund is on course to maintain AIC Dividend Hero status?

By
Frank Buhagiar
05 Jun

Foresight Sustainable Forestry the next alternative to head for the exit?
Foresight Sustainable Forestry (FSF) has agreed terms with Averon Park whereby Arizona Bidco Limited, a wholly-owned indirect subsidiary of Averon Park, will acquire the entire issued and to be issued ordinary share capital of FSF for 97p cash. That’s a 32.88% premium to the closing FSF share price of 73p on 28 May 2024, a 43.28% premium to the volume weighted average price of 67.7p per share for the three-month period ended 28 May 2024 and a 5.09% discount to FSF’s unaudited NAV per share as at 31 March 2024.

There is an alternative to the cash offer – qualifying shareholders can opt to receive one unlisted B ordinary share in the capital of the Bidco for each FSF Share. According to Averon’s press release, it has received commitments and indications of support for the deal representing, in aggregate, approximately 26.88% of FSF. Add that to the 29.64% Averon already owns and looks like FSF is on its way out.

Jefferies: ‘Despite the connected nature of the bidder (already owning 29.6% of the shares as Blackmead), we see this as a fair offer for the remaining shares given the narrow discount to NAV of 5%, the stable underlying portfolio valuation, and the sub-scale nature of the company.’

abrdn Property Income shareholders choose to wind down
abrdn Property Income (API) shareholders voted overwhelmingly in favour of the proposed New Investment Policy – to implement a managed wind-down. at the 28 May 2024 General Meeting.

In terms of timings, according to the accompanying announcement, the process of realising the company’s assets and returning the proceeds to shareholders is expected to take around 18-36 months. So, expect API to be around for a while yet. Be interesting to see if jilted suitors Urban Logistics (SHED) and Custodian Property Income REIT (CREI) pick up a few of API’s assets though.

Edinburgh cuts its fees
Edinburgh (EDIN) unveiled an 11% cut in fees. As announced in the recent Finals, a new lower fee scale has been agreed with the manager: 0.45% per annum on the first £500m market capitalisation; 0.40% per annum on the next £500m; and 0.35% on the remaining balance. Based on the year-end market capitalisation, that works out at an 11% pro-forma management fee cut.

Dividend Watch
CT UK Capital Equity & Income (CTUK) on course to maintain AIC Dividend Hero status. That’s because, as announced in the company’s interims, the 5.70p half-year dividend represents a 3.6% increase compared to a year earlier. Not only does this generate a yield of 3.9% but puts the fund on track to maintain its record of raising the dividend every year since launch in 1992 and in the process its AIC Dividend Hero status.

Finsbury Growth & Income (FGT) ups its interim dividend. As announced alongside the Half-year Report, the first interim dividend of 8.8p per share represents a 3.5% increase on 2023’s 8.5p.

You need to save a certain amount on a certain date, u can currently save in a tax free ISA but are worried that as interest falls you will not achieve your target.

Example. For a special reason u want 10k at the start of 2028

Which u need on a certain date, with no ifs and buts.

Example u want 10k at the start of 2028.

Government gilts, spread 0.7%.

KEY INFORMATION

ISINGB00BMBL1G81TIDMTN28 ExchangeLSE
ParValue£100 Maturity Date 31/1/2028
Coupons per year 2
Next coupon date 31/7/24 Coupon 0.125%Income

Yield 0.14%Gross

Redemption yield 4.12%
Accrued interest 4.36p
Dirty Price£86.63

Currently £87.77 to buy. Cost to buy £8,777 plus your dealing cost at AJ Bell £4.95. U have to leave an order but most orders are filled straightaway.

Income is negligible and there are no capital gains to pay if held outside a tax wrapper. On the 31/01/28 the government will return to u 10k.

Currently £87.77 to buy. Cost to buy £8,777 plus your dealing cost at AJ Bell £4.95. U have to leave an order but most orders are filled straightaway.

Income is negligible and there are no capital gains to pay if held outside a tax wrapper. On the 31/01/28 the government will return to u 10k

Ian Cowie: bargains for the brave or funds for fools?
Our columnist examines an area offering high yields. However, over the past year and five years this has, in some cases, come at the cost of lower total returns.

6th June 2024

by Ian Cowie from interactive investor

Critics of investment trusts claim that double-digit discounts to net asset values (NAVs) are illusory if nothing happens to lift share prices back into line with NAVs. Now, a £434 million commercial property investment trust, where I reported buying shares here last month, has seen its price jump by 11% in one day on bid speculation.

Some illusions seem to be more powerful than others. The warehouse specialist, Tritax EuroBox Euro Ord

EBOX is the sterling currency version) surged to just short of its annual high when Brookfield Asset Management Ltd Ordinary Shares – Class A
BAM confirmed it is considering a bid.

The Canadian fund manager, which claims to have US $725 billion (£569 billion) under management, said it is in the early stages of assessing a possible cash offer for the entire share capital of EBOX. However, that £434 million stock market capitalisation remains -26% below this investment trust’s NAV – which is in line with the average for its sector. So, I believe there might be further to go for both EBOX and other undervalued commercial property investment trusts.

Either way, shareholders are being paid to be patient with dividend income of 7.2%. Not that we should have to wait too long before news, one way or another, because BAM is now required by takeover rules to either announce a firm intention to make an offer for EBOX or admit that it does not intend to make an offer before close of business on 1 July.

Here and now, bid activity adds urgency to considering income and growth opportunities in the heavily discounted commercial property sectors of Britain and Continental Europe. Whatever cynics may say about the lack of catalysts for recovery, you can still buy £1 worth of many warehouses, office blocks or shopping malls for less than 75p or less.

For example, even greater dividend yields and discounts – of 9.1% and -39% respectively – can be obtained from Schroder European Real Estate Inv Trust
SERE
This £199 million investment trust owns a variety of commercial properties in Paris, Berlin, Hamburg and Frankfurt.

Sad to say, the price of a higher income has been lower total returns because SERE has shrunk shareholders’ capital by -12% and -20% over the last five-year and one-year periods respectively. For comparison, EBOX’s total returns over the same periods are -12% and plus 13% respectively. Neither of these Continental European property trusts has a decade-long record.

Decent dividends with higher total returns and deeply discounted prices can be found closer to home in UK Commercial Property. For example, abrdn Property Income Trust Ord
API

currently yields 7.6% income but remains priced -31% below its NAV, despite leading its sector over the last year with a total return of 9.2%.

API’s five and 10-year track record offers a partial explanation by illustrating the cyclical volatility of this sector. Over the shorter period, its total return is -23% while, over the longer term, it is positive by the same amount.

Balanced Commercial Property Ord
BCPT

ranks second over the last year after similar switchbacks over the long, medium and short terms. Is a current dividend yield of 6.6% sufficient to justify total returns over the last decade, five years and one-year periods of plus 6.4%, minus 14% and plus 6.6%? BCPT’s -26% share price discount to NAV suggests that for many folk the answer is “no”.

Part of the problem with API and BCPT is that neither has consistently delivered rising dividends. Both have shrunk shareholders’ income over the last five years; by annual averages of -3.4% and -3.3% respectively.

Top 10 most-popular investment trusts: May 2024
The top 10 most-popular investment funds: May 2024
Investors piling into US funds, but are they joining the party too late?
More positively, real estate income trust Alternative Income REIT Ord
AIRE

currently yields 8.8% income, despite raising dividends by an annual average of more than 13% over the last five years. It is important to beware that dividends are not guaranteed, because they can be cut or cancelled without notice, but if that rate of ascent is sustained it would double shareholders’ income in less than five years and six months.

AIRE’s 18 underlying properties are spread across diverse sectors including “automotive and petroleum, education, healthcare, hotels and industrials”. Its total return over the last year is a modest 5.5%, but it also remained positive over the last five years with a total return of 22% although it lacks a 10-year record. Its discount is -16.5%.

All the above investment trusts have survived setbacks for this sector – ranging from rising interest rates and online shopping to Covid collapsing demand for offices and technology boosting working from home. Commercial property investment trusts have demonstrated that closed-end funds are a much better way to gain exposure to illiquid assets than their open-ended rivals, which former Bank of England governor Mark Carney memorably described as being “built on a lie”.

Looking forward, it remains to be seen whether the dividend yields and discounts currently available in this sector will prove to be bargains for the brave…or funds for fools.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

Darvas Boxes. Still a time for sitting although if u are in profit u could take some money of the table to be sure to be sure. The worst that could happen is that the share continues to rise and u make more money.

Yield 10.8% and trades at a discount to NAV of 37%. The dividend is at the high end of a risk profile.

Selected Property Trusts that are near to their recent lows.

I’d buy cheap REITs with £500 to target a £500k nest egg
Investing regularly in carefully-chosen cheap UK REITs could help investors build significant wealth.

Zaven Boyrazian, MSc

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.

Real estate investment trusts (REITs) can be a powerful addition to a retirement portfolio. These types of businesses are notorious for offering impressive dividends that can build into a chunky passive income with minimal effort. And when left to reinvest over the long term, a carefully constructed portfolio of top-notch stocks could even transform into a £500,000 nest egg.

The power of investing regularly
Dividend investing often doesn’t get associated with high levels of growth. After all, it’s typically only large mature businesses that redistribute excess earnings back to shareholders. Yet despite this, dividends have historically provided the lion’s share of investment returns. In fact, since 1960, an estimated 85% of gains have come from shareholder pay outs.

There are a few reasons behind this phenomenon. However, the leading catalyst is the miracle of compounding. By regularly investing a lump sum each month, as well as automatically reinvesting any dividends received, the number of shares owned in each business increases. For each additional share, more dividends are received when the next payment date comes around. And this process repeats then repeats itself over and over again in a wealth-building loop.

Turning £500 into £500k
Ensuring that a portfolio has a constant, steady stream of capital is essential. The more an investor can spare each month, the better. However, it’s critical to try and mitigate, or better, eliminate any risk of falling short. Why? Because in the long run, missing out on even just one month of investing can leave a lot of money on the table.

To demonstrate, £500 compounded at 9% for 25 years is worth around £4,700. In other words, for each missed month, investors lose almost five grand of wealth. But for those who consistently invest at this rate of return without missing a beat, they can expect to have just over £560,000.

Of course, achieving a 9% return each year is easier said than done. The FTSE 100 has historically only offered around 8%, and over the last decade, it’s actually been closer to 6%. This is where REITs come to the rescue. With their chunky yields and steady share price appreciation, reaching a 9% target becomes a bit more straightforward.

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.

However, like with every investment, nothing is risk-free. REITs may have a strong reputation for paying dividends, but they’re also known for operating with a lot of debt and with interest rates now elevated, leveraged balance sheets are under pressure. .

In fact, that’s precisely why yields in 2024 is sitting higher since lower confidence from investors has dragged down valuations.

We think earning passive income has never been easier
Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

How much can a £250,000 pension pot get you in your retirement?

Story by Temi Laleye

How much can a £250,000 pension pot get you in your retirement?© GB News

Increases in food, energy and motoring costs will see those approaching retirement having to save more to afford the lifestyle they want.

Savers typically aim for a pension pot of £250,000 on average but end up with just over half of that in reality, new research reveals.

This is a massive shortfall in the amount they hoped to have available (£250,000) to buy an annuity or invest to generate an income.

A £250,000 pot can buy an annuity – which provides a guaranteed income for life – worth £12,091 a year at today’s rates, according to Standard Life.

A £131,000 fund can currently get someone an annuity of £6,332 a year.

With many people ending up with just over half of their pension saving goal, Britons are urged to carefully consider their retirement plans so they can ensure they have enough to live off in retirement.