British Assets Trust performs in line with benchmark

British Assets Trust said it had performed on par with its benchmark over the last year, posting a net asset value total return of 17.3 per cent.

Looking forward, the company said equity markets were likely to be volatile in the near term following a year of good returns.

Chairman Lynn Ruddick said the prospects for earnings and dividend growth have fallen in recent months.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"But equities remain attractively valued relative to other asset classes and investors are likely to continue to seek higher quality companies which pay good levels of dividends," she said

"This should be of benefit to the company."

The company's NAV total return matched the return from its composite benchmark index of 80% FTSE All-Share Index and 20% FTSE World (ex UK) Index.

The firm said the biggest impact on performance in the past year was the benefit of gearing in a rising market.

At the end of September the company's level of gearing, net of cash, was 16.4%.

This was represented by 2.9% of equity gearing and 13.5% in corporate bonds.

Its UK portfolio slightly underperformed the FTSE All-Share Index as the out-performance of the core portfolio was more than offset by disappointing returns from the UK satellite portfolio.

The emerging markets portfolio continued to perform well, producing a total return of nearly 19%, but the contribution was partially offset at the asset allocation level by the overweight position to this asset class, which underperformed developed markets.

The trust added that it Global High Yield (ex UK) portfolio met its objective of generating a higher level of income but produced a disappointing total return.