Troy Income and Growth lags benchmark – Troy Income and Growth reports an NAV total return of +4.3% and a share price total return of +4.5% for the year ended 30 September 2016, lagging the All-Share Index, which returned +5.9%. Dividends for the year totalled 2.665p, a 4.1% increase on the prior year.
The company shrank a little as it repurchased a net total of 2.5% of the shares in issue at the beginning of the year. A fall in the size of the company led to a modest increase in its ongoing charges ratio – to 0.96%.
Extract from the manager’s report
“The strong market rally in April led to positive returns from the portfolio, although it lagged the market slightly. Q2 upside was dominated by the energy sector, with the oil majors Shell and BP posting total returns >20%, as crude oil prices climbed on the back of continued supply discipline, solid demand, and the US’s withdrawal from the Iran nuclear accord. All but one sector for the portfolio posted positive returns in the quarter, with notable strengths in the American financials Wells Fargo and American Express, and the fashion retailers Burberry and Next. The latter two have been rare positives amidst a rout on the UK high street this year, with a number of household names coming under severe pressure, including Debenhams, House of Fraser, John Lewis, HomeBase, Mothercare, New Look, and Maplin, none of which investors in the Company have direct exposure to.
Information Technology was the one detracting sector in the quarter as the accounting software business Sage did not participate in the rally. Our long-term holding in Sage has had a very poor 2018, with slowing organic growth and margin pressure knocking the share price. The position was exacerbated at the end of August with the surprise announcement that CEO Stephen Kelly, who has held the role since 2014, was resigning. Kelly has been a driving force behind Sage’s focus on specific and arguably demanding growth targets. We hope his departure allows the business to ease off what has latterly appeared to be a ‘growth at all costs’ culture.
In the Company’s final quarter, the portfolio posted a pleasing positive return in a down market. The biggest relative and absolute contributors were in the Financials and Consumer Staples sectors. The top stock was Jardine Lloyd Thompson, buoyed by the news in September that the insurance broker had accepted a bid from their giant US competitor Marsh & McLennan. The acquisition of a long-term, high-quality holding is often bittersweet; while we are sorry to see JLT go, the 34% premium in the purchase price represents a welcome final boost to shares we have been well rewarded to hold since 2011 (originally purchased at GBP6.19). It was also pleasing to see our stolid consumer staples holdings return to form in a weak market, with Reckitt Benckiser and Nestlé in particular posting strong returns.”
TIGT : Troy Income and Growth lags benchmark