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

Another bumper round up. Of the 14 funds covered, eight clocked up double-digit returns: Barings Emerging EMEA Opps BEMO, Fidelity China Special Situations FCSS, Polar Capital Technology PCT, GCP Infrastructure Investments GCP, Henderson European HET, TwentyFour Select Monthly Income SMIF, JPMorgan Asia Growth & Income JAGI and JPMorgan Indian JII. But which fund is up +1,884.44% since 1995?

By Frank Buhagiar

Barings Emerging EMEA Opportunities (BEMO), beats benchmark by 8.8%

BEMO had a strong year: +17.3% net asset value (NAV) total return beat the benchmark by +8.8%, making it one of the top performing investment trusts in its sector this year. Chair Frances Daley provided an update on the discount and performance targets that are due to be tested in September 2025. “While the portfolio’s outperformance since 2022 puts the performance target within realistic reach, the Board sees a strong likelihood of the discount management target being missed.” If that’s the case, “the Board will consider the case for a tender offer alongside other strategic options, taking account of the Company’s remaining Russian assets.”

Winterflood: “Emerging Europe (Poland, Greece) was key geographic contributor to relative performance, as was South Africa.”

JPMorgan European Discovery’s (JEDT) looking for ‘hidden gems’

JEDT -0.5% NAV total return for the half year fell short of the benchmark’s +1%. While the investment managers acknowledge that “political uncertainty is escalating”, they don’t sound unduly concerned “we cannot second guess the impact of political events on financial markets. The Company’s investment strategy remains focused instead on identifying Europe’s ‘hidden gems’ – great companies with strong fundamentals that have escaped the attention of most investors.”

Winterflood: “During the year, tender offer executed with 21.2m shares tendered. Interim dividend increased to 3.0p per share (2023: 2.5p).”

Fidelity China Special Situations (FCSS) an ‘attractive way to access the market’

FCSS posted a +16.1% NAV total return for the half year compared to the MSCI China Index’s +24.5% (sterling). Finger of blame pointed at the stimulus measures unleashed by the authorities in September. According to Portfolio Manager Dale Nicholls, this led to money flowing “into sectors that were seen as the direct beneficiaries or had been sold off the most.” Nicholls not going to be distracted though “With so much focus on the macro considerations, it can be easy for investors to forget that what really drives superior returns are great companies executing well in growing industries where they have strong competitive advantages.”

Numis: “we believe that Fidelity China is an attractive way to access the market, should investors be comfortable with the risk profile of a leveraged fund with a focus on mid/small caps in a single Emerging Market.”

Oryx International Growth (OIG) discount narrowing

OIG notched up a +6.5% NAV increase over the half year. According to Chairman Nigel Cayzer, NAV is now up +1,884.44% since inception in 1995, a testament to the investment philosophy “to nimbly invest in companies that have good ideas, strong balance sheets and where necessary, augmented management skills to unlock value and generate exceptional returns.” Would have been a good idea to invest in OIG all those years ago!

Winterflood: “Share price TR +20.2% as discount narrowed from 29.1% to 20.0%.”

Templeton Emerging Markets (TEM) suffered due to volatility

TEM’s +7.2% NAV total return for the half year, almost in line with the benchmark’s +7.5%. The investment managers note “it was not all plain sailing and a bout of volatility marked the period.” Despite this “our investment approach, which is anchored in a bottom-up process to finding companies that our analysis indicates have sustainable earnings power and whose shares trade at a discount relative to their intrinsic worth and to other investment opportunities in the market, has managed to steer the performance of TEMIT.”

Winterflood: “Share price TR +12.0%; 46.2m shares (4.1% of share capital) repurchased for £74.3m, providing +0.6% uplift to NAV.”

JPMorgan China Growth & Income (JCGI) rallied in the second half of the year

JCGI’s focus on quality and growth stocks worked against it over the full year (+3.6% NAV total return compared to the MSCI China Index’s +12.7%) as value stocks drove the market higher. It’s a different story over 10 years: NAV total return of +90.0% easily ahead of the benchmark’s +69.0%.

Winterflood: “Absolute performance was ‘year of two halves’, with NAV TR of -13.1% in H1 (amidst continued concerns over Chinese economy and geopolitics) and +19.3% in H2 (with reduced volatility and government stimulus announcement in September providing significant boost)”.

Polar Capital Technology (PCT), AI maximalists

PCT’s +11.7% NAV per share return for the first half, a little shy of the benchmark’s +14.1% sterling-adjusted return. According to the investment managers, “This largely reflected the remarkable performance of a select group of US mega-cap technology stocks” – PCT is “structurally underweight in mega-caps”. Looking ahead, the managers “remain firmly AI ‘maximalists’. As AI begins to more obviously substitute labour, its addressable market will expand far beyond IT spending alone.”

Numis: “The shares currently trade on a c.12% discount to NAV, broadly in line with its closest peer Allianz Technology, both of which we believe offer value.”

Gore Street Energy Storage (GSF) well-positioned

GSF’s -3% NAV total return for the half year brings NAV total return since the 2018 IPO to +42.7%. Updated third-party revenue curves blamed for the value decline during the period, but progress continues to be made on the ground with energised capacity across the portfolio expected to reach over 750 MW by February.

Liberum: “we see its growing US exposure and strong build out in 2024 as positives for the fund. The diversification of geographic markets remains a positive for the GSF portfolio.”

GCP Infrastructure Investments (GCP) recovers lost ground

GCP’s +28.4% total shareholder return for the full year goes some way towards offsetting last year’s -25.2%. The company puts the improved outcome down to “improvements in market factors and the implementation of the capital allocation policy.” NAV total return was up a more sedate +2.2%.

Jefferies: “there is a clear path to repaying the remaining RCF borrowings and potentially further returns of capital beyond the outlined £50m.”

Montanaro European Smaller Companies (MTE) and a new multi-cycle of outperformance

MTE’s +0.7% NAV per share total return for the half year couldn’t match the benchmark’s +1% but over five and 10 years, NAV per share total returns of +55.8% and +243.4% respectively are well above the benchmark’s +17.7% and +94.6%. Chairman R M Curling thinks it’s “too early to say whether the recent underperformance of smaller companies has ended” but “If SmallCap is entering a new, multi-year cycle of outperformance, MESCT stands to benefit” thanks to holding companies that “continue to deliver high returns on equity”.

Winterflood: “Small caps outperformed larger peers in Europe by 2% over the period, while small-cap valuations (12.3x forward P/E) remain at a ‘record’ 13% discount to the wider European market.”

Henderson European’s (HET) ahead of the benchmark

HET had an eventful year. It combined with Henderson EuroTrust, gained promotion to the FTSE 250 and still managed to post a +16.6% NAV per share total return for the year, +1.3% ahead of the benchmark. Both NAV and share price have now outperformed over 1, 3, 5, and 10 years – a full house.

Numis: “Henderson European is differentiated from its peer group with a slight ‘value’ tilt relative to its peers which are more ‘growth’ focussed.”

TwentyFour Select Monthly Income (SMIF), benefits from expertise in credit markets

SMIF’s Chair Ashley Paxton puts the +22.56% NAV total return per share for the year down to “TwentyFour’s expertise in credit markets”. The strong performance meant SMIF was able to issue 18,310,813 new shares “to meet shareholder demand, making the Company one of the most prolific issuers in the investment company sector.”

Numis: “We believe SMIF is an attractive option for income-seeking investors and expect the yield to remain high given exposure to sectors that have benefited from rising rates and continue to offer an attractive return outlook from a diversified portfolio of holdings in less liquid parts of credit markets.”

JPMorgan Asia Growth & Income’s (JAGI) looks to enhanced dividend

JAGI underperformed over the full year (+14.8% NAV total return compared to the MSCI AC Asia ex Japan Index benchmark’s +17.3%). But this is very much an outlier, for in seven of the last ten calendar years the fund has beaten the benchmark. That’s not the only outlier. Chairman Sir Richard Stagg thinks Asia is an outlier too “The global landscape is unpredictable and uncertain. However, the prospects for Asian economies remain positive – particularly when compared to the relatively lacklustre growth projections of developed markets.”

Winterflood: “The Board is recommending an increase in the fund’s enhanced dividend from 1.0% to 1.5% per quarter in order to differentiate JAGI further from its peers and lead to additional demand for its shares.”

JPMorgan Indian (JII) up nearly a fifth

JII clocked up an impressive +18.1% NAV total return for the year. The MSCI India Index posted an even more impressive +27.7%. Chairman Jeremy Whitley notes “Nearly all of this underperformance occurred in the first half of the financial year, and is mainly attributable to the Portfolio Managers’ bias towards higher quality corporate names, at a time when lower quality sectors of the market did well.”

Numis: “we believe there is limited downside given share buybacks and a performance triggered tender for 25% of share capital at NAV less costs.”