Foreign & Colonial had a good 2014 but returns were below those of the FTSE All World Index. The total return on net assets was 10.3%, comprising a 7.9% uplift in the NAV and a 9.3p dividend, up 3.3% on the previous year. The index returned 11.3%. The return to shareholders was 13.5%.
Over the first half of the year they were underweight the US market (which was the main driver of the good returns on the FTSE All World Index) and they say this accounts for much of their underperformance.
The fund’s 25-year debenture matured at the end of the year. This long-term debt was an enormously expensive mistake on the part of a previous Board as it cost them 11.25% per annum. The loan has been replaced with short-term borrowings costing between 0.66% and 1.32%. They say they are thinking about locking in medium to long-term borrowings at low cost.
FRCL : F&C mulling new long term debt