Law Debenture investment trust update: premium over net assets slips

Law Debenture investment trust (LSE: LWDB), a trust run by investment manager Janus Henderson, and one of the components of the MoneyWeek model portfolio of investment trusts, recorded a fall in its premium relative to its net asset value (NAV, the value of the underlying assets held by the fund).

In the month to 30 April, the trust recorded a premium of 1.01%. This is lower than the previous month where the premium was 1.7%.

The trust’s net asset value slipped by 0.6% in the month to 788p per share, compared to the FTSE all-Share index benchmark’s rise of 0.3%. The trust’s share price fell 796p.

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However, the trust has still outperformed its benchmark index over the last tear, as the trust’s one-year NAV total return (with debt at fair value) was 10.8%, higher than the benchmark’s return of 8.7%.

I3 Energy, an independent oil and gas company, was the largest positive contributor to relative performance as the company benefited from “higher commodity prices and good cost control”.

Large defensive companies such as Unilever, British American Tobacco and AstraZeneca were the largest detractors from relative performance due to the fund’s underweight exposure in these firms.

These companies saw robust performance during the month as fears of higher interest rates and higher inflation continued to accelerate.

The trust said it opened a new position in agricultural and pharmaceutical company Bayer due to it trading at “an attractive valuation”.

Law Debenture added that it believes Bayer is being underappreciated by the market.

The trust closed positions in Glencore and BHP following a period of strong performance. In March, BHP was the trust’s biggest contributor to relative performance.

GlaxoSmithKline and Shell remained the trust’s two top holdings, representing 3.2% and 2.9% of the fund, respectively.

Oil major BP moved up from fifth place, to third place, representing 2.4% of the fund.

British bank HSBC was the fourth biggest holding, representing 2.3% of the fund.

Mining company Rio Tinto fell from third place to fifth place, holding a 2.3% stake in the trust.

National Grid, a British publicly listed utility moved from seventh position to sixth position. The company represents 1.8% of the trust.

British bank Barclays moved from ninth place the previous month to seventh place. It represented 1.8% of the fund.

Miner Anglo American moved from sixth position to eighth place. The mining company represented 1.7% of the trust. BHP Group was omitted from the top ten holdings.

Sewage and water company Severn Trent moved from tenth place to ninth position. The company’s stake in the company was worth 1.7% of the trust.

Insurer Aviva, which was not part of the trust’s top ten holdings in March, took the tenth spot, representing 1.6% of the trust.

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.