Fund spotlight: F&C Investment Trust

by Teodor Dilov from interactive investor |

interactive investor's analysts give an update and view on the F&C Investment Trust.

Considering the general consensus that we are at the late stage of the economic cycle, investors should pay extra attention to their holdings and portfolio exposure. More cautious positioning might be a sensible approach for the more risk averse, but that should not prevent them from exploiting still growing markets and economy. 

With countless opportunities across various asset classes it might be difficult for the individual investor to select their global holdings. However, F&C Investment Trust (LSE:FCIT) may be a good option that provides a blend of assets some of which could be difficult to access and navigate directly.

About the trust

F&C Investment Trust is the world’s oldest collective investment scheme, launched in 1868, and is also one of the AIC’s “dividend heroes” by continuously growing its dividend for the last 48 years. The trust aims to deliver long-term growth and income to its investors through all market environments via a globally diversified portfolio of public and private equity securities.

Paul Niven has been managing the strategy since July 2014 and has the support of BMO’s deep resource of investment professionals. Paul, who is one of the industry’s highly regarded managers, joined F&C (now under the BMO’s Global Asset Management umbrella) in 1996 and is currently also Managing Director of the company’s £30 billion Multi-Asset Solutions business, as well as chair of the Global Asset Allocation Committee. 

He runs a well-diversified portfolio across different styles and asset classes that may be a good core holding for a balanced portfolio. The manager sets the strategic and tactical allocation tailored towards his views on the market and then delegates the security selection to third parties either internal or external. All decisions have to be approved by the board which consists of highly experienced and knowledgeable senior professionals. The trust is benchmarked against the FTSE All World Total Return Index.

What’s in it?

The trust has a well-diversified portfolio of both listed and unlisted equities. As at December 2019, the investment trust had over 470 holdings with a clear bias towards the US where more than half of its funds were invested. Within the top three geographical allocations were also Europe with about 16% allocation and Emerging Markets with about 11%. 

The vast majority of holdings were large internationally established quality businesses with just 16% of the trust invested in the mid-cap space. This strategy is designed for “all weather” market conditions and is well spread across sectors with cyclical, sensitive and defensive features. Currently, the top five holdings include a position in private equities, Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL)

How does it perform?

The trust uses a net gearing of 9% and is currently trading on a small discount to its net asset value (NAV). Since Paul took over in 2014, the strategy has delivered an annualised return of 13%, outperforming both its FTSE All World benchmark and the IT Global sector. In discrete terms, the trust managed to outperform its benchmark in four of the last five calendar year periods.

Annual Returns % (GBP) 2015 2016 2017 2018 2019
F&C Investment Trust Price 9.01 23.72 21.05 -0.57 22.89
F&C Investment Trust NAV 7.65 23.79 16.98 -3.35 19.03
Morningstar Global Large-Cap Blend Equity NAV 7.26 21.29 17.05 -4.5 19.93
FTSE World Total Return Index 4.34 29.59 13.34 -3.09 22.81

Source: Morningstar as at 31st December 2019

ii view

F&C Investment Trust features on the ii Super 60 list of high-conviction active and passive investments as a Global Equity recommendation.

The trust offers a sound portfolio of predominantly large cap companies that operate in well-established markets. This, combined with the manager’s long-term investment perspective, makes it a good Core option for investors with a lower risk profile.

In addition, a reasonable dividend yield could provide support for total returns in periods of market turbulence. Last, but not least, the trust has changed its fee structure to a tiered fee model based on market size which makes it very competitive against peers.

If you enjoyed this article, you may also like other funds picked for interactive investor's Super 60 range of high-conviction investment ideas. Click here to find out more.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article. 

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