Bankers promises 6% dividend increase – Bankers Investment Trust says that, for the year ended 31 October 2017, its NAV increased by 16.3%. The share price performance was enhanced as the discount to NAV narrowed, with the share price recording a 23.5% increase. The dividend was upped by 9.4% to 18.6p and the directors are forecasting a dividend increase for the new financial year of at least 6%. Every international portfolio outperformed its local benchmark. The UK portfolio did not. David Smith has taken over the management of the UK portfolio from Alex Crooke.
The manager’s statement says “The US portfolio has been the largest contributor to overall performance in recent years, rising to over 30% of the portfolio value earlier this year, at which point we decided to take some profits. Valuations in the US are at an elevated level, justifiable to some extent by better growth, but as economic activity improved in other parts of the world we felt better value could be obtained elsewhere. These reductions proved to be well timed. The proceeds from US sales were reinvested into Europe and China, and later in the year, Japan. At a stock level, we are beginning to find that better levels of growth globally and the slow normalisation of interest rates is benefitting cyclicals: those stocks that are more attuned to economic growth such as financials and industrials. We have benefitted from the share price appreciation of US technology shares but, towards the middle of the year, started to rotate these holdings into more diversified areas, reducing the potential impact should they start to underperform. Our managers have not had it all their way; smaller companies have performed far better than large and this dynamic impacted performance in the UK and to some extent Europe where we have limited exposure to small companies.
Europe and Asia, including China, have delivered the best absolute level of returns during the year. We continue to believe that these markets can make further progress but the exposure to China, through both mainland and Hong Kong, is getting towards the maximum level that we are able to tolerate. The region can be susceptible to higher levels of volatility and central government control, which means we should not be overly exposed. The deployment of gearing within the Company has been conservative all year and ended the period at 2%. We felt more comfortable retaining cash to take advantage of a market setback, as there have been troubling political and macro events that could easily have resulted in investors withdrawing from markets. In the end, no meaningful fall occurred but we continue to cautiously recycle investments from stocks we feel are expensive into those which offer better value.”
The manager provides a list of the 25 largest holdings. Of those, the greatest contributions to NAV appreciation came from Samsung, Apple and Delphi Automotive. No stock in this list lost money.
BNKR : Bankers promises 6% dividend increase