F&C Managed Portfolio – Big difference in performance of growth and income shares

F&C Managed Portfolio - Big difference in performance of growth and income shares

F&C Managed Portfolio – Big difference in performance of growth and income shares – F&C Managed Portfolio (FMPG & FMPI) has released its results for the twelve month period to 31st may 2018

One company; two portfolios

F&C Managed Portfolio is an investment company that has two investment portfolios. These are F&C Managed Portfolio Growth (FMPG) and F&C Managed Portfolio Income (FMPI).  The two portfolios invest in other investment companies with the aim of achieving a good level of diversification by underlying management style, geography, sector and company. The growth portfolio is managed to provide capital growth and its shares pay no dividends. The income portfolio focuses on offering an income yield above the yield of the FTSE All-Share Index and as of 31 July 2018 its shares had a yield of 4.2%.

Performance

For the year to 31 May 2018, the FTSE All-Share Index rose 6.5% (in total return terms).

Over the same period the NAV of the Growth Portfolio gained 11.0%, whilst that of the Income Portfolio was ahead by 3.0% (both in total return terms).

The manager, Peter Hewitt notes that the disparity in performance between the Growth Portfolio and the Income Portfolio over the past year has never been as wide and indicative of the bifurcated nature of performance that has existed across many global equity markets.

Peter goes on to explain that “particularly in the US and China, new economy stocks, as highlighted by certain technology or internet companies, have experienced extremely strong growth, which has fed through to very strong share price performance.  In contrast, more value orientated stock examples of which could be found in the telecoms, utility or tobacco sectors, have seen their share prices lag mainstream indices. These types of companies are typically quite mature and have above average dividend yields and often form a core element within income or equity income portfolios. Technology or growth companies often do not pay dividends as they require the cash they generate to fund future growth and so investment companies with a dividend requirement will find it difficult to own these types of companies.

The above trend is especially visible in the US and Chinese equity markets but is also in part a factor behind the relative underperformance of UK and European equity markets. There are not many of the growth type of companies described above in the UK and Europe whereas there is a much greater weighting in large financial, telecom, consumer and energy companies which have not performed as strongly in the past year.”

Revenue and dividends

For the year ended 31 May 2018, four interim dividends were paid by FMPI, totalling 5.7p per Income share (5.45p for the previous year).

In addition, the company declared a special interim dividend of 0.8p per income share of FMPI. This was made possible by the receipt of a special dividend from one of our investee companies (3i Infrastructure) and is in line with the investment trust rule to retain no more than 15% of income.

F&C Managed Portfolio – Big difference in performance of growth and income shares

  • Growth shares achieve 11% return in difficult markets
  • Sixth consecutive year that the Growth portfolio has outperformed the FTSE All-Share Index.
  • Dividend for Income shares increased by 4.6% plus 0.8p special dividend
  • Seventh consecutive year of dividend increases

FMPG , FMPI : F&C Managed Portfolio – Big difference in performance of growth and income shares

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