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

Schroder Income Growth (SCF) chalks up a 19% NAV total return; AVI Global (AGT) up 13.7% not far behind; Capital Gearing Trust (CGT) a little way off with a 2.4% NAV total return; that was better than Syncona’s (SYNC) -5.2%; Scottish Oriental Smallers (SST) posts an 18.6% NAV total return; and a case of as you were for Worldwide Healthcare (WWH), NAV per share total return came in at 0.6%.

By Frank Buhagiar

Schroder Income Growth’s (SCF) double track record of growth

SCF’s net asset value (NAV) total return came in at +19% for the full year compared to the FTSE All-Share’s +17%. That means since the current investment team took over in July 2011, the NAV total return stands at +174.1%. That’s well ahead of the FTSE All-Share Index’s +138.1%. The strong track record extends to dividends paid too. A +2.9% dividend increase to 14.20p makes it 29 years in a row that the payout has been raised, confirming the funds AIC “Dividend Hero” status. A track record that ought to go down well with shareholders when it comes to voting on the fund’s continuation at the 2025 Annual General Meeting. Meanwhile, the share price, which returned +17.7% during the year, took a well-earned breather following the results, closing off a penny at 280p.

Winterflood: “Gearing top contributor (NAV +2.6%). Stock selection in Financials, Consumer Staples and Energy drove outperformance over period, while SME bias contributed as well.”

AVI Global’s (AGT) creditable performance

AGT Chairman, Graham Kitchen, describes the fund’s +13.7% NAV total return for the year as “creditable”. Easy to see why, as it came in above the long-term average annual return, although it did fall short of the benchmark’s +19.9%. As the investment manager explains, this is down to the index’s returns being primarily “driven by a narrow band of US technology companies. Even so, it is stark to note that the equal weighted version of the MSCI AC World index returned +10.7% over the period (£)”. Longer-term performance remains in the value investor’s favour. Over the last five years the fund is up +65.5%, compared to +63.3% for the benchmark.

Copy and paste job in Kitchen’s outlook statement “This time last year I wrote that ‘The geopolitical and economic environment are undoubtedly challenging and the world is likely to be unstable for some time’ and those words bear repetition this year.” That doesn’t seem to bother the investment manager though “As ever, we do not pretend to know what is round the corner from a macroeconomic perspective. We continue to believe that stock picking, hard work, activism and a focus on events are key tenets in navigating our way forward.” Shares struggled to find their way on the day, finishing unchanged at 237p.

Numis: “We believe that AVI Global 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, with activism being a key tool in their arsenal.”

Capital Gearing Trust (CGT) keeping its powder dry

CGT reported a +2.4% NAV total return for the half year which is comfortably ahead of the Consumer Price Index’s +0.9%. The share price total return was +3.1%. Chair, Jean Matterson, reminds investors that “The Company’s objective is to preserve and, over time, to grow shareholders’ real wealth. I am pleased to report that this has been modestly achieved over the reporting period.”

From the investment managers’ outlook statement, it seems the focus is very much on preservation “Against the backdrop of elevated equity market valuations, there is a growing number of geopolitical developments which have the potential to act as catalysts to a broader market repricing. It is this concerning prospect that means we retain a constrained weighting to equities even though the discount opportunities in investment trusts are at their most attractive level for a decade.” What’s more, the managers “are taking profits in several positions that have performed well, and as such, dry powder now sits at 31% of the portfolio. This will help to ensure that the portfolio could withstand the stern test that may be coming our way, and will provide optionality to redeploy these resources into yield-seeking assets as the risk environment moderates.” Market seems to have taken the gloomy outlook on board – shares closed off 10p at 4745p

Winterflood: “All parts of portfolio contributed positively to performance, but majority was driven by risk assets and corporate credit holdings. Index-linked bonds reduced from 44% to 34% of portfolio.”

Numis: “We note that Capital Gearing, and other defensive ICs, have all been delivering a period of relatively dull performance, which is often an ominous sign for equity markets and can be an attractive time to add to more defensive holdings.”

Syncona’s (SYNC) roadmap to £5bn

SYNC reported a -5.2% NAV per share return for the half year. Finger of blame pointed at the weak performance of the portfolio’s holding in Autolus, and a lower US dollar. Progress, however, continues to be made in the rebalancing of the portfolio towards more late-stage companies. The healthcare investor now has a “Maturing strategic portfolio of 14 companies, with 68.1% of its value now in clinical and late-stage clinical companies, following work to rebalance the portfolio over the last 24 months.” That’s all part of a plan to grow the fund’s NAV to £5bn by 2032. Chair. Melanie Gee, sets out a roadmap to achieve this goal “We continue to believe that there is significant future value in our portfolio. NAV growth, as a result of corporate activity, should follow the progress of clinical milestones over time.” Clinical milestones + corporate activity = strong NAV growth. Market needs a little convincing – shares ended the day at 111.6p compared to 112.8p previously.

Winterflood: “Post period-end, the Board has decided to allocate an additional £15.0m to share buybacks, recycling most of the proceeds from the partial realisation of Autolus. Alongside the £20.0m allocated to buybacks in June 2024, this takes the total amount allocated to £75.0m since buyback programme was launched in September 2023.”

Jefferies: “looking forward, we think SYNC needs to deliver on various value inflection points within its portfolio in the near-term if the organic NAV target of £5bn by 2032 is to remain a realistic goal.”

Numis: “As Syncona has restructured its portfolio and management, investors have been waiting for ‘jam tomorrow’ for some time, and it is unsurprising to see the shares trading on a c.38% discount given NAV performance in recent years. However, we believe this fails to reflect the current, more mature portfolio with a number of upcoming milestones”.

Scottish Oriental Smaller Companies (SST) outperforms thanks to India and Philippines

SST’s +18.6% NAV total return for the year, comfortably ahead of the MSCI AC Asia ex Japan Small Cap Index’s +13.5% and the MSCI AC Asia ex Japan’s +12.0%. The main reasons for the outperformance, the fund’s holdings in India and Philippines. And the strong performance is no one-off either. On a total return basis, over the last five years, NAV is up +55.1%; over ten years, +112.3%. A thumbs up then for the fund managers’ long-term investment horizon, focus on capital preservation and strategy to invest in “companies with high quality management teams, sustainable earnings growth.” Shares treaded water though at 1435p.

Winterflood: “Annual dividend +7.7% YoY to 14.0p per share. Special dividend of 8.0p also declared. 5:1 share split proposed by Board to ‘improve liquidity and marketability’.”

Worldwide Healthcare’s (WWH) one-stop shop

WWH’s +0.6% NAV per share total return for the half year enough to beat the MSCI World Healthcare Index, the benchmark was flat in sterling terms. Share price total return topped the lot up +3.6%. NAV would have performed better had it not been for a strong sterling – the currency was up 6.2% against the US dollar – as the majority of the fund’s investments are denominated in dollars. The Portfolio Managers are sticking with their long-standing allocation strategy which is focused on “a diverse distribution of investments across all of the major sub-sectors and across the global healthcare industry. This allows investors to view the Company as a ‘one-stop-shop’ for all of their healthcare investment needs given the broad exposure of the portfolio to the entirety of the healthcare ecosystem – from therapeutics, to services, to medical technologies, to growth of emerging markets.” Well, if it aint broke, although at the time of writing, shares were off 5p at 338.5p.

Numis: “The fund remains differentiated through its exposure to emerging (including emerging markets) biotechnology companies. The fund is currently trading at a 10% discount to NAV, supported by buybacks.”