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 centers 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 the trust outperforming the FTSE All Share index over the past 5 & 10 years. In more recent times, the value approach has underperformed the benchmark.
They have today published full year results for 2015 (link via Investegate). The past 12 months has not been good and unfortunately, the trust has not been able to quite replicate the out-performance of previous years - total return of net assets fell by -1.0% compared to a small gain of +1.0% for the FTSE All Share index - almost identical to the previous year. 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 3% to £3.35m! Combined with the reduction in net assets, the effect has been to increase total expenses from 0.65% to 0.75% - not something I like to see. 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 32 years.
The board are recommending a final dividend of 15.87p making 39.66p for the full year - an increase of 2% on 2014. The dividend is covered by earnings of 39.87p.
|2 Yr Chart TMPL -v- FTSE All Share Index|
The share price has lost around 16% over the past 12 months, partly due to a widening of the discount to NAV. At the current price of £9.85 the trust yields 4.0%.
Fortunately, at the height of the markets last May, I reduced my holding in TMPL (also Murray Income and Murray Intl.) and recycled the proceeds into the Vanguard LifeStrategy 60 index fund which has been able to ride out the market volatility much better in recent months.
I will hold the remainder of Temple Bar for the time being and await some recovery in its fortunes - hopefully!
If you hold this investment trust in your portfolio, I would be happy to hear what you think…leave a comment below.