Caledonia Investments full year NAV jumps

Caledonia Investments increased net asset value, after strong gains across its investment portfolio, but noted that markets will be left vulnerable as quantitative easing measures are wound down.

The FTSE 250 international investment trust said net asset value per share total return rose to 18.9% from minus 7.0% a year earlier.

Pre-tax profit stood at £201.9m compared to a loss of £95.6m while revenue increased to £39.4m from £33.3m the last time.

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Net asset value per share climbed to 2299p from 1977p before.

Chief Executive Will Wyatt said: "This has been a strong year for the company, in which our shareholders have seen a 19% total return, capping a 202% return since we became an investment trust ten years ago."

"The actions we have taken over the last three years have ensured that we have a balanced portfolio tailored to our shareholders' requirements and capable of delivering long term outperformance in the current macroeconomic environment."

Commenting on the economic outlook, Caledonia added: "Economic growth in developed markets is proving to be slower than governments would like, but in response central banks globally are cutting rates to historically low levels to stimulate growth, though with modest success."

"Thus a degree of stability has been created to allow time to deal with structural problems. Central bank initiatives via QE are driving holders of cash to reinvest in risk assets due to negligible bank interest rates, which leave markets vulnerable to the eventual withdrawal of QE stimulus."

Caledonia noted that inflation remains the key risk that could derail current stimulus efforts, though is probably some way off.

Otherwise it said markets are currently responding positively to policy initiatives, but "clearly remain vulnerable unless economic growth gains traction in the coming year."

The company has recommended a 10% increase in its annual dividend to 47.2p per share.

CJ