Fund manager commentary
During May Investors Capital Trust announced results for the year ended 31 March 2014. Over that period the Company’s net asset value total return increased 9.7 per cent, ahead of the 9.1 per cent increase in the FTSE All Share Capped 5% Index. The Equities Portfolio returned 10.5 per cent in total return terms over the year while the Higher Yield Portfolio returned 6.9 per cent. Since launch in February 2007 the net asset value total return remains well ahead of the benchmark index.
The year proved to be another good one for UK mid-sized companies, many of which benefited from a stronger earnings and dividend growth profile than their larger FTSE 100 counterparts. Mid-cap portfolio holdings that made notable contributions to performance included Booker, the UK’s leading food wholesaler, Berendsen, the textile cleaning and supply services business, and Howden Joinery, which designs, manufactures and sells fitted kitchens. Several other holdings recorded exceptional share price gains during the year, including telecommunication group BT, aviation services group BBA and the owner and operator of the Premier Inn and Costa Coffee franchises, Whitbread.
This year marks the fifth anniversary of the postcrisis global economic recovery. Recent evidence gives cause for cautious optimism that the recovery is becoming more established and that the coming year may mark the transition to a more stable and enduring economic expansion. Global inflation remains subdued, suggesting that central banks will remain accommodative and that any move towards a normalisation of monetary policy will be gradual. Along with the US and Germany, the UK economy is likely to remain one of the stronger growing developed economies in the year ahead. Following the rally and re-rating of equity markets, valuation levels now appear less compelling despite strong corporate sector fundamentals. However, against a background of stronger global growth, increasing business confidence and low borrowing costs, we expect the recent upturn in merger and acquisition activity to gather pace and remain supportive for equity markets.As at 31 May 2014
Percentage growth, total return, bid to bid price with net income reinvested in sterling. Basis in accordance with the regulations of the Financial Conduct Authority. Past performance is not a guide to future performance. Stock market movements may cause the value of investments and the income from them to fall as well as rise and investors may not get back the amount originally invested. A fund investing in a specific country carries a greater risk than a fund diversified across a range of countries. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. If markets fall, gearing can magnify the negative impact on performance. The discrete annual performance table refers to 12 month periods, ending at the date shown.