Wednesday, 18 November 2015

Edinburgh IT - Interim Results

Edinburgh is one of oldest trusts on the market as well as one of the largest investment trusts with assets approaching £1.5bn.

It is almost 2 years since Mark Barnett took over the reins from Neil Woodford.

This trust is one of the top UK Income Trust in terms of net asset value and share price performance over five and ten years, its returns far outstripping those of the FTSE All-Share index. A sum of £1,000 invested 10 yrs ago would now be worth £2,886 compared to a total return of £1,723 from the benchmark FTSE All Share index.

10 yr chart EDIN -v- FTSE All Share Index
(click to enlarge)

The trust invests primarily in UK securities with the long term objective of achieving:
  1. an increase of the Net Asset Value per share by more than the growth in the FTSE All-Share Index; and,
  2. growth in dividends per share by more than the rate of UK inflation.
Although this is a UK income trust, the manager is permitted to invest up to 20% of the portfolio in overseas listed holdings. Around 15% is currently allocated including Swiss pharma, Roche and US tobacco firms Reynolds and Altria. The rest of the portfolio is comprised 50% FTSE 100, 28% FTSE 250 and a smaller allocation towards UK small caps.

Edinburgh has been one of the cornerstones of my income portfolio for several years and is held in both Sipp drawdown and ISA. Earlier in the week it published  results for the half year to 30th Sept 2015 (link via investegate).

The Company's share price, including reinvested dividends, rose by 6.6% during the past 6m, compared to a fall of  -7.2% (total return) for the benchmark FTSE All-Share Index.

6m chart v FTSE All Share 2015
This 13.8% out performance over just 6 months is quite an achievement. This is largely the result of being underweight in miners and banks and correspondingly overweight in tobacco, pharma, real estate and non-life insurers.

Tobacco stocks - Reynolds, Imperial, BAT and Altria - take up 4 of the top 10 holdings and together account for 19.0% of the portfolio. Maybe not one for the more ethically minded investor!

During the period, the entire holding in GlaxoSmithKline was sold, Rolls Royce was reduced and low cost airline easyJet joined the portfolio.


The board recently announced a 4% uplift in the first quarterly dividend to 5.2p (2014 5.0p) giving a current full year dividend of 24.05p

The yield is 3.4% based on the current share price of ~700p.


This year I have embraced passive index funds as I believe they are more likely to generate a better return than most actively managed funds over time. That said, I fully accept there will always be some managed investments that can genuinely add value and Edinburgh appears to be one of them.

There can be little doubt that index investing works; active investing can work as evidenced by the 10 yr performance and therefore a combination of the two can work. Therefore, lets not throw the baby out with the bath water... it's not either/or but take on board index funds and keep the best of the actively managed funds/trusts.

More on this following the full year results next May, but so far, happy with progress made under the stewardship of the new manager.


  1. Thanks for this update - EDIN still on my to buy list and I am fully going towards a portfolio mixed with trackers, investment trusts/shares and try to get the best of both worlds!

    1. weenie,

      Thanks - it's always good to have a watchlist and a few options to consider. I guess after the recent good run, the shares are not so attractive but things can quickly change.

  2. Ciao DYI,
    I am also quite interested in IT, the only problem for me is that it's hard to buy them from Italy and sometimes the banks ask for very high commisisons. Still I do agree with you that they can be a very good item to add in order to diversify the portfolio. Thnaks for sharing!


    1. Stal,

      Thanks for dropping by. I was not aware it was a problem purchasing UK equities in another EU country. Do you not have access to the low cost online brokers there?

  3. Thanks for the update. As with Weenie, these are on my watch list for purchase, but not yet dived in - good to see that they are increasing steadily on the dividend too, fingers crossed it keeps going!

    1. Rob,

      Cheers - I hope you find a good entry point at some time but you may need a little patience?

    2. Thanks DIY - I am, a number of ITs I have on the list I just have to sit on my hands and wait! :)

  4. Really good article on Edinburgh Trust, I took a position (slowly expanding into IT from ETFs) a couple of weeks ago. The discount made it attractive, the performance against the FtSE all share as you indicate plus a low OCF for active management. What's not to like! I would dearly love to see one of you experienced bloggers (monevator also comes to mind ) put out a model portfolio which blends index trackers with investment trusts. So index trackers for core holdings, then IT are good for diversification (adding extra value in terms of the global behemoths like Edinburgh and Scottish Mortgage, then property (TR Property for example) and also small caps and private equity. Maybe I should put together an amended Slow and Steady Model portfolio for discussion purposes myself?

    1. Bellabeck,

      Welcome to the blog and thanks for your comment.

      My actual portfolio is well documented and is heading in the direction you outline with index funds and ETFs becomming more core and complemented by my basket of investment trusts. It feels like a decent investing solution blending a mixture of passive and active.

      Slow & steady steps....!