The Results Round-Up – The Week’s Investment Trust Results

Which fund has generated five and ten-year NAV total returns of +18.8% and +85.4% respectively, both of which are double those of its benchmark? And which fund’s average holding period for its top-10 stocks is 10 years? Find out in this week’s round-up.

The Results Round-Up – The Week’s Investment Trust Results


By
Frank Buhagiar

Vietnam Enterprise Investments’ (VEIL) three-year track record of outperformance
VEIL’s NAV per share growth couldn’t quite match that of the index over the full year – in sterling terms NAV per share increased +4.1% compared to the VN Index’s +5.3%. Tables turned over a 3-year period though with VEIL outperforming the index by +2.6%. The biggest detractors to relative performance over the year just gone were retail, real estate and construction sectors.

The Portfolio Manager’s full-year Report lists a number of reasons why investors can look forward to the year ahead: inflation at manageable levels of around 3.3%; interest rates on their way down; and a government focused on economic growth. What’s more the Portfolio Manager has pencilled in mid-teens earnings growth for 2024 which equates to a price to forward earnings ratio of 9.6x. All of which points to a very attractive growth and value profile – and hopefully a positive year ahead.

Numis: “We remain positive on the outlook for Vietnam, which we believe is a beneficiary of diversification away from China.”

Schroder Income Growth’s (SCF) 28 consecutive years of dividend growth
SCF posted an NAV per share total return of +1.9% for the half year, a little off the FTSE All Share’s +3.9%. The Half-year Report puts the underperformance down to stock selection, particularly within the consumer discretionary, industrials and basic materials sectors. The good news is that the second half has got off to a decent start – NAV Total Return stands at +7.6% for the period 29 February 2024 to 24 April 2024, comfortably ahead of the All Share’s +5.9%.

Chairman, Ewen Cameron Watt, points out that since the current investment management team were appointed in July 2011, the fund has outperformed the FTSE All-Share Index by 0.8% per annum on a cumulative basis. And the dividend has continued to grow too – the payout has now been increased for 28 years in a row. That long-term track record is key as, according to Watt, over the long-term returns are less likely to be derailed by any unexpected nasties.

Winterflood: “Share price TR -0.3% as discount widened from 8.9% to 11.1%; 38k shares repurchased over HY, representing first buyback since 2008.”

Gresham House Energy Storage’s (GRID) good timing
GRID had a tough year. EBITDA down 47% year-over-year to £25.8m due to a weakening revenue environment for the battery sector; NAV per share off 17% year-over-year to 129.07p thanks in part to those lower revenue forecasts; and then there was the decision to scrap the 2024 dividend.

Wasn’t all bad though. During the year, operational capacity increased by a quarter to 690MW/788MWh. And since year end, capacity has grown to 740MW, putting the fund on course to hit its 1GW operational capacity target in 2024. Good timing it seems as, according to the Full-year Report, the challenging trading environment has eased in recent weeks as market fundamentals have improved.

Liberum: “We note that GRID is continuing to progress a disposal of a subset of the portfolio and it is hopeful that something may be announced in this regard in the coming month or two. This could act as a helpful proof point in terms of valuation and we note that there is sufficient funding for the planned roll-out without any disposals.”

Ecofin US Renewables Infrastructure’s (RNEW) final Finals?
RNEW’s Finals included an update on the ongoing strategic review, perhaps of more interest to shareholders than the latest full-year numbers. The review is ongoing – already knew that. And it’s taking longer than expected – knew that too. The interesting bit is that the review, which involved looking for potential buyers for the fund’s assets, has, according to Chairman, Patrick O’D Bourke, resulted in “specific discussions and negotiations taking place”. And these negotiations are expected to conclude soon. So, watch this space. As for the full-year numbers, NAV per share fell 9.7%.

Numis: homes in on “comments that potential buyers would take account of RNEW’s discount to NAV, when arriving at their valuation of the portfolio as a whole.”

abrdn Property Income’s (API) full house
API might have reported a -3% NAV total return for the year, but the real estate investment portfolio still managed a +0.7% return, comfortably ahead of the MSCI Quarterly Property Index’s -1.5%. This means API’s portfolio has beaten the Index over 1, 3, 5 and 10-year timeframes – a full house! Despite the outperformance, an Extraordinary General Meeting (EGM) is to be held in May at which shareholders will be asked to approve plans to wind-down the company. Why? As explained in Chairman, James Clifton-Brown’s full-year statement, this is down to concerns over the size of the fund, liquidity in the shares, the discount at which the share price trades to net assets and the lack of dividend cover.

Numis: “The manager comments that if the managed wind down is approved by shareholders, a sales process ‘is expected to take approximately 24 months within a range of 18-30 months from the date of implementation, although this is very dependent on a reasonable market existing for all the Company’s properties.’”

Digital 9 Infrastructure’s (DGI9) long good-bye
DGI9’s latest set of full-year numbers, which included a 28% decline in NAV to £686.3 million, are probably not as important as they may have been a few months ago. That’s because post-period end, 99.9% of shareholders who attended the General Meeting in March voted to adopt a new Investment Objective and Policy – an orderly managed wind-down. In line with this, sale preparations for the fund’s remaining five wholly-owned assets are being progressed. But DGI9 is unlikely to be disappearing anytime soon. According to Chair, Charlotte Valeur, selling the remaining portfolio and winding down the company is expected to take a number of years.

JPMorgan: “DGI9 has a concentrated portfolio and there are significant risks in executing its managed wind down. But on balance we continue to think there is now likely to be materially more upside than downside. We remain Overweight.”

Jefferies: “A reduction in the audited NAV further erodes confidence in the portfolio valuations and so is likely to limit confidence in the wind-down process for the time being. More positively, the balance sheet position will be much more simplified following the impending RCF repayment, albeit with further progress contingent on executing the Aqua Comms sale.”

Pacific Assets (PAC), top of the class
PAC may well have reported a -1.3% NAV total return for the year, but this was still the best among its four peers and an exchange-traded fund. It was also considerably better than the -10.5% fall in the MSCI AC Asia ex Japan Index. In terms of performance drivers, Chair Andrew Impey cited the fund’s Indian exposure as being particularly helpful – seven of the portfolio’s top-10 positive contributors during the year were Indian companies.

As for the outlook, Impey said it’s nigh on impossible to predict what’s around the corner for the Asia Pacific region in the short term, but long-term growth drivers such as a growing middle class, investment in infrastructure and technological change remain in place. Helpfully, the fund’s Portfolio Manager invests for the long term. According to the Portfolio Manager’s Report, the average holding period for the top-10 stocks is 10 years.

Winterflood: “India exposure level is determined by bottom-up stock selection, not a ‘macro overlay’, thematic view or political assessment. 75% of top 100 India stocks considered uninvestable for quality or sustainability reasons. China & Hong Kong exposure (12% of NAV) detracted. Approximately 20 Chinese companies considered investable. Indiscriminate sell-off has generated opportunities for stock-picking, and the managers expect China weighting to increase.”

Invesco Perpetual UK Smaller Companies (IPU) to be continued?
IPU posted full-year NAV and share price total returns of –4.1% and –1.8% respectively – a respectable outcome considering the benchmark returned –3.3%. The long-term performance is more than respectable with the fund outperforming the Deutsche Numis Smaller Companies + AIM – Investment Companies Index over five and 10 years – the five-year cumulative NAV total return stands at +18.8%, double the benchmark’s +9.8%; similarly, over 10 years, the NAV total return is +85.4%, more than double the benchmark’s +40.4%. With numbers like these it’s no wonder Chair, Bridget Guerin, and the Board are hoping shareholders vote for the fund’s continuation at the June 2024 AGM “to allow the Company the opportunity to continue to grow over a longer market cycle”.

JPMorgan: “if shareholders do want a return of capital they have the opportunity to vote collectively against continuation, though we would expect the company to continue. Overall, we see no reason to change our Neutral recommendation.”