Seneca Global still expanding – in the six month period ending 30 September 2019, Seneca Global Income and Growth managed to issue a net 1.8m shares, despite posting underperformance of its benchmark over this period.
The trust’s interim results show a -1.6% return on NAV and a -0.8% return to shareholders for the six-month period. The benchmark (6% over the rate of inflation) is designed to encourage positive real returns – its return for the period was 3.7%. The quarterly dividend has been increased by 2.4% to 1.68p.
The chairman notes that the period was a turbulent one for markets. The managers have been steadily cutting the trust’s exposure to equity markets for some years. The manager’s statement spells out why “Investors currently inhabit a world full of extreme valuations and unusual economic conditions. These extremes are causing huge disparities whether they be between value and growth stocks, sterling and foreign currencies or UK domestic earnings versus international earnings. Our process is not designed to capture strong returns when these disparities are growing. It is designed to look through the short-term mindset, position the portfolio appropriately and patiently wait for extreme positions to normalise. Hence we are currently reducing our exposures to valuations that have become stretched as the herd instinct takes hold and moving that capital into the more neglected corners of the market. The extreme highs and lows in stock markets take a long time to build and usually form over a number of years but the reversals tend to be much quicker. We are and will remain prepared for such reversals.”
Two stumbles took over 2% off the NAV between them – the trust held the contractor, Kier Group which dived as investors drew parallels between it and Carillion. It also held Woodford Patient Capital – a case of catching a falling knife as that trust’s NAV and share price continue to be weak.
SIGT : Seneca Global still expanding