Foreign & Colonial (FRCL) has announced its annual results for the year ended 31 December 2016. During a year that the Trust’s chairman describes as being extraordinary, in terms of political events, stock market returns and sterling weakness, FRCL has provided an NAV total return of 23.9% and a share price total return of 23.7%. The company says that this fell short of the 29.6% delivered by its benchmark, the FTSE All-World Index, which was largely due to a significant reversal in performance within equity markets, with a substantial rally in areas previously out of favour, such as resources and economically sensitive stocks. The Trust’s underweight position in North American, which performed well, and underperformance from stock selection also detracted from returns. Furthermore, the Trust’s exposure to private equity lagged the benchmark’s return over the year, despite posting strong returns. However, the trust says that, while it underperformed listed markets over the year, it performed well relative to our peer group. FRCL’s board a proposing a full year dividend of 9.85p. If approved, this will be the 46th consecutive annual increase.
The announcement does not include detail from the investment managers report or more detailed attribution, so we cannot comment on that here. However, in terms of outlook, the Trust’s chairman, Simon Fraser, says that long running trends in inflation and interest rates may well have turned on a secular basis, with significant implications for investment opportunities across and within stock markets. Despite longer term uncertainty and the unclear political environment, he says that we enter 2017 with some renewed impetus in the global economy and signs of improvement in corporate earnings for the first time in several years. Markets have responded with enthusiasm and the US economy continues to be very resilient.
Foreign & Colonial post strong returns but lags benchmark : FRCL