Global sector company, F&C (FRCL), has reported its annual results to 31 December 2019. The company’s growth and income mandate is carried out through investments in public market, unquoted investments and private equity. With a market cap above £3bn, it is among the largest closed-end investment companies and was the first investment trust to launch, back in 1868.
- FCIT’s NAV total return gained 19.1%, with debt at market value. Private Equity performance and some underperformance from some listed portfolio strategies, held the NAV returns below benchmark;
- FCIT’s share price was 765.0 pence representing a total return of 22.9%, ahead its benchmark, the FTSE All-World Index, of 22.3%; and
- The shares ended the year at a premium of 1.5% having opened the year at a discount of 1.5% and averaging a 2.2% discount overall.
Exposure to listed equity markets delivered strong gains, whereas the private equity holdings produced marginally positive returns due to declines in value of the residual mature funds of funds holdings and Syncona. FCIT noted that the newer commitments to private equity produced satisfactory returns. Private equity has a strong record of delivering higher returns than listed equities in FCIT’s portfolio and the trust says it expects this to continue.
FRCL’s performance by strategy is shown in the following table:
| wdt_ID | Investment Portfolio Strategy | Portfolio strategy weighting % | Underlying geographic exposure % | Benchmark weighting % | Strategy performance in Sterling % | Gross index performance in Sterling % |
|---|---|---|---|---|---|---|
| 1 | North America | 43.90 | 54.30 | 57.20 | 22.80 | 26.50 |
| 2 | Europe inc UK | 15.00 | 24.20 | 19.00 | 24.00 | 20.00 |
| 3 | Japan | 7.40 | 8.70 | 7.70 | 11.30 | 14.80 |
| 4 | Emerging Markets | 9.50 | 11.10 | 12.30 | 9.30 | 14.30 |
| 5 | Developed Pacific | 1.70 | 3.80 | 0.00 | 0.00 | |
| 6 | Global Strategies | 16.50 | 20.50 | 22.30 | ||
| 7 | Private Equity | 7.70 | 0.20 |
FRCL’s chair, Beatrice Hollond, said:
“Global equity markets have fallen sharply in recent days, in stark contrast to 2019 when they delivered annual returns which ranked among the strongest in decades.
Our exposure to listed equity markets delivered strong gains but our Private Equity holdings, which by their nature as unlisted investments will always lag valuation changes reflected in listed markets, produced only marginally positive returns. Our newer commitments to unlisted exposure produced satisfactory returns but our holdings in Syncona and residual mature funds of funds declined in value. Underperformance of the Private Equity exposure as a whole was driven by the valuation declines of these particular funds. Private Equity and underperformance from some of our listed strategies, notably North America and Emerging Markets, left our NAV total return below benchmark. Private Equity has a strong record of delivering higher returns than listed equities in FCIT’s portfolio and we expect this to continue to be the case over the longer term.
The rise and spread of COVID-19, coronavirus, has seen increased risks of widespread economic disruption with simultaneous demand and supply side shocks for global and corporate earnings. This is being reflected in substantial falls in equity markets worldwide. We expect that policymakers will attempt to contain both the economic and financial market impact through concerted monetary and fiscal easing. As at 12 March 2020, FCIT’s NAV per share was 586.6 pence per share, a fall of 22.2% since 31 December 2019. The share price fell by 24.6% to 577.0 pence per share. FCIT has weathered many a crisis throughout its long history and even though there are likely to be economic and equity market challenges in the near-term, the company has a diversified portfolio that is well placed to cope with market shocks and short-term volatility. There are risks and there will be opportunities. Shareholders can be assured that, at all times, we will retain our focus on delivering growth in both capital and income over the longer term.”
FRCL: F&C reports annual results and update on covid-19