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Fund Manager commentary – City of London Investment Trust

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager


22 Feb 2019

UK equities produced a negative return of 3.75% in December as measured by the FTSE All Share Index. The FTSE 100 Index of large companies, with a negative return 3.5%, outperformed the more domestically focussed FTSE 250 Index of medium-sized companies which produced a negative return of 5.1%. Concern about rising US interest rates against a background of slowing global economic growth weighed on investor sentiment. In addition, UK domestic stocks were adversely affected by pessimism about the outcome of the EU withdrawal negotiations.

The best performing sector was mining where City of London is under represented relative to the market average. However, City of London has large holdings in BHP, Rio Tinto and Anglo American, which together make up 4.7% of the portfolio (at 31st December 2018) and did well over the month. General retailers were a notably weak sector given tough competitive conditions. City of London has reduced exposure to this sector over the year to only 1.4% of the portfolio but there are attractive dividend yields available on selected holdings.

A new holding was bought in Ferguson, which is a UK listed company with the vast majority of its operations distributing building products in the US. Ferguson’s valuation looked attractive given its strong record and its growth prospects.

The weakness in UK equities in recent months has led to an improved dividend yield from the market because dividends have continued to grow. While shares are always prone to be buffeted by macro-economic and political concerns, the dividend yield from UK equities is currently much more attractive than the main alternatives.

Job Curtis, ASIP

Job Curtis, ASIP

Portfolio Manager


22 Feb 2019

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