Edinburgh Investment Trust shareholders may be disappointed that their return for the year ended 31 March 2022 failed to match that of the All-Share. The problem though was one of a widening discount rather than the underlying NAV return. Over the period, the NAV return was 14.1% to the index’s 13.0%, but the return to shareholders was 10.6% as the discount widened from 4.5% to 7.7%. The discount has widened further since.
The dividend was increased by 3.3% to 24.8p. However, this was once again not covered by revenue. The net revenue per share was 22.4p.
The company’s ongoing charges ratio rose to 0.52% from 0.43%.
The manager says that prominent positive contributors to performance have come from a range of different sectors and industries. The biggest contributors were Anglo American (commodity metal mining), BAE Systems (defence), WM Morrison (the food retailer that was acquired by private equity during the period), Newmont (gold mining), Centrica (gas distribution) and Tesco. It says that it has long considered the ESG issues facing companies such as BAE Systems: to date it has been comfortable with this long-standing holding. Referring to the war in Ukraine, it says that the sad turn of events highlights the important reality of defence spending by western governments. The manager believes that liberal democracy requires defence – and a lot of catch-up spending is in order. BAE Systems is a prime beneficiary.
Negative contributors to performance came from long-standing positions in Mondi (paper production), Hays (recruitment) and Weir (engineering) which had modestly weaker share prices and all of which the manager remains happy to hold. Glencore, another large mining group which performed well and was not held in the portfolio, was also a negative contributor to relative returns.
EDIN : Wider discount holds back Edinburgh