Tuesday, 24 February 2015

Temple Bar - Final Results

I hold this investment trust in my ISA - it was the 3rd best performing trust in 2013 from my portfolio of ITs behind Aberforth and Bankers.

TMPL has been managed by Alastair Mundy since 2000. He takes a contrarian view on the timing of buy and sell decisions, buying the shares of companies when sentiment towards them is thought to be near its worst and selling them as fundamental profit improvement and/or re-evaluation of their long-term prospects takes place. This contrarian approach centres on long-term investment in cheap, out-of-favour companies in the belief that over time, these will be affected by reversion to mean.

This approach has proved very successful over the longer term with a total return CAGR of 10% p.a. over the past 10 years.

They have this week published full year results for 2014 (link via Investegate). Unfortunately, they have not been able to quite replicate the out-performance of previous years - total return of net assets fell by -1.7% compared to a small gain of  +1.2% for the FTSE All Share index. This underperformance was mainly due to share selection. The contrarian approach often requires long periods before the benefits for the trust are realised.

Interestingly, the underperformance has not prevented them from hiking the management fee by 14% to £3.25m! Having said that, the admin expenses have reduced and the total expenses remain reasonable at around 0.65%. The trust does not pay a performance fee.

Income

The trust is committed to paying a rising dividend year on year and has met this commitment for the last 30 years.

The board are recommending a final dividend of 23.33p making 38.88p for the full year - an increase of 3% on 2013. The dividend is covered by earnings of 39.82p - an increase of 10% on 2013. The surplus income has bolstered dividend reserves which represent around 17 months of the current payout.

In line with most other income trusts, TMPL are now moving to quarterly dividends.

At the current share price of £11.95 the trust yields 3.25%.

Slow & steady steps as they say....

4 comments:

  1. I have a fund in my SIPP which is managed by Alistair Mundy - Investec Cautious Managed. It has also been one of my lower performing funds over the last year but I choose it because of the conservative approach which I need in my SIPP as I'm looking to start drawdown in a couple of years or so. It will be interesting to see if (and when) his contrarian approach pays off although I don't, in any case, expect more than a very modest amount of growth from the Investec fund as it's under 60% stocks.

    Good luck with Temple Bar and the slow and steady approach.

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    Replies
    1. Hi Cerridwen,

      I am not a big fan off funds due to their historically higher charges. I think the situation is starting to change with the introduction of RDR but for this reason I have always favoured inv. trusts which tend to have lower charges, although there are always exceptions. I see the charges on the fund you hold is 1.6% according to Trustnet.

      The fund is a global multi asset OEIC. The return of 32% over the past 5 yrs is steady but significantly less than Temple Bar @ 86%. Also TMPL pays a reasonable dividend - my main reason for holding - whereas the funds distribution is less than 1%.

      Good luck with your investing as you approach drawdown day! The cautious approach may well be the best strategy over the next couple of years - who knows.

      Thanks for stopping by.

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    2. Hi,

      I am a little constrained in my SIPP by what's available via Fidelity - they only seem to offer their own range of ITs. However I do get your point about charges. The Investec fund isn't quite as bad as it appears on Trustnet as I'm actually paying a total of 1.20% (0.85% TER and 0.35% Fidelity platform charges). Not good though.

      I've recently been putting a bigger chunk of my monthly deposit into the Fidelity World Index - chalk and cheese I know - but the charges do balance out a bit as this in only 0.53% in total.

      Thanks for the well-wishes. I admit to not having got the strategy for my SIPP quite sorted yet, but I am working on it and, thanks to comments on my recent blog post, I'm fast coming to the conclusion that holding a fair amount of cash wouldn't be a bad idea going forward.

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    3. Hi Cerridwen,

      Thanks for clarifying. I think 0.35% platform fee is par for a sipp so 1.2% incl their charge is not so bad. Do you have the option of lower cost trackers with Fidelity e.g.Vanguard or L&G ? If so this may be worth exploring.

      I will have a look at your recent blog post but good to hear you are getting some useful comments - I am always surprised at the wealth of practical advice and know-how provided by the diy investor community on the comments of some of the blogs I visit - both UK and USA. Long may it continue to educate us all!

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