It is one of a basket of income trusts held in my SIPP drawdown portfolio. It is one of the smaller trusts in my basket with total assets just shy of £170m. I generally like to hold the larger trusts as the expense ratio tends to be lower due to economies of scale with the larger operation. Having said that, the expenses for IVI are not too bad - 0.93% incl. transaction charges
The trust issued its annual report today for the 12 months to 31st March 2014 (link via Investegate).
On a total return basis, the share price (incl. dividends) increased by a very acceptable 16.7% over the year compared to the benchmark FTSE All Share rise of 8.8%. The trust has outperformed its benchmark index over 1, 3, 5 and 10 years.
|3 yr comparison -v- ftse all share index|
courtesy of Digital Look (click to enlarge)
The board are recommending a final dividend of 3.65p which will make a total of 9.85p an increase of 3.1% on the previous year (2013 9.55p). Dividend CAGR over the past 10 years is 7.6%. The current yield is around 3.6%.
The balance of the portfolio is weighted towards FTSE 100 large caps comprising 70%, FTSE 250 23% and the rest made up of smaller companies and some fixed interest. The top 10 holdings are have a significant weighting in the traditional big hitters; tobacco - 8%, pharma - 8% and oil producers - 5.6%. Also good to see Next making the top ten with a weighting of 2.6%.
Commenting on outlook, the trust manager says: " …I continue to find pockets of decent value, especially amongst the higher dividend payers. Indeed my guarded optimism with regard to portfolio prospects is reflected in the fact that the Company remains modestly geared, the portfolio being 108% invested at the time of writing, using our short-term flexible borrowing facility.
My investment strategy remains intact - I am seeking companies with strong fundamentals, with sensible management whose interests are aligned with shareholders, and a low risk balance sheet. The UK stock market, as measured by the FTSE All-Share Index, has very nearly doubled over the last five years. Whilst I would not expect such performance to be repeated over the next five, I nevertheless feel confident that the current portfolio looks well placed to provide good long term returns for shareholders."
I am happy to continue with IVI in my portfolio - the only slight reservation is the revenue reserves are a little on the light side at 84% of past years dividends paid. I would be happier if this could be increased to over 100%.
As ever, slow & steady steps...