Doceo Trust news

The Results Round-Up – the week’s Investment Trust results

Which investment trust can lay claim to being 2023’s busiest? And which fund would have made shareholders 11.6 times their original investment had they invested at the time of its launch 25 years ago? Find out in this week’s round-up.

By
Frank Buhagiar
05 Apr, 2024

Nippon Active Value Fund (NAVF), the busiest investment trust in 2023?

NAVF’s has had a busy year. Chairman Rosemary Morgan revealed: “we migrated to the Premium Listing Segment of the Official List and were appointed as preferred vehicle for the rollover of abrdn Japan Investment Trust (AJIT) and Atlantis Japan Growth Fund (AJG). The reorganisation of those holdings to align them with our own portfolio was completed by the end of November 2023”. Having hands full didn’t stop the fund managers from clocking up a 23.1% increase in NAV per share bringing the fund’s gain since launch in 2020 to 76.9%. That compares to the MSCI Japan Small Cap Index’s +7.8% (sterling) for 2023 and +15.8% since the Company’s inception.

Winterflood: “Share price TR +41.1% as discount narrowed from 16.3% to 4.2%.”

Baillie Gifford China Growth’s (BGCG) comfort blanket

BGCG’s NAV total return for the year came in at -40.9%. The MSCI China All Shares Index (sterling) didn’t fare much better, off ‘only’ -30.5%. As Chair Susan Platts-Martin writes it was a year that has “tested the patience”.

“Generally, the negative returns over the period have been driven by macroeconomics and geopolitics rather than the performance of the underlying companies in the portfolio. The listed holdings within the Company’s portfolio continue to perform well operationally, delivering 17.7% earnings growth in the financial year. What comforts us during these challenging times is our holdings’ continued strong operational performance and the knowledge that, over meaningful periods, share prices are likely to follow fundamentals.”

JPMorgan: “Looking forward, with BGCG trading in line with its peers in terms of discount, we remain Neutral.”

Pantheon Infrastructure (PINT), a full pint

PINT’s 10.4% NAV Total Return for the year was not the only highlight for the investment managers “We are particularly pleased to have fully deployed our funds and exceeded our pre-IPO NAV total return target. We look forward to continuing to build value for our investors over the long term by providing access to a diversified portfolio of high-quality, global infrastructure assets.”

Liberum: “We continue to view a wide pipeline, an experienced manager and very attractive fee structure with no performance fee and ongoing charges at 1.35% as one of the most attractive ways to access the core-plus market and remain BUYers at 115p TP.”

CT Private Equity’s (CTPE) silver jubilee

CTPE reported a 2.8% NAV total return for the year. That means those who invested in the fund at the time of its launch 25 years ago would have made a “gain of 11.6 times the original investment over the 25-year period. Significantly outperforming the stock market for the same period (FTSE All-Share 2.4 times).” Chairman Richard Gray puts the performance down to “strong underlying fundamentals for our investee companies which have recorded impressive growth in revenues and profits over the year, tempered by a slight softening in valuation multiples.”

JPMorgan: “Overall, we see no need to change our Neutral recommendation.”

Schiehallion (MNTN) looking for bootstrapped companies

MNTN’s NAV total return of -0.9% may give the impression of a relatively stable year for the growth capital provider but don’t be fooled. As the investment managers explain, “Although the year ended with a small negative return, this was the result of a weak first half followed by a recovery in the second half of the year.”

What’s more, “Companies seem to either be significantly over or under-priced. This is a perfect market for bottom-up stock pickers. Bootstrapped companies that have evaded the trappings of overcapitalisation are of particular interest to us.”

“Now could be a dangerous time to invest with the ‘herd’, it could also be the perfect time to be a contrarian.”

Numis: “The fund is attractive to many investors given its fee structure with a modest base fee and no performance fee, leading to an ongoing charges figure of 0.85%. This compares favourably with traditional private equity.”

Dunedin Income Growth (DIG) tops the rankings

DIG’s NAV total return of 6.7% for the year ended 31 January 2024 not only beat the FTSE All-Share’s 1.9%, but also beat all the other trusts in the AIC UK Equity Income sector. The strong performance is no one-off either. According to the Annual Report over five years, the NAV total return stands at 43.8%, placing the fund 3/20. All goes to show performance and sustainability are not mutually exclusive. As Chairman David Barron explains: “The Company has a clear focus on generating both total return and dividend growth while formally incorporating sustainability into its mandate.”

Winterflood: “Portfolio benefitted from underweight exposure to Basic Materials and overweight exposure to Technology.”

Temple Bar (TMPL), raising the bar

TMPL’s 12.3% NAV total return for the year ended 31 December 2023 comfortably beat the FTSE All Share’s 7.9%. That brings NAV total return since Redwheel took over the management in October 2020 to 86.7%, while the benchmark could only muster 50%. Chairman Richard Wyatt thinks there’s more to come “Your Board shares the view of our Portfolio Manager that the Trust’s portfolio continues to be priced to offer shareholders further excess investment returns in the future.”

Numis: “The shares currently trade on a c.9% discount to NAV, yielding 3.9%, which we believe offers value.”

Invesco Bond Income Plus (BIPS), above average

BIPS reported an 11.7% NAV increase for the year which, as Chairman Tim Scholefield explains, “was slightly below the 13.8% achieved by the ICE Bank of America Merrill Lynch European High Yield Index but above the average return of 8.0% for funds in the Investment Association Sterling Strategic Bond Sector.” Not all about NAV though “Our investment policy is to provide a high level of dividend income relative to prevailing interest rates and we were able to meet this objective despite the elevated returns available from bank and building society savings accounts.”

Winterflood: “The managers view a ‘soft landing’ scenario as favourable for the high yield market. Nevertheless, they see a range of risks to this scenario and therefore remain positioned cautiously.”

Merchants Trust (MRCH), long-term performance record still intact

MRCH’s -3.1% NAV total return for the year was a little off the FTSE All Share’s +1.9%. Chairman Colin Clark admits “investing is never ‘easy’, the financial year to the end of January 2024 was especially challenging. The newsworthy events of 2023 could justify an article in their own right and included (overseas) bank failures, equal measures of utopian and dystopian views of a future shaped by AI, war & conflict and natural disasters.” All of which made “the period under review a difficult one for the more modestly priced stocks that our manager tends to favour due to his ‘value’ investment style.” Nevertheless, “the longer-term record remains strong, with outperformance of both the industry benchmark, as well as the sector peer average, over 3 and 5 years.”

Winterflood: “DPS (dividend per share) +2.9% YoY to 28.4p (FY23: 27.6p), representing 42nd consecutive annual increase, with annualised growth rate of 6.4% vs CPI of 3.8%.”

JPMorgan Global Emerging Markets Income (JEMI) in it for the long term

JEMI may have posted a negative 2.4% NAV total return for the half year, but once again that was enough to beat the benchmark.

According to Chair Elisabeth Scott “performance over periods of three, five years and beyond is significantly ahead of the Benchmark”. Scott thinks this is “reflective of the Company’s long-term approach and testament to the experience of the Portfolio Managers and strength of their process.”

Winterflood: “Primary driver of outperformance relative to benchmark was stock selection within China, Hong Kong, Korea, Taiwan and South Africa.”

VH Global Sustainable Energy Opportunities (GSEO) sees green shoots

GSEO Chair Bernard Bulkin had this to say about the fund’s full-year performance: “NAV per share was 116.46p as at 31 December 2023, an increase of 7.6% from the previous year. As at 31 December 2023, the Company has achieved a 10% annualised NAV total return since IPO including dividends, which is in line with the Company’s target total return.”

What’s more, Bulkin believes he is seeing macroeconomic green shoots which “coupled with the underlying strengths of the Company, lead the Board to look forward to the year ahead with confidence.”

Numis: “GSEO’s shares have not been immune from the wider listed infrastructure weakness in 2024. Given the very limited interest rate exposure by having virtually no leverage (1.9% of NAV), and a portfolio which is generating healthy levels of cash, underpinned by a high proportion of contracted revenue, this looks unjustified.”

North American Income Trust (NAIT) designed to withstand volatility

NAIT’s -1.6% NAV total return for the year fell short of the Russell 1000 Value Index’s +2.6%. Chair Dame Susan Rice doesn’t sound too concerned: “The Investment Manager has designed the Company’s portfolio to include financially robust companies with strong income-generating potential and sound governance practices. The investment team continues to review the portfolio and seek opportunities to ensure its ability to withstand any volatility, as it seeks to protect against downside risks.”

Winterflood: “Underperformance driven by stock selection, particularly in Materials sector, and sector allocation, mainly Industrials.”