F&C Capital and Income Trust, chaired by Steven Bates (pictured), has announced its final results for the 12-months ended 30 September 2015. During the year the company’s NAV and share price total returns were 3.5% and 3.1% respectively, beating the trusts benchmark index, the FTSE All-Share, which fell 2.3%. The dividend has also been increased for the twenty-second consecutive year. A fourth interim dividend of 3.2p per share will be paid on 31 December 2015 bringing the total dividend for the year to 10.10p, an increase of 2.5%.
In terms of performance attribution, the announcement doesn’t provide extensive detail but does say that the portfolio has employed less risk than the market to achieve this result. Specifically, an underweight position in the mining sector was positive although, within the sector, the portfolio held the more attractive businesses and in the financial service sector very good stock selection combined with an overweight position produced large net gains. On the downside, the company says that Raven Russia suffered from the emerging markets malaise and Interior Services had contractual difficulties and so was also a notable detractor.
In terms of outlook, the board say that normalisation of interest rates is still some way off and despite the rhetoric, the UK budget deficit remains troubling, in their view. They say that, in their opinion, UK stock markets are not especially expensive by global standards, and there is no reason to suspect that domestic developments will be anything other than mildly benign. However, they believe that, given that the effect of unorthodox monetary policy seems to be waning, the market is becoming increasingly sensitive to the tide of global events. This partly reflects the highly international dimension of the UK’s major businesses, but also the increasing correlation of global markets, itself probably a reflection of monetary policy worldwide. The board say that, whilst it difficult to attempt to forecast anything, it does seem likely that interest rates will soon rise in the US even though the economy is not especially robust, while elsewhere the economic status quo ante looks set to persist.
F&C Capital & Income grows dividend for 22nd consecutive year : FCI