M&G Credit Income delivered a return of 8.08% over 2024, compared to a benchmark return of 9.50%. The share price total return was 14.6%, however, as the shares moved from trading on a 4.2% discount to a 1.6% premium. The dividend was upped from 7.96p to 8.53p. Some of that came from capital as the revenue return was static at 6.0p.

The chair says that the investment manager kept the portfolio defensively positioned throughout the year because it believed, and continues to believe, that credit spreads are not compensating investors for longer term corporate risk; the manager has therefore focused on improving the credit quality of the portfolio rather than seeking higher yield. This strategic decision reduced shorter-term returns, concentrating instead on credits which should perform better through the cycle. Unfortunately, however, in the second half of the year, the portfolio did see write-downs which related to two idiosyncratic and unrelated instances of credit distress, which primarily accounted for the underperformance against the benchmark.

During the year, the company resold all of the 4,126,532 shares held in treasury, which had previously been repurchased pursuant to its ‘zero discount’ policy. In addition, the company issued a further 2,450,000 new shares at a small premium to NAV during the year. Subsequently, including the results of its placing and retail offer under which 6,647,969 new shares were issued, 13,297,969 new shares have been issued since the year end.

[I wrote about the trust for Questor in the Telegraph, behind a paywall unfortunately]

MGCI : M&G Credit Income in demand, manager taking a cautious stance