Interactive Investor

Temple Bar re-enters FTSE 250 index as value style starts to shine

12th March 2021 11:23

Kyle Caldwell from interactive investor

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Since RWC Partners took over the trust just over four months ago, performance has markedly improved. 

Temple Bar (LSE: TMPL) has re-entered the FTSE 250 index in place of TalkTalk Telecom Group (LSE:TALK), which has been taken over by Tosca IOM Limited. 

The trust, which invests in UK value shares, was booted out of the index last September ahead of the board changing management group from Ninety One (formerly Investec) to RWC Capital Partners. Under its new fund managers, Nick Purves and Ian Lance, the trust’s investment objective and value investment approach remain unchanged.

Since RWC Partners took over the trust (30 October 2020), performance has markedly improved. The trust’s share price has risen 61.4% from 700p to 1130p. Signs of a market rotation taking place following announcements about viable vaccines in November has proved a helpful tailwind.

Ahead of RWC Partners being appointed, Temple Bar had been hit hard by how the UK market responded to the coronavirus crisis. From the start of 2020 to the beginning of September, its share price halved.

Long-standing manager Alastair Mundy stepped down from managing the trust in April for health reasons, leading the board to search for a replacement and appoint a different fund management group.

Commenting on Temple Bar’s re-entry into the FTSE 250, Arthur Copple, chairman of Temple Bar, said: “The board is very happy with the recent performance of the trust, both in net asset value (NAV) and share price terms, with the recent promotion being a recognition of the considerable effort that we and the manager have made to offer something different to investors. 

“The managers believe that, despite the significant returns the trust has delivered to our shareholders since they took over Temple Bar, the valuations of many of the stocks in the portfolio are still looking incredibly cheap.”

What is the FTSE 250 index, and why do promotions and relegations matter?

The FTSE 250 is a market capitalisation-weighted stock market index which tracks the largest 250 companies listed on the London Stock Exchange (LSE) outside the FTSE 100 index.

It is not the FTSE 100 plus an extra 150 companies. Instead, the index is the next largest 250 companies on the LSE after those in the FTSE 100.

When companies are promoted to the index, their share prices tend to bounce higher, due to the fact that passive funds or exchange-traded funds (ETFs), which aim to replicate the performance of the index, are obliged to buy into them.

The reverse is true of stocks being demoted; share prices fall as tracker funds automatically unwind their positions.

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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