Seneca Global Income & Growth Trust has published its interim results for the six months ended 31 October 2016. The fund generated a net asset value per share total return of +10.1% for the six months to 31st October 2016 and the share price total return was slightly lower at +9.8%, both much better than the benchmark return of +1.8% (3-month LIBOR plus 3%). They paid two interim dividends of 1.52p per share for the period, an increase of 3.4% on the equivalent dividends last year. It is the Board’s intention, barring unforeseen circumstances, that it will at least maintain the quarterly rate of 1.52p per share for the full year to 30 April 2017.
Positive contributions to returns were made from all major asset classes. However, the UK equity performance was well below the benchmark, with mid-sized companies, in which the UK portfolio is largely invested, underperforming their larger brethren. Overseas equity managers in general produced good absolute returns but have struggled to match their respective local indices over the period. A drag on returns came within the European equity investments, which were hurt by the currency hedged position held going into the Brexit vote, which amounted to around 65% of the Euro exposure (this hedging was subsequently reduced to around 25%).
The largest positive contribution came from Fair Oaks Income Fund, which benefitted from an uplift in net asset value, a very high dividend yield together with exposure to the US dollar in which its assets are denominated. It is perhaps unsurprising that the Asian funds were also amongst the most positive contributors, with Japanese equity and commodity related equity holdings also providing solid contributions.
The major detractors from returns all came from within the UK equity portfolio. Concerns over the ability of UK retailers to pass on increased import costs due to weaker sterling undermined investor confidence in Halfords and Marks & Spencer, with similar worries also afflicting Britvic. Senior and BT Group both fell on company specific issues, which they felt presented a further buying opportunity in both companies, as they took a long-term view of their prospects.
SIGT : Seneca Global Income & Growth posts decent returns despite UK mid cap exposure