| Investment Trust-Thoughts (April 2024)

31st Mar by Charles Mitchell

176 comments 6278 reads

Investment Trust- Thoughts (April 2024)

For more information on Investment trusts visit:

Association of Investment Companies.

https://www.theaic.co.uk/
Free to sign up. On the site you can create portfolios, screen and compare Investment Trusts by Geographic region, Sector , Yield and more. A few Trusts who are not AIC members have limited data.

The Investment Trust Handbook by Jonathan Davies has articles and data on Investment Trusts. The 2024 edition is out now.
Available online or from Jonathan Davies's website https://money-makers.co/.
You can also sign up(Paid membership) for insights on Investment Trusts from him and others. Weekly email and podcast .

Citywire do a daily Investment trust email. Free, does have sponsored content but keeps you up to-date with Investment Trust news.

https://citywire.com/investment-trust-insider

Trustnet have an Investment trust section. https://www.trustnet.com/

Plenty of performance data on that site.

Edison cover Investment Companies and do a monthly Investment trust round up. You can sign up for free.

https://www.edisongroup.com/equities/investment-companies/.

You can sign up for newsletters/fact sheets from most of the Investment Trusts on their websites.

For ETF's I use https://www.justetf.com/uk/. You can screen buy region, sector and see performance comparisons.

March 2024 Investment Trust monthly performance.

Equity invested only.

Top 10

Schiehallion Fund (LON:MNTN) +38.6%

British and American Investment Trust (LON:BAF) +12.5%

Scottish Mortgage Investment Trust (LON:SMT) +11.6%

Hipgnosis Songs Fund (LON:SONG) +10.4%

Ecofin Global Utilities and Infrastructure Trust (LON:EGL)+8.9%

Blackrock Sustainable American Income Trust (LON:BRSA) +7.9%

Fidelity European Trust (LON:FEV) +7.9%

Manchester And London Investment Trust (LON:MNL) +7.1%

Lowland Investment (LON:LWI) +7%

Henderson Eurotrust (LON:HNE) +6.8%

Bottom 10

India Capital Growth Fund (LON:IGC) -14.5%

Crystal Amber Fund (LON:CRS) -12.9%

Molten Ventures (LON:GROW) -10.9%

Sure Ventures (LON:SURE) -10.4%

Cordiant Digital Infrastructure (LON:CORD) -9.9%

Jupiter Green Investment Trust (LON:JGC) -6.7%

Downing Strategic Micro-Cap Investment Trust (LON:DSM) -6.5%

Chrysalis Investments (LON:CHRY) -6.3%

River and Mercantile UK Micro Cap Investment (LON:RMMC) -5.8%

All funds

Top 5

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Charles Mitchell

24th Apr

Ken- purchased Schroder European Real Estate Investment Trust (LON:SERE)-thanks for mentioning it . Part of their issue is in my opinion the lack of a monthly fact sheet and poor website design. May just be me but you would think these trusts on large discounts would improve their marketing. Encouraged by this "

Sir Julian Berney Bt., Chairman, commented:

"The Company is very well placed, with one of the strongest balance sheets - a net LTV of 24% and €27 million in cash - and dividend covers amongst the UK-listed peer group. The Board continues to assess opportunities to grow earnings and the evolution of the strategy to maximise shareholder returns and liquidity. The current share price discount does not reflect the strength of the portfolio, growth city exposure and local expertise of the investment manager."

Let us hope they do indeed do something to get the share price to reflect their strengths.

ken mitchell

Sorry that it’s late to be posting this info now as Henderson Far East Income (LON:HFEL) goes ex the next (modestly increased) 6.1p and 2.6% quarterly dividend tomorrow.

What many might have missed is that since Management changes along with new investments approach, Henderson Far East Income (LON:HFEL) has recovered strongly at long last. So much so that it has gone from being the worst performer in the sector by far to THE best performer in the sector over 1 month, 6 months and year to date.

It’s up 5.4% over 1 month, and next best abrdn Asian Income Fund (LON:AAIF) and Jpmorgan Asia Growth & Income (LON:JAGI) 3%. Over 6 months Henderson Far East Income (LON:HFEL) is up 12% and next bestabrdn Asian Income Fund (LON:AAIF) 10%. Year to date Henderson Far East Income (LON:HFEL) is up 8% and next best Jpmorgan Asia Growth & Income (LON:JAGI) 5.3%.

Their latest factsheet is also positive about dividends and fwiw I think a cut which already a low risk, is now very unlikely. Here’s the link including the key text on page 3:-

https://cdn.janushenderson.com...

So the current yield is still 10.4% even after the recent share price and NAV gains. The yield was 11.5% when Henderson Far East Income (LON:HFEL) was first covered in posts here. It’s a less risky buy now than it was then as there’s evidence to show that their investment performance is improving.

Because Henderson Far East Income (LON:HFEL) is still the worst performer over 1 year (ahead of investment policy changes) it’s quite likely that the recent improvement has gone unnoticed.

Hope buying Schroder European Real Estate Investment Trust (LON:SERE) pays off Charles. I agree about the poor website and lack of monthly updates as is the case for some of the other REITS too. Not sure though that either has much effect on the share price?

Just adding to the Chairman’s comments you posted, note this bit too from their December update:-

“Finally, as sustainability considerations become even more important for investors, lenders and occupiers, we are making good progress evolving our strategy, which we believe should differentiate the Company further and help to drive more sustainable, long-term returns. We anticipate providing details on this strategy during the first half of 2024.”

So presumably not too long to wait for that.

Rusty2

Unfortunately l hold this as well.

Gresham House Energy Storage Fund (LON:GRID)

Some rise in the share price recently, update today sounds reassuring.

But this has been a complete disaster as an investment.

Will hold for a while longer, nearly sold last week.

Rusty- I hold as well. It has been a very poor investment. The directors need to realise the asset value- which is way above the share price. I did read this on CityWire yesterday "Gresham House Energy Storage (GRID) and Harmony Energy Income (HEIT) ‘could attract interest as a corporate target’ after share price crashes left both battery funds vulnerable to bids, said Stifel." Full article here https://citywire.com/investmen...

Thu 7:32am

I am a long term believer in emerging markets ( might have been a bit early on buying Blackrock Latin American Investment Trust (LON:BRLA) ). This article from Scottish Oriental is I think well argued.https://www.scottishoriental.c... I do not hold Scottish Oriental Smaller Companies Trust (LON:SST) .

Fri 8:00am

Henderson Far East Income (LON:HFEL) ( I hold)Half year figures show an improved NAV performance and as Ken mentioned recently the share price has picked up. Link here to the fund manager's comments on the half year figures. https://www.janushenderson.com... The fund yields 10.78% and price/NAV at at par near enough. Dividends have grown at 5 year average of 2.30%. Only concern Div is only covered 0.55% but the board have committed to at least maintaining it.

Fri 10:03am

Having another look Odyssean Investment Trust (LON:OIT) after getting Q1 2024 update through by email.

Top 10 positions as % of NAV2

Elementis Industrials 15.5
NCC 12.9
Gooch &Housego 6.9
Ascential 10.5
Spire Healthcare 5.9
Ascential 10.5
XP Power 8.7
Xaar 7.4
Dialight 5.7
James Fisher 5.0
Benchmark 4.8
Total 83.3%

Video presentation is here

Sat 3:36pm

Having listened to the OIT presentation I will be buying on Monday. I was impressed by the managers and many of the holdings are companies I have been considering investing Spire Healthcare (LON:SPI) , James Fisher And Sons (LON:FSJ) and Xaar (LON:XAR) . So rather than buy individually I have decided to use OIT and get exposure to a few more companies as well. The top 10 holdings= 83.3% of the portfolio. 15% of the fund is in Elementis (LON:ELM) . Every 7 years shareholders can exit at NAV less costs. They also have a buyback programme to control the discount.

ShoeShineBoy

Sat 4:26pm

fwiw, one or two thoughts....

My portfolio has done well recently, I need to update my spreadsheet to understand performance year to date but I can see that I'm up versus the closing balance back in December. with the exception of Primary Health Properties (LON:PHP), any losers I have in my portfolio are on small single digits. Pleasing but worrying at the same time! Mainly because I still have cash to invest but also because I'm always thinking something will go wrong. Perhaps I'm benefitting from cutting my losers more quickly ? May and June are always big dividend months so I'm optimistic.

Charles, you mentioned emerging markets recently. I thought the following podcast interview with the managers of BlackRock Frontiers Investment Trust (LON:BRFI) was good. Looking at my iPhone podcast app, there is the option to read the transcript of this interview but that option is unfortunately not available on this link. There is an interesting discussion at the start on the AIC promotion and relegation between frontier markets, emerging markets etc and the comment is made that this process is actually far more arbitrary than retail investors understand. Some good points made on the fact that EM countries are no longer pure resource plays and dependent on the US dollar. I d find myself asking why I would take the risk for a 4% dividend.

https://tinyurl.com/2f3netyv

Ken, thanks for posting on the REITs again. The interest rate cuts are not materialising which makes Loan to Debt percentages and debt financing all the more important. I hold Primary Health Properties (LON:PHP) which refuses to increase in value but still pays out a 7% dividend yield. And Schroder Real Estate Investment Trust (LON:SREI) which has come off lows in SP terms, also pays out a 7%+ dividend and still on a massive 30% discount to NAV. I'm a little reluctant to invest more in property as I think there are sectors with better prospects. I keep an eye on some of your favourites though - Alternative Income REIT (LON:AIRE) and Aew UK Reit (LON:AEWU). I recall being impressed by an interview with Laura Elkins of Aew UK Reit (LON:AEWU). If I recall correctly, there is an element of improving properties arather than just running them and therefore actively trying to increase the NAV.

Even on average days now, Japan trusts in general tend to do well (I follow Nippon Active Value Fund (LON:NAVF) and AVI Japan Opportunity Trust (LON:AJOT) although I own Japan as part of my holding in AVI Global Trust (LON:AGT)). In addition, the UK Smaller Companies and UK Equity Income Sectors also seem to be coming to life a little. I'm happy with my recent purchases so far.

I sold Henderson Far East Income (LON:HFEL) a while back. No point in getting a big dividend if the SP is constantly declining. I bought Schroder Oriental Income Fund (LON:SOI) instead and whilst a much lower dividend, it's less volatile which is something I prefer. Again, the sector in general seems to be doing better recently than in prior years.

Again, right click and open image in new tab to see the detail.

One final thought for now.... I bought a small stake in HgCapital Trust (LON:HGT) a few months back when it was trading at a 15% to 20% discount to NAV. At the time, I thought it was either clearly undervalued by the market (and therefore a good buying opportunity) or there was something clearly wrong with it and I just didn't understand that. Discount has since closed to 6% and it seems my first thought was the correct one. Only issue is I didn't buy enough of it! Next time.... :-)

Feedback welcome.

SSB

Sat 7:14pm

SSB- I will continue to hold HFEL- I do believe that there is a change going on within the managers and we will see capital growth as well as income.

I am committed to emerging markets- might have too large a % of portfolios in them but all I have read/observed makes me convinced that over the next 10 years there will be huge growth in these regions. All the indicators- education, widespread energy and lower family sizes have been historically been key indicators. Savings seem to be increasing in these regions.

I am not an economic expert but the above makes sense to me. Economic growth should lead to increased domestic expenditure as incomes rise.

I like buying undervalued assets- so many of the property trust are looking attractive-contemplating buying Real Estate Investors (LON:RLE) .

Trading the discount can be productive- I do this when I spot a discrepancy as you did with HGT

KevinS1

Sun 7:34am

Hi SSB,

Henderson Far East Income (LON:HFEL) issued its HY report on Friday and a very interesting note came out as well from Edison.

It highlighted that the more recent poor performance was as a result of the manager piling into Chinese stocks when China reopened in anticipation of a market reopening which as we know never materialised.

However, more recently they had moved out of these stocks and instead refocussed on better quality (although lower dividend) stocks which have a better chance of a greater total return and a growing dividend. This has been supported by the decision to also continue to cover the dividend from reserves.

I feel with the spread of other investments across India, Taiwan, Indonesia etc then it should have a good future - the 3mth & 6mth returns (12% & 19%) are very good and I am hopeful of this performance continuing so currently am very happy to hold.

Sun 2:40pm

Hi SSB.

I’m also holding Henderson Far East Income (LON:HFEL) and with increasing confidence for reasons already posted recently by other posters here. It’s the future that counts now and not the failed tactics and some awful investment decisions in the past. BUT I would never buy a share or Trust that I don’t like, however convincing the investment case for it. . Far better to have confidence when buying.

As for the REITS……some made significant gains on Friday. As soon as this week we might know whether that was another one day blip or the market starting to price in better prospects. It’s not just lower interest rates buy also improving prospects for the UK (and Europe if holding Schroder European Real Estate Investment Trust (LON:SERE) and Tritax EuroBox (LON:EBOX) , economies. AND any interest rate cut ahead will likely get priced in via share price recovery ahead of it actually happening.

As for HgCapital Trust (LON:HGT), I haven’t looked for a while but I used to hold when it had a great record of realisations well above purchase price. I took the profits and switched to Oakley Capital Investments (LON:OCI) and Harbourvest Global Private Equity (LON:HVPE) and both have done well, especially so Oakley Capital Investments (LON:OCI).

Finally off topic and I hope little noticed but as you asked a while ago……..I’ve now got an excellent team working on my apparently almost unique sepsis problem. At last they have found via blood cultures what the infection in my blood is and scans are showing up where too. The uniqueness is because 2 years of this apparently deadly infection in my blood, leading to frequent rigours has not, as is usual, resulted in potentially fatal sepsis, and in between the rigours, my health is surprisingly good. So I’m not even in hospital! So as well as doing everything they can to save my life, mine seems to be a one off case. So it’s very useful to them from research angle too. Meanwhile I read and post on investments to keep my mind off it all.

Sun 4:57pm

Hope they get it sorted for you Ken.

China= I bought HSBC MSCI China UCITS ETF USD (LON:HMCH) at the end of March- currently up 5%. I am looking at buying a trust as well- Had a bad experience with Fidelity China Special Situations (LON:FCSS) so thinking of Jpmorgan China Growth & Income (LON:JCGI) with it's 6% yield. It is the worst performer over 1 and 3 years- hopefully it will now pick up ! There are only 3 Trusts to choose from https://www.theaic.co.uk/inves...

TB_Investor

Sun 6:44pm

All the very best Ken!!

Sun 9:03pm

Thanks for the replies, much appreciated, I enjoyed reading them all. It's a good community of PIs on this board, long may it continue.

I hadn't realised there had been a change of policy at Henderson Far East Income (LON:HFEL). Interesting but I will stick with Schroder Oriental Income Fund (LON:SOI) for now.

I'm hopeful the progress at Schroder Real Estate Investment Trust (LON:SREI) continues as the dividend is worth it. I still say the market doesn't like Tritax EuroBox (LON:EBOX) but I have no evidence to back that up other than a widening discount.

Ken, good to hear your health issues are progressing, long may that continue. You have have helped me so much with my thinking on trusts and dividends, I appreciate that. Like others on this board, I wish you well.

SSB

Mon 12:46am

Hello Charles, you have Henderson Opportunities Trust (LON:HOT) down 79%, but looking at Stockopedia chart that does not seem correct.

Mon 9:36am

Hi Rusty, Will remove- not sure where that came from- could have been a data blip. Thanks

Mon 12:42pm

New research from Edison on Henderson Far East Income (LON:HFEL) (I hold). https://cdn.janushenderson.com...

Summary " Henderson Far East Income (HFEL) has consistently delivered on its
objective to provide a rising dividend. However, like many investors,
HFEL’s managers overestimated the potential for a post-pandemic rebound
in China. The trust’s resultant overweight to Chinese consumer and other
cyclicals led to a fall in portfolio revenues and underperformance in the
financial year ended 31 August 2023 (FY23). With a view to improving
future returns, HFEL’s board has since indicated an increased willingness
to use reserves when necessary to support dividend payments, which it
did in FY23. This reduces the requirement to focus primarily on high
income names to fund dividend payments, giving lead manager Sat Duhra
scope to move into other areas of the market where he can acquire wellpriced value names offering performance and yield, or the prospect of
dividend growth over time. Duhra has been quick to reduce the trust’s
exposure to China and increase positions into well-priced value names in
India and Indonesia. Early signs suggest this repositioning is paying off -
HFEL outperformed the market in the six months to end March 2024."

Tue 11:47am

Utilico Emerging Markets Trust (LON:UEM) Interview with Charles Jillings, Portfolio Manager, re recent trip to Latin America. https://vimeo.com/londonbroadc...

Investment Trust-Thoughts (April 2024)

Investment Trust- Thoughts (April 2024)

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Charles Mitchell

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