REG - City of Lon Inv Grp - Pre-Close Trading Update

City of London InvestmentAnnouncement

24/07/2025 07:00

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RNS Number : 2827S  City of London Investment Group PLC  24 July 2025

City of London Investment Group PLC

24 July 2025

 

 

CITY OF LONDON INVESTMENT GROUP PLC

("City of London" or "the Group" or "the Company" or "CLIG")

PRE-CLOSE TRADING UPDATE FOR THE YEAR ENDED 30 JUNE 2025

 

City of London (LSE: CLIG), a leading specialist asset management group
offering a range of institutional and retail products investing primarily in
closed-end funds ("CEFs"), provides a pre-close trading update for its
financial year ended 30 June 2025. The numbers that follow are unaudited.

 

Funds under Management (FuM) increased by 5.6% to $10.8 billion as of 30 June
2025 as compared to $10.2 billion as of 30 June 2024.

 

Investment Management Performance

It was broadly a favourable environment for CLIM's investment strategies from
a performance perspective and all strategies ended the year ahead of their
benchmarks as the table below demonstrates.

 

 CLIM strategy          Performance  Benchmark  Difference
 Emerging Markets       +20.3%       +14.8%     +550bps
 International Equity   +22.7%       +17.7%     +500bps
 Opportunistic Value    +17.5%       +12.8%     +470bps
 Listed Private Equity  +16.6%       +8.0%      +860bps

*The above returns are presented as net of fees performance figures. The CLIM
Global Emerging Markets strategy is shown against the S&P Emerging
Frontier Super Composite BMI Net TR Index, the CLIM Global Developed CEF
International Equity Strategy is shown against the MSCI ACWI ex-US Net TR
Index, the CLIM Opportunistic Value Strategy is shown against the Blended
50/50 MSCI AWCI/Bloomberg Global Aggregate Bond Index, and the CLIM Listed
Private Equity Strategy is compared to an 8% annual hurdle rate. Data is as of
30 June 2025. Past performance is no guarantee of future results.

 

Firstly, our strategies have benefited from an improved environment for
corporate governance. The last few years since 2022 have been characterised by
a period of wide discounts among the universe of closed-end funds in which
CLIM primarily sources investments. This has been particularly pronounced in
the UK market where outflows from institutional and retail investors alike had
resulted in depressed ratings. Such ratings allowed CLIM to accumulate
positions at deeply valued price points and to work with boards to take
measures to address discounts. Among other factors, these engagements helped
provide the catalyst for broad-based actions by boards to narrow discounts on
funds held in portfolios. Such event-driven actions included elevated levels
of share buybacks, tender offers, mergers, restructurings and, in extreme
cases, outright liquidations. CLIM's strategies benefited accordingly.

 

Secondly, heightened market volatility, particularly since the election of
President Trump in late 2024, has provided additional opportunities to benefit
from discount volatility, as well as market rotation, as countries, sectors,
size and style factors came in and out of favour.

 

Lastly, outperformance by non-US equities over the last twelve months, after
more than a decade of dominance by US stocks, brought new buyers to our
largest areas of underlying focus, namely International Equities and Emerging
Markets.

 

The International Equity strategy benefited from increased demand, especially
for European and UK large cap exposure as well as International mid and small
cap exposure.

Conversely, in addition to the factors highlighted above, the Emerging Markets
strategy was meaningfully aided by its allocation to South Korean holding
companies which outperformed following the Government's proposed Corporate
Value Up program designed to address the "Korea Discount" by promoting capital
efficiency, transparent governance and increased shareholder returns.

 

Likewise, KIM's main strategies performed well over the trailing twelve
months.

 

 KIM strategy                Performance  Benchmark  Difference
 Growth Balanced             +12.71%      +12.16%    +55bps
 Conservative Balanced       +9.2%        +10.07%    -87bps
 Tax-Sensitive Fixed Income  +3.17%       +1.10%     +207bps
 Taxable Fixed Income        +7.39%       +5.89%     +150bps
 Cash Management             +5.96%       +5.67%     +29bps
 Equities                    +16.80%      +16.33%    +46bps

*The KIM Fixed Income Strategy is shown against the Bloomberg
Government/Credit Bond Index, the KIM Tax-Sensitive Fixed Income Strategy is
shown against the Bloomberg Municipal Bond Index, the KIM Growth Balanced
Strategy is shown against the Blended 40% Bloomberg Government/Credit Bond
Index/39% Russell 3000 Index/21% MSCI ACWI ex USA Net TR Index.  The KIM
Conservative Balanced Strategy is shown against the Blended 60% Bloomberg
Government/Credit Bond Index/26% Russell 3000 Index/14% MSCI ACWI ex USA Net
TR Index. The KIM Equities Strategy is shown against the Blended 65% Russell
3000 Index/35% MSCI ACWI ex USA Net TR Index.  The KIM Cash Management
Strategy is shown against the ICE BofA 1-3 Year US Treasury Index.

 

The primary contributor to outperformance over the past twelve months has been
a modest narrowing of discounts across fixed income and equity closed-end
funds. Performance was further enhanced by substantial tender offers executed
near net asset value and notable distribution increases among several major
holdings.

 

Special Purpose Acquisition Companies, during their pre-acquisition phase,
continue to serve as effective alternatives to T-bills and money market funds
within our Cash Management and Fixed Income strategies. While short-term
performance remains important, KIM's long-term track record is particularly
strong, especially in fixed income. Over the past five years, the Taxable
Fixed Income and Tax-Sensitive Fixed Income strategies have exceeded their
respective benchmarks by 6.60% and 3.67% per annum.

 

Flows

Net outflows were weighted more heavily to the first half of the financial
year when macroeconomic uncertainty rattled markets. The second half
withdrawals were characterised by some profit-taking after very strong
performance by our investment teams. This was particularly true in the
International Equity and Emerging Markets strategies which saw net outflows of
$387 million and $372 million, respectively. The Growth and Conservative
Balanced strategies (a combination of equity and fixed income) saw net
outflows of $241 million over this period, due primarily to client retirement
cash needs. Net investment outflows totaled $974 million across the Group
during the financial year.

 

New mandates included $60 million in the Listed Private Equity strategy and
$70 million in the Emerging Markets strategy, with another $46 million mandate
confirmed for August 2025 funding. Net inflows of circa $84 million combined
across the Opportunistic Value, Listed Private Equity, alternatives and
Taxable Fixed Income strategies were also recorded.

 

Persistent discount volatility and strong outperformance of the Group's
strategies continue to be the focus of marketing efforts with allocators.

 

A breakdown FuM by strategy is as follows:

 

                             FuM ($ million)

                             Jun-24 Actual  Inflows  Outflows  Net Flows  Market & investment performance      Jun-25 (estimate)

 CLIM
 Emerging Markets            3,394          91       (463)     (372)      652                                  3,674
 International Equity        2,394          122      (509)     (387)      479                                  2,486
 Opportunistic Value         251            26       -         26         32                                   309
 Listed Private Equity*      174            60       (50)      10         34                                   218
 Other**                     104            40       -         40         6                                    150
                             6,317          339      (1,022)   (683)      1,203                                6,837
 KIM***
 Growth Balanced             1,426          36       (174)     (138)      131                                  1,419
 Conservative Balanced       1,103          45       (148)     (103)      143                                  1,143
 Tax-Sensitive Fixed Income  693            87       (108)     (21)       (144)                                528
 Taxable Fixed Income        501            58       (50)      8          198                                  707
 Cash Management             108            10       (24)      (14)       7                                    101
 Equities                    93             3        (26)      (23)       9                                    79
                             3,924          239      (530)     (291)      344                                  3,977
                             10,241         578      (1,552)   (974)      1,547                                10,814

* The Listed Private Equity strategy is to buy high quality private equity
funds at discounts in closed-end fund structures traded in listed markets. It
was recategorised from Emerging Markets during the year, and the
recategorization of existing client assets is not reflected in the Net Flows
column for either strategy.

** Includes Frontier and alternatives

*** KIM's FuM has been recategorised into underlying strategies.

Funds under Management figures are rounded

 

Leadership Update

In June, Mike Edmonds was appointed Chief Investment Officer of CLIM. A highly
accomplished investor and City of London veteran, Mike first began his career
with the Group in 1992. He brings deep investment expertise, creativity, and
an engaging intellectual curiosity-qualities that complement his strong
collaborative relationships across our Investment, Research, and Macroeconomic
teams.

In his capacity as Chairman, Rian Dartnell continues to work closely with our
teams and with the Board to evaluate CEO candidates and consider the Group's
future leadership needs. A further announcement will be made in due course.
Meanwhile, our entire team is focused on providing strong risk-adjusted
returns, enhancing client service excellence, and deepening shareholder
engagement. We are also reinforcing our commitment to inclusivity and
accountability to position the Group for long-term success.

 

 

Dividend

The Board expects the final dividend for the year ended 30 June 2025 to be in
line with the previous year.

 

Following the completion of the year-end audit, the Board will announce the
final dividend and results alongside publication of its Accounts for the year
ended 30 June 2025 on 16 September 2025.

 

The Group's Annual General Meeting will be held on 27 October 2025 and the
Group expects the dividend payment date to be in November 2025 similar to last
year's timing.

 

For further information, please visit https://www.clig.com/ or contact:

 

Rian Dartnell, Chairman

City of London Investment Group PLC

Tel: 001-203-561-0450

 

Martin Green, James Hornigold, Louisa Waddell

Zeus Capital Limited

Financial Adviser & Broker

Tel: +44 (0)20 3829 5000

 

This release includes forward-looking statements, which may differ from actual
results.  Any forward-looking statements are based on certain factors and
assumptions, which may prove incorrect, and are subject to risks,
uncertainties and assumptions relating to future events, the Group's
operations, results of operations, growth strategy and liquidity.

 

Past performance is no guarantee of future results.

The information contained in this document is intended for infor-mation
purposes only. This document does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor will any sale of a
security occur in any jurisdiction where such an offer, solicitation or sale
would be unlawful.

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