How to pick an investment trust
The first investment company was launched some 150-odd years ago in 1868. From the very beginning,...
The City of London Investment Trust
Investment trust
Launched in 1891, this is one of the longest-running investment trusts in the UK. It aims to provide growth in income and capital by investing predominantly in larger UK companies with international exposure. It has increased its dividend payment every year for the past 52 years.
Our opinion
This is a well-established income and growth trust, run by a very experienced manager - Job Curtis. His thorough research process and a conservative approach to stock selection has generated steady returns over an extremely long period of time. Maintaining dividend income is of the utmost importance to the board, making the City of London Investment trust an excellent core option for investors wanting UK equity exposure.
Trust manager
Janus Henderson Investors manages this trust. The company was formed in 2017 following the merger of Janus Capital Group and Henderson Global Investors. The business has more than 2000 employees and offices in 28 cities worldwide. Funds are managed by autonomous teams with distinct investment strategies.
City of London Investment Trust has been managed by Job Curtis since 1991. He has 35 years’ industry experience, and started his career as a trainee stock broker in 1983. Job joined Henderson Global Investors in 1992, when it acquired Touche Remnant, where he was employed as a fund manager. He works closely with the global equity income team, who assist him in running the portfolio.
I have a conservative personality and it is reflected in the portfolio. I pay attention to the downside risks as well as the upside potential.
Job CurtisTrust manager
Investment board
The trust’s board comprises of five members and is chaired by Phillip Remnant CBE. He holds other independent directorships with investment institutions, including chairman of M&G Investments and deputy chair of the Panel on Takeovers and Mergers. The other board members are Simon Barratt, Martin Morgan, Samantha Wren and Ted Holmes. They have a wealth of experience, particularly in the areas of investment management and accountancy. The board meets with the investment team seven times a year and the company year-end is 30 June.
Investment process
Job focuses on companies which have the ability to pay and increase their dividends over time. He pays close attention to valuations and is careful not to overpay when he initiates positions. He particularly likes companies with a competitive advantage and has historically favoured multi-national brands with stable earnings and growth prospects. He has a bias towards large caps.
Risk
This trust invests primarily in UK equities, although it does have the flexibility to invest up to 20% in overseas equities. Over the very long term, the trust has been about as volatile as the UK stock market, tending to fluctuate slightly higher or lower for periods. Stock specific risk is somewhat mitigated by the number of stocks Job holds, which is typically more than 100.
Gearing
The manager is able to employ gearing when appropriate in a bid to enhance returns over the long-term. Other than in exceptional market conditions, borrowing will not exceed 20% of net asset value. The long-term gearing target is between 0% and 20%. The company has a mix of fixed and variable loan facilities in place, providing funds for the manager. Some of the fixed borrowings are quite expensive, but they are due to be repaid in 2020 and 2021.
Read more about this fund
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