The 143-year-old Foreign & Colonial Investment Trust (LSE: FRCL) may be an unfashionable investment choice, but its 16.9% return over the past year shows the trust is holding up well in its old age. The trust's performance holds up over the longer term too, with a 36.6% return over five years, comfortably ahead of the 28.6% gain seen in its benchmark, the global growth sector. Better still, the £1.8bn trust trades at a 9.3% discount to net asset value (so you can buy almost £1 of assets for 90p), and also pays a 2.2% dividend yield.
The trust's private-equity portfolio has helped it deliver a solid performance in the first half of 2011 it rose 11% and cash realisations from its private equity investments grew significantly. "We are on the cusp of seeing significant cash returns from our private-equity funds and our highly diversified listed portfolio gives us exposure to many growth opportunities," said Simon Fraser, chairman of the trust's board, when the trust announced its first-half results.
Another key factor that helped, says Nick Goodway in the Evening Standard, was that long-time manager Jeremy Tigue spotted last year "that many companies were in a position to start raising their dividends well above inflation". As a result, the trust collected £31.9m in dividends in the first half of 2011, up from £24.9m the year before.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely 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
Tigue isn't an outright bull. "None of the problems that have worried investors have been resolved" and stockmarkets will remain "directionless", but "profits and dividends are rising, and alternatives to equity investing look very unattractive".
Contact: 0800-136420.
Foreign & Colonial Investmenttop ten holdings
| Pantheon Europe Fund III | 2.90% |
| Pantheon Europe V | 2.40% |
| Harbourvest V Direct Fund | 2.30% |
| Vodafone Group | 2.10% |
| Rio Tinto | 2.00% |
| HSBC Holdings | 2.00% |
| GlaxoSmithKline | 1.90% |
| BP | 1.80% |
| Harbourvest Buyout Fund VII | 1.60% |
| British American Tobacco | 1.50% |
-
Going part-time could leave a £58,000 hole in your pension: how to plug the gapThere are many reasons for switching to part-time work, but some savers don’t consider the impact on their pension until it is too late
-
Three bargain investment trusts to add to your portfolioThese three investment trusts are bargains compared to their net asset value (NAV), but one fund analyst thinks the deep discounts are unwarranted.
