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.
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....