Capital Gearing has announced results for the year ended 5 April 2015. Over the year the net asset value grew by 5.7% but the share price fell by 0.7% as the shares moved to trade on a lower premium to asset value. The dividend was increased by 25% to 20p.
The persistent premium that the fund has traded on has at times been excessive and the Board has now decided to adopt a zero discount policy – issuing shares to meet unsatisfied demand and reduce the premium and buying them back if the company trades at a discount.
The fee basis will change so that the current investment management fee of 0.6% would reduce to 0.45% on incremental NAV above £120m and below £500m. The fee on assets above £500m would further reduce to 0.3%.
One other change that they are considering is to hold a greater proportion of any allocation to equity markets in ETFs and open-ended funds – the idea behind this is that they would then have the liquidity in the portfolio to meet possible buy-back requirements.
An investment in Strategic Equity Capital was amongst the best performers over the period but the best returns came from their holdings of US index-linked bonds. They have been decreasing the duration of their bond investments (shifting into bonds whose returns are paid out sooner). One investment that detracted from performance was their holding in Renewable Energy Generation – the UK wind power company.
CGT : Capital Gearing to adopt zero discount policy