Tuesday, 25 September 2018

City of London - Final Results


I first purchased CTY for my personal equity plan (PEP) in 1995 - it has served me well enough over the past two decades and it represents the largest weighting in my remaining IT income portfolio (ISA and SIPP drawdown).

City have just announced 
full year results for the year to 30th June 2018 (link via Investegate). Share price total return has increased by 6.2% over the year. Once again however the performance was less than the FTSE All Share benchmark of 9.0%. The trust took a big hit from the collapse of Provident Financial. The manager however is quick to point out the outperformance over the longer period!

Dividends have increased by 6.0% from 16.7p to currently 17.7p giving a yield of 4.1%. This represents over 50 years of rising dividends - quite an achievement.

Earnings per share rose by 5.0% to 18.7p, mainly reflecting the underlying dividend growth from investments.

Ongoing charges are 0.41% and remain the lowest in the sector.

I have been reducing my exposure to UK equity over the past year or two and I have recently reviewed my strategy as I no longer require income and will focus more towards global growth.

3 Yr Performance v FGT & TMPL

I will therefore be looking to offload my CTY holdings when circumstances look favourable. I feel the time is right to put the faithful old carthorse out to grass in retirement. The fact that the trust has lagged the all share index over the past couple of years makes the decision easier!

As ever, please DYOR

2 comments:

  1. I'm still in the process of continuing to top up on CTY as I'm at the other end of the spectrum to you, chasing after income! It wasn't great news about Provident Financial but I have faith that it will bounce back!

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    Replies
    1. I understand your strategy weenie. Set a target for income and then focus on income-generating investments. My concern would be that during a period when income is not actually needed, you may be missing out on better opportunities to generate a better total return from your savings.

      For example, compare the returns from a few of your global trusts such as Scottish Mortgage or Bankers or even Lifestrategy 80 over the past 3 years (or longer) with total return of your UK income trusts. I would be interested to see how the figures stack up but would think there is likely to be quite a difference between the two.

      CTY has served me well enough over the past decade when I relied upon certainty of quarterly income to cover living expenses during early retirement. I am sure if I was still in the build phase for the 10 or 20 yrs before retirement, I would be looking more towards global multi-asset and/or growth opportunities.

      Having said that, we are all different and the main thing is to work out a strategy which feels right for each individual. As I often say, there are many ways up the mountain!

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