Tuesday, 20 February 2018

Temple Bar - Full Year Results


I hold this investment trust in my ISA. It is part of my ‘basket’ of income-focussed investment trusts designed to provide an above inflation rising natural income and hopefully some increases in capital over the longer term.

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 the trust outperforming the FTSE All Share index over the past 5 & 10 years. In 2016 it was one of my best performing trusts with a total return on net assets of 20.4%.

Results

They have today published full year results for the 12 months to end 2017 (link via Investegate). Unfortunately, they were unable to outperform the FTSE this year with total return of net assets increasing by 9.7% compared to a gain of  13.1% for the FTSE All Share index. The contrarian approach often requires long periods before the benefits for the trust are realised.

3 Yr Performance v FGT
(click to enlarge)


Temple Bar has ongoing charges of just 0.6%, a natural dividend yield of 3.3% and provided the third-best 10-year total returns in the UK equity income sector (top place held by Finsbury Growth & Income) despite a poor run in 2014 and 2015.


Income

The trust is committed to paying a rising dividend year on year and has met this commitment for the last 34 years.

The board are recommending a final dividend of 17.48p making 42.47p for the full year - an increase of 5% on 2016. The dividend is covered by income receipts of 43.3p.

This trust is a relatively small proportion of my total portfolio currently ~3% or so and I am happy to retain on the basis that it provides a reasonable income and has a good track record of providing some decent appreciation to capital over the longer periods.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

7 comments:

  1. I've not heard of this investment trust before, nor have I heard of the term 'contrarian approach' towards investing. Time to do some more reading. This personal finance thing is a life long learning project for me!

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    1. Agreed...I have been investing for over 25 years and still learning!

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  2. I don’t own this investment trust becuase it is one of the few that has a balanced portfolio. By that I mean it has c. 20% invested in fixed income, commodities and REITs and the remainder is in dull out-of favour value stocks. So it doesn’t quite fit into my asset allocation model, as I have separate fixed income etc funds doing that.
    But if I was seeking a ‘core’ holding or if I only wanted to invest in one or two funds, this would be ideal.

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    1. Chris,

      Yes, always a good idea to assess how any potential investment blends with your existing portfolio and avoid unnecessary duplication.

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  3. Thanks for the update, DIY. I didn't realise it was run on a contrarian strategy, or maybe I did but I've just forgotten. Not that it really matters, just interesting.

    TMPL forms 9% of of my growing basket of investment trusts, which is on the high side, although less than 2% of my overall portfolio.

    I'll be happy to add to it, though probably not this year as I will be building up some of my other holdings first.

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    1. I remember you acquiring this a couple of years back and it was one of your 'Monkey Stocks' for the competition. I hope it continues to do well for our respective portfolios.

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    2. Yes, not bad for a randomly chosen stock :-) And long may it do well for us all!

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