Law Debenture investment trust gets a boost from hydrogen

Saloni Sardana looks at recent developments in the Law Debenture investment trust, one of the six funds in MoneyWeek’s model investment trust portfolio.

Law Debenture, an investment trust run by investment manager Janus Henderson, said its portfolio got a boost from its holdings in hydrogen stocks in October. 

The trust’s managers, James Henderson and Laura Foll, said that companies such as hydrogen technology group ITM Power and fuel cell company Ceres Power were the “largest contributors to relative performance” for the month. “The shares rose on a positive outlook for hydrogen fuel cells and electrolysers after the International Energy Agency published a report that was supportive for future renewable energy demand,” they said. 

Hydrogen companies have fared well in recent months as the ongoing energy crisis – which has seen global natural gas prices surge in value – has boosted the idea of hydrogen being part of the solution to moving beyond fossil fuels. Countries accounting for more than a third of the world’s population – including India, Russia and the European Union nations – now have hydrogen strategies in place.

Even with the gains from the hydrogen names, the £981m UK equity income portfolio’s net asset value (NAV) fell 0.3% in the month. But the trust’s discount to its NAV shrank compared to September, and as of 29 October the trust is trading at a 1.1% discount to NAV. The trust’s share price rose from 766p to 771p. 

The Law Debenture Corporation is unusual in that it is an investment trust and also a professional services business. Founded in 1889 and listed on the London Stock Exchange, the trust’s objective is to achieve a higher rate of total return than the FTSE Actuaries All-Share Index Total Return, which rose by 1.8% during the month.

The trust opened a new position in home improvement retailer Kingfisher with the view that the company’s valuation doesn’t reflect “the long-term growth potential of the business”. A position in aerospace company Meggitt was sold following a takeover offer. 

The trust’s top ten holdings hardly changed month on month. GlaxoSmithKline remained the top equity holding, accounting for 2.6% of the portfolio. But Ceres Power, which was not part of the top ten in September, grew to become its seventh-largest equity holding. 

Meanwhile, IP Group, a firm that invests in early-stage scientific companies, was the “largest detractor” from relative performance as its shares underperformed after a change in its long-standing CEO was announced. 

Law Debenture is one of the six trusts in MoneyWeek’s model investment portfolio (read more about that here).

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