Capital Gearing Trust PLC on Friday announced the forthcoming retirement of Chair Jean Matterson, and said it was ‘too cautious’ after lamenting its underperforming net asset value.

Shares in Capital Gearing traded 0.1% lower at 4,720.59 pence on Friday morning in London.

The Belfast-based investment trust targets long-term growth in shareholders’ assets through investing in a range of commodities, equities and bonds.

Net asset value per share was 4,810.5p at March 31, up 0.3% from 4,797.3p a year prior. Capital Gearing declared a dividend of 78p per share for financial 2024, up from 60p for the previous year.

Capital Gearing said this represented a positive 1.8% return for the year to March 31, compared with the negative 3.6% return delivered for the previous year.

However this, Chair Jean Matterson said, was ‘far from satisfactory’ next to the consumer price index or CPI, which delivered a total return of 3.2% over the same period.

CG Asset Management Ltd, the firm’s investment manager, explained: ‘We began the year defensively positioned and, as things turned out, were too cautious’ since concerns surrounding interest rates and inflation ‘much stickier than markets expected’ were only partially founded.

‘As it turned out, the spat of bank failures in the spring of 2023 were contained with little spillover into other markets,’ CG Asset Management added.

Chair Matterson meanwhile commented: ‘The worst inflationary episode since the 1970s has resulted in a significant reset in the bond market. Whilst this has proved a headwind for the company over the last two years, dramatically higher yields will also result in improved medium term returns.

‘Close to 70% of the portfolio is invested in a range of high-quality bonds all now yielding well in excess of inflation. These should underpin returns for the next few years.’

Matterson further said that ‘investment trust discounts, which recently hit lows last seen in the global financial crisis, are showing tentative signs of improvement.

‘The investment manager believes this is a compelling opportunity and that the company’s exposure to this corner of the equity markets can, over time, deliver strong returns without undue risk.’

Also on Friday, Capital Gearing announced that Matterson will retire at its 2025 annual general meeting.

‘We have commenced a recruitment campaign and hope that we will be able to announce the outcome in the next few months,’ said Matterson, who joined the board as a director in May 2015 and was promoted to chair in early July 2020.

‘To avoid two long-standing directors standing down at the same time and facilitate an orderly handover, my colleagues have asked me to remain on the board for a further period of one year,’ she added.

Capital Gearing had announced last year that Senior Independent Director Robin Archibald would retire, following the upcoming AGM in July.

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