British Empire going more liquid

Value focused investment trust British Empire Securities and General Trust has much work to do in the second half of its financial year if it wants to outperform its benchmark index.

Net assets at the end of March stood at £761.9m, up 2.9% from the end-September figure of £740.4m. Net asset value (NAV) per share rose by the same percentage to 475.96p from 462.51p six months before.

Revenue earnings per share improved to 4.40p from 1.29p in the corresponding period of the previous year. The interim dividend has been maintained at 2p.

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The NAV total return of the trust over the six month period was 5.69%, which is a sharp turnaround from the 10.31% decline in the year to September 30th, but when compared with the trust's benchmark index, the performance does not look so hot; the Morningstar Investment Trust Global Growth Index's total return over the six months to the end of March was 13.17%.

Worse still, since the end of the reporting period, the trust's NAV has fallen 6.8% and it is small consolation that the benchmark index over the same period has suffered even more, sliding 8.1% on a total return basis.

With performance like that, the trust's investment manager could be forgiven for pulling funds out of the market, and liquidity at the end of March had increased to 16.5% compared to 12.1% six months earlier. As at May 18th, liquidity had increased further, to around 18%.

"Whilst your manager continues to build an excellent store of value in the company's investments, the net asset value only improved modestly from September 2011 to the end of March and, as continuing political turmoil took its toll, had lost these gains by the time of writing this report," Stone Macpherson, the trust's chairman, told shareholders.

"Your board believes that this store of value will become apparent over time and, while closely monitoring the investment portfolio, continues to support the manager in an investment approach which has weathered previous periods of under-performance and demonstrated its merits over the long term," he added.

JH