Thursday, 18 September 2014

City of London Trust - Final Results

City of London, like Murray Income, is another of my steady, predictable, middle-of-the-road income trusts. In my corresponding post last year I referred to CTY as feeling like a dependable, faithful old carthorse.

City have just announced full year results for the year to 30th June 2014 (link via Investegate). Share price total return has increased by 15.1% over the year compared to the FTSE All Share benchmark of 13.1%. Dividends have increased by 3.2% from 14.3p to currently 14.76p giving a yield of 3.9%.  The dividend was increased for the 48th consecutive year.

Income was significantly impacted by the strength of sterling as the UK economy recovered. Over the year, the pound appreciated by 12.4% against the US dollar. Some 22% of the dividends which City of London receives (from its holdings in UK companies such as HSBC and BP) are declared in dollars

Ongoing charge remains, at 0.43%, the lowest in the sector.

Over the year there was again a reduction in the weighting in large UK-listed companies with a corresponding increase in the weighting of medium-sized and overseas listed companies.  Large companies (FTSE 100) account for 69% of the portfolio, medium companies 20% and overseas-listed companies, 11%.

Looking at their top 40 holdings, I hold a significant number in my individual shares portfolio namely Glaxo, Diageo, Unilever, BHP Billiton, Legal & General, Centrica, Reckitt, Imperial Tobacco, IMI and BSkyB. This is the nearest proxy to a HYP portfolio often discussed on the Motley Fool discussion boards. I have been monitoring the performance of my individual shares portfolio against a basket of investment trusts for the past 4 years. In each of those years, the basket of trusts has delivered slightly better returns than my shares. This year, they seem to be on track to repeat this out-performance. More on this at the end of the year!

I first purchased CTY for my personal equity plan (PEP) in 1995. Having topped up my ISA holding this week it now represents the largest weighting in my IT portfolio and yes, it still feels like a dependable, faithful old carthorse. Happy to continue holding for the foreseeable…

5 comments:

  1. Interesting to see that CTY has outperformed you for the last 4 and a bit years. Are you not tempted to give up and hand over all of your portfolio to the trusts?

    ReplyDelete
  2. Hi UTMT,

    Good to hear from you.

    It is the 'basket' of trusts which have outperformed my shares portfolio - having said that, I suspect CTY itself may also have outperformed!

    As you suggest, it is tempting to abandon the shares portfolio in favour of the trusts. In recognition of this outperformance, I have weighted my equity portfolio in favour of trusts - 2/3 to 1/3. The comparison has been running for 4 yrs during a generally rising market when gearing will have given the edge to the ITs, also some write options to boost income returns, also discounts will have narrowed to boost share price returns.

    I will give the balance some further thought at the end of this year and if there is a significant divergance, may well move more weighting towards the professionally managed trusts.

    ReplyDelete
    Replies
    1. ...just to add a little to the above - here's a link to a post by Monevator from July 2008 discussing just the same scenario (excepting for the 10% discount which has since disappeared)!
      http://monevator.com/should-you-swap-your-shares-for-an-investment-trust-on-a-discount/

      Delete
    2. This is exact link I was thinking about when you say "basket' of trusts which have outperformed my shares portfolio". I am invested in CTY and few others like Temple Bar, MRCH, MYI and RIT Cap with biggest exposure to Temple Bar. Things might change when interest rates start increase. I can see some struggle for CTY to outperform as I checking attribution chart "Estimated Performance Attribution Analysis" where it just contributed +1.14% for stock selection.
      Please do reveal the basket of trust or it is same as sample portfolio which you track on six monthly basis?

      Delete
    3. Hi,
      Thanks for leaving your comment. The trusts have had a decent run over recent years so I guess there is more likelyhood that some underperformance is to be expected - when that will be and what the trigger points will be is anyones guess. This is why I like a 'basket' to spread the risk - I like the contrary approach of Temple Bar but unfortunately, the yield is not sufficiently high for me to take a larger weighting - similar with Finsbury Gr & Income Trust.

      Yes, I hold all the same trusts in my portfolio as in the demonstration IT income portfolio, just the weightings vary.

      Good luck with your investment trusts!

      Delete