Majedie has announced its interim results for the half year ended 31 March 2016. During the period the trust provided an NAV total return of 3.4% although, reflecting a widening of the discount during the period, share price total return was -0.7%. In comparison, the FTSE All-Share Index and MSCI World Index rose 3.5% and 10.9% respectively. In terms of income generation, the trust had a revenue return of 5.0p and paid a dividend of 3.0p.
The trust has, at times, traded at a premium during the period but finished the period end at a discount. The board say that, in general this reflects widening discounts across the Investment Company Sector due to volatile markets and the European Referendum and specifically a large institutional shareholding in the Company has been transferred to a new fund management group with whom the Company is seeking to establish a dialogue.
The Trust invests through a number of investment strategies managed by Majedie Asset Management (MAM) and retains an equity holding in the company. Reflecting this, the trust has no overall benchmark; rather each fund has its own benchmark. The Company’s total assets were £187.0m at 31 March 2016. The largest asset allocation of £55.8m, which represents 29.9% of the Company’s total assets, is in a segregated fund that is managed alongside the MAM UK Equity Fund. The funds are predominantly invested in UK equities with overseas equities limited to 20% and the strategy incorporates a dedicated allocation to UK smaller companies. In the six months to 31 March 2016 the fund returned 0.9% net of fees, which is an underperformance of 2.6%.
The MAM UK Income Fund, which was started in December 2011, has an objective is to maintain an attractive yield whilst outperforming the FTSE All-Share Index The trust has an allocation of £20.0m which represents 10.7% of total assets. In the six months to 31 March 2016 the fund returned -0.7% net of fees which is an underperformance of 4.2%.
The MAM Tortoise Fund is a global absolute return fund which started in August 2007 and since inception has returned 8.7% per annum net of fees. The Company has an allocation of £28.7m, which represents 15.4% of the Company’s total assets. The fund returned 4.4% net of fees in the six months to 31 March 2016 and, as it is an absolute return fund, the managers say that it has no relevant benchmark.
The MAM Global Equity Fund, MAM Global Focus Fund and MAM US Equity Fund were launched in June 2014 and have returned 16.7%, 18.2% and 31.3% net of fees in the Sterling share classes, which represent an outperformance against their benchmarks of 2.7%, 4.2% and 3.5% respectively. The benchmarks are the MSCI ACWI and the S&P 500 in Sterling terms. The manager says that these returns have benefited from the weakness of Sterling, though this has no effect on relative returns. The Company has allocations of £16.2m, £5.9m and £6.6m to the MAM Global Equity Fund, MAM Global Focus Fund and MAM US Equity Fund, which represent 8.7%, 3.2% and 3.5% respectively of total assets. In the six months to 31 March 2016 the funds returned 11.7%, 9.2% and 10.0% net of fees, which represents an outperformance of 0.8% in the MAM Global Equity Fund and an underperformance of 1.7% for the MAM Global Focus Fund and 3.9% for the MAM US Equity Fund.
In terms of Majedie’s holding in MAM, the board say that MAM’s assets under management have risen slightly to £11.4bn. They say that the relatively new Global and US funds have yet to materially influence the total assets under management, but that the early signs are encouraging. As part of a new agreement with MAM, Majedie did not sell any of its shares in MAM in December 2015 and so the Company’s holding is 16.7% of MAM. The Board has increased its valuation to £53.2m, which represents 28.5% of total assets, having also received a dividend of £2.0m in December 2015.
Majedie sees NAV perform in line with FTSE All-Share but underperforms global markets : MAJE