Majedie lifts Edinburgh Investment Trust 48%

The £1.2 billion Edinburgh Investment Trust said on Monday its net asset value (NAV) has risen 48%, compared with 36.8% for the FTSE All-Share, since Majedie became the day-to-day manager of the closed-end fund at the end of March 2020.

Announcing half-year results for the period ending September, 30, 2021, Edinburgh Investment Trust said its net asset value in total return terms rose 9.8% in the period compared to the 8% rise of FTSE All-Share.

However, the share price discount to NAV widened from 4.5% to 9.3%.

Edinburgh Investment Trust is a constituent of the FTSE 250 index and invests primarily in a portfolio of UK listed shares and has net assets of £1.2 billion.

The fund’s biggest holdings include Royal Dutch Shell, Ashtead, AstraZeneca, Tesco, Unilever, NatWest, Anglo Americam, BAE Systems, Weir Group and Electrocomponents.

On dividends, the company said: “For this financial year, we announced to the market on 27 October 2021 that the first interim dividend will be 6p per share.

“This will be paid, as usual, in November.

“Shareholders can reasonably assume that the following two interims (due to be paid in February and May) will be at a similar level.

“The board will decide on the level of the final dividend later in the financial year.

“The reason for rebasing the dividend last year was the structural reduction in the portfolio’s underlying earnings: partly a function of dividend pauses and cuts caused by the pandemic and also because of the manager’s view that certain companies in the broader UK equity market were over distributing.”

Edinburgh Investment Trust chair Glen Suarez said: “This has been a period of improving fortunes for the company’s portfolio.

“In the last six months, the company’s net asset value in total return terms has risen by 9.8%, compared with the index return of 8.0%.

“It is encouraging to see the foundations of a strong long-term track record beginning to take shape.

“While growth in NAV has been encouraging, over the last six months the discount has widened.

“Finally, we are very pleased to have secured much more efficiently priced debt, and we are optimistic that the portfolio’s long-term returns should be enhanced.”

Trust manager James De Uphaugh said: “There are several compelling reasons to think that the UK equity market can generate further attractive returns on a medium-term view.

“The gains we are reporting on for the last six months were despite a combination of tempering growth rates here and abroad, ongoing supply bottlenecks, and rising energy prices.

“There is no question pricing pressures are more prevalent now than in other inflationary spikes over the last decade, but we take reassurance from the fact that the portfolio is dominated by companies that have pricing power and strategic strength that we believe will afford greater protection against cost inflation.

“Overall, the UK is widely regarded as a great place to do business with strong companies.

“The return of overseas/marginal investors, boosted by the growing appetite for takeovers from foreign companies or private equity funds, is a positive endorsement of the UK market.

“Furthermore, the valuation discounts relative to other equity markets highlight the opportunity in UK equities.

“We believe the market is taking a short-term view of the prospects for many businesses in the UK, which provides opportunities for investors willing to look through the current macroeconomic headwinds.”

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Mark McSherry
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