F&C Investment Trust (FCIT) disappointed shareholders in the first half of the year by underperforming its benchmark, the FTSE All-World Index, and offering poor returns.

One of the oldest collective investment trusts (founded in 1868) reported a 4.7% rise in net asset value which lagged the 7.5% return from its benchmark for the six months ending 30 June 2023.

Its shares were down over 1% in morning trading at 869p and year-to-date they have fallen 4.5%.

TOUGH ECONOMIC CLIMATE

The company blamed macroeconomic issues for its lacklustre performance including ‘stubbornly’ high inflation and a hawkish Bank of England.

Sterling rose by 5.1% against the US dollar over the six months. ‘This had the effect of reducing the return from our investments in overseas assets. For our private equity holdings, the value of our investments fell by 4.1%, partly reflecting the impact of these currency movements,’ F&C said.

INVEST FOR THE LONG-TERM

F&C chairman, Beatrice Hollond attempted to reassure shareholders about the investment trust’s long-term performance after it reported a negative shareholder total return of -2.6%. The situation was partly to do with the trust’s discount to net asset value moving out from 3% to 9.8%.

Hollond said: ‘The valuation excesses in markets overall appear relatively contained and it now seems likely that the US may avoid recession. Against this background your manager (Paul Niven) will continue to adopt a diversified approach and remain focused on the longer-term opportunities as they emerge.’

F&C aims to generate long-term growth in capital and income by investing primarily in an international portfolio of listed equities. The portfolio is diversified across over 300 holdings.

Despite its disappointing recent performance, the trust remains popular among retail investors. Over the past 20 years it has delivered more than double the total return of the FTSE All-Share at 669% versus 313% respectively, according to FE Fundinfo data.

Income risk remains 'significant', warns Octopus

EXPERT VIEW

Stifel analyst Iain Scouller explains why he believes F&C underperformed its benchmark in the first six months of the year: ‘There was a negative impact from stock selection as well as a drag on performance from allocation to private equity, which underperformed listed markets. Overall relative performance of listed strategies was negatively impacted by an underweight position in many of the names which drove the first half rally.’

LEARN MORE ABOUT F&C INVESTMENT TRUST

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