Investment Companies Monthly Roundup

Kindly sponsored by Baillie Gifford and abrdn


After a second year of navigating the uncertainty and volatility caused by the coronavirus pandemic, 2022 ended with an outbreak of the latest variant, Omicron. Though reportedly a milder version, the virus has proven extremely contagious, and lockdowns and restrictions have once more been imposed in various countries across the world. December’s median total share price return was 2.4% (the average was 2.2%) which compares with a median of 0.7% in November. Readers interested in the most recent briefings from the industry can click here to access our economic and political roundup.

Best performing sectors over December

In terms of top performing investment companies for December, property trusts did well, with those in both logistics and residential sectors making share price gains, though NAVs remained, on average, flat. Latin American trusts made somewhat of a comeback after falling for the bulk of 2021 while global equity income names also performed well.

Worst performing sectors over December

On the other hand, China, Japanese smaller companies and commodities & natural resources trusts were weak in December, ending on a low after what had already been a generally tough year for these sectors. The worst sector for the month however was insurance & reinsurance strategies (see Appendix 1, below, for a breakdown of how all the sectors have performed this year).

On the positive side

After years of underperformance and being underappreciated, UK trusts dominated the best-performing tables in December in NAV terms, with BMO Capital & Income, Aberforth Split Level Income, JPMorgan UK Smaller Companies, Fidelity Special Values, Chelverton UK Dividend and Mercantile among the top ten. This reflects the UK market in general, which had a good month and which saw the MSCI United Kingdom index up by 3.2% in December. Despite Omicron woes, restrictions were not implemented at the same level as previously seen, and so consumers could get out and about and spend in shops, restaurants and the like, in the run-up to the holiday season. Though its sector was hit in December, BlackRock World Mining navigated the storm and performed strongly, while Securities Trust of Scotland enjoyed a boost following the publication of its good interim results. In share price terms, property trusts led the way, with Schroder European Real Estate, Home REIT, Ediston Property Investment Company, Residential Secure Income and Urban Logistics REIT all enjoying returns of above 10%. Private equity names Standard Life Private Equity and Seed Innovations also performed strongly in December, with the latter at the top of the list after its discount narrowed as its portfolio holding, Yooma Wellness, reported strong growth and operational progress.

On the negative side

On the negative side, Japanese Smaller Companies and China trusts took a hit, as already highlighted, with names such as JPMorgan Japan Small Cap Growth & Income, Baillie Gifford Shin Nippon, JPMorgan China Growth & Income and Baillie Gifford China Growth all down in NAV terms. Worries over China’s heavily indebted property development sector and new lockdowns as China attempts to control the spread of Omicron generated growth fears. Omicron, rising fuel costs and a decision by the Bank of Japan to reduce its support for the economy all weighed on that market. In share price terms, Macau Property Opportunities was the worst performer as it asked shareholders to extend its life to allow the piecemeal sale of its Waterside apartment complex rather than a quick sale of the whole block. This company has been in wind down mode for many years now. Baillie Gifford managed funds, including market-leader Scottish Mortgage, feature prominently. It has been suggested that the prospect of rising interest rates is denting valuations of high growth companies. Hedge fund Third Point Investors was in the news a lot over the month. Asset Value Investors and others have been trying to encourage it to narrow its discount. However, they were knocked back and the discount has widened once again.

Discounts and premiums

More expensive and cheaper relative to NAV

Seed Innovations become more expensive in December as its overly-wide discount narrowed by almost half to 26.2%. Strong growth prospects from one of its key holdings, Yooma Wellness, gave the trust a boost. Meanwhile Home REIT saw its 5% premium shoot up to 20.6% over the month, while new kid on the block, Thomas Lloyd Energy Impact has kicked off its life on an attractive double-digit premium. Standard Life Private Equity and Caledonia Investments enjoyed their mid-20s discounts narrowing to 13.1% and 16.2% respectively during December, helped by good performance over 2021. Meanwhile, Downing Strategic Micro-Cap became cheaper in December, with its 9.6% discount widening to 18%. The manager reported on a tough period in its interim results while inflation, interest rates and supply chain issues continue to be concerning. BMO UK High Income, whose defensively focused portfolio struggled to make headway in 2021, saw its 4% discount more than double to 11.2% while Petershill Partners, which only launched in October and is not well-understood by investors we think, seems to have taken a hit, now trading on a discount of 21.6%.

Money in and out

Money coming in and going out

£1.2bn of net new money was raised in December following a combination of IPOs and fundraises. Greencoat UK Wind raised the lion’s share of £450m – an impressive total for a secondary issue, which will be used to fund its recent offshore wind farm investment – while Urban Logistics REIT enjoyed an oversubscribed fundraise of £275m despite targeting gross proceeds of £200m. It ended the year purchasing four new assets with the proceeds. The one IPO during the month was that of new Asia-focused renewable energy infrastructure trust, Thomas Lloyd Energy Impact, which raised $115.4m in cash and also issued about $35m of stock in exchange for assets, while Octopus Renewables Infrastructure and VH Global Sustainable Opportunities also raised around £70m each.

At the start of the month, Amedeo Air Four Plus handed back almost £30m to shareholders which it received following the sale of two planes last September and had been holding on to for financial flexibility but has since decided it is no longer needed. Share buybacks were led by Witan, Polar Capital Technology, CVC Credit Partners European Opportunities and BMO Commercial Property.

Recently published research notes

North American Income Trust – Healthy dividend increases

Unlike its AIC North America peers, North American Income Trust (NAIT) combines an income focus with having at least 90% of its assets invested in the US. After more than a year of uncertainty around dividends, things finally seem to be normalising, with some companies even increasing their dividends. Over the past year NAIT’s manager, Fran Radano, has found good value in stocks with slightly lower dividend yields than would previously have been expected for a NAIT holding, but these companies offer greater opportunities for capital appreciation and often-times double digit dividend growth. These are complemented by high yielders with more modest dividend or earnings growth.

Grit Real Estate Income Group – Showing some grit

Grit Real Estate Income Group (Grit) has taken decisive action to secure its future with the announcement of a proposed capital raise of up to US$215.6m. The group’s portfolio has suffered heavy valuation declines during the COVID-19 pandemic, especially in the retail sector, which has seen its loan to value ratio (LTV – borrowings plus cash as a percentage of portfolio valuation) soar to 53.1%. The proceeds of the equity raise will be used in two parts: firstly to pay down debt and secondly to acquire a controlling stake in a real estate developer, which has an attractive pipeline of projects including diplomatic residences let to the US government. If fully subscribed, the issue will not only result in the LTV dropping to 33.6% but will allow Grit to address its short-dated debt and be a catalyst for a re-rating of the discount to net asset value (NAV).

Temple Bar – No compromise

The turnaround in Temple Bar (TMPL)’s fortunes following the appointment of RWC as manager last November and a surge in ‘value’ stocks on hopes of an end to the COVID-19 pandemic has been dramatic. Frustratingly, the discount that the trust’s shares trade on relative to their net asset value widened from the middle of April 2021, as investors fretted about the impact of new variants of the virus and switched back to buying ‘growth’ companies for their perceived ability to thrive even in a lacklustre economy.

India Capital Growth – The show must go on

India has attracted a lot of attention over 2021 as it has outperformed even the US, despite suffering from one of the deadliest waves of the COVID-19 pandemic earlier this year. Combined with improved stock selection and its new investment policy, India Capital Growth (IGC) has also seen its performance shine through.

The adviser, Gaurav Narain, highlights the start of a new economic cycle and the returning of profitability to Indian corporates, which had previously been at all-time lows. Meanwhile India is also benefiting from extra capital via the China Plus One strategy (a strategy where companies seek to diversify their supply chains beyond China so as to reduce risk) and a government that is now prioritising growth over reform and giving extra support to private companies. These developments are particularly timely as IGC can enjoy increasing traction ahead of its redemption vote at the end of the year.

Vietnam Holding Limited – Asia’s emerging champion

Since we last published on Vietnam Holding (VNH), the Vietnamese economy has gone from strength to strength, lifting the country’s equity markets, which are among the best performing globally year-to-date (YTD). VNH has captured this and more – outperforming local and global indices, and its direct competitors. Despite this impressive performance, there is still much to go for – attractive valuations (despite the strong earnings growth potential); domestic income that has passed US$3,000 per head (which the manager identifies as an inflexion point from which it could accelerate); a boom in exports as multinationals continue to diversify their supply chains; further benefits to come from privatisation; and, over the medium term, the potential for Vietnam’s elevation to the MSCI Emerging Market index. With its decent track record and strong environmental, social and governance (ESG) focus, we see room for VNH’s currently double-digit discount to narrow from here.

Bluefield Solar Income Fund – Executing on revised objective

Since we last published on Bluefield Solar Income Fund (BSIF), the company has raised £105.1m in an oversubscribed share issue, and completed on the purchases of its first wind and battery storage investments. The company’s financial results, covering the 12-month period ended 30 June 2021, were encouraging. BSIF hit its 8p per share dividend target comfortably, maintaining its record of sector-leading distributions that are well-covered by underlying earnings (after paying back debt as it falls due for repayment). A high proportion of government subsidy income (designed to encourage the development of solar power in the UK) means that BSIF’s revenues already have a high degree of predictability and inflation-linkage.

JPMorgan Japanese Investment Trust – Bright long-term future

JPMorgan Japanese Investment Trust (JFJ) had an impressive run of both absolute and relative (to its benchmark index and to competing trusts) performance going into and during the worst of the pandemic. However, once vaccines became a reality, the share prices of businesses that had struggled during lockdowns surged. These were often the types of company that the managers would not consider for JFJ’s growth- and quality-focused portfolio. Consequently, over the past 12 months, JFJ has produced decent returns, surpassing £1bn in assets, but has given up a little of its outperformance of its benchmark.

The management team of Nicholas Weindling and Miyako Urabe is unfazed by this. They make the compelling argument that an investor in JFJ is backing the companies that are set to disrupt and revitalise Japan’s sclerotic economy, which are also capable of compounding their earnings sustainably over the long term. The long-term future is bright.

BlackRock Throgmorton – Powering on

BlackRock Throgmorton Trust (THRG)’s results for the accounting year ended 30 November 2021 will not be published for a while yet, but it looks as though THRG has had another great year, with its net asset value (NAV) and share price returns well above peer group averages and its benchmark.

It might have been reasonable to think that the resurgence in sectors hit badly by COVID (retail, leisure, banks, energy and mining, for example) – areas that THRG tends to have little or no exposure to – would have provided a significant headwind. However, this has not been the case and THRG manager Dan Whitestone says that the trust’s good performance reflects the success of the companies in the portfolio. He remains enthused about their prospects.

Jupiter Emerging & Frontier Income – When the going gets tough

Emerging markets have struggled to make headway over the course of 2021, but Jupiter Emerging & Frontier Income (JEFI), helped by its frontier market exposure, has been one of the winners within its peer group. Manager Ross Teverson’s long-held view that better value is available outside of China has worked in the trust’s favour, while its allocation to frontier markets offers an opportunity otherwise not available in the majority of its peers’ portfolios.

Headwinds in the form of inflation, potential interest rate rises and rising energy prices do exist, but the manager’s bottom-up approach – which combines value and growth elements – offers some resilience from the strength of the underlying portfolio’s balance sheets and earnings growth. We also note that JEFI is the top-yielding trust within the AIC’s Global Emerging Markets sector.

Urban Logistics REIT – In the sweet spot

It has been a whirlwind few months for Urban Logistics REIT (SHED) as it continues to grow rapidly in one of the best-performing real estate sectors in the UK. The group deployed the proceeds of a July capital raise in short order and earlier this month raised a further £250m to plough into a net asset value (NAV) accretive pipeline. The logistics sector is currently in the sweet spot, with high demand for space and a chronic lack of supply resulting  in strong and sustained rental growth.

Major news stories over December

Portfolio developments

Corporate news

Managers and fees

Property news

QuotedData views


Here is a selection of what is coming up. Please refer to the Events section of our website for updates between now and when they are scheduled:


Have you been listening to our weekly news round-up shows? Every Friday at 11 am we run through the more interesting bits of the week’s news and we usually have a special guest or two answering questions about a particular investment company.

Friday The news show Special Guest Topic
2 July GSS, PCFT, SHED, BSIF David Conlon GCP Asset Backed Income
9 July AGT, DIGS Matthias Siller Baring Emerging EMEA Opportunities
16 July AGT, ABD, SONG, PRSR, RHM Nick Wood Quilter Cheviot
23 July RNEW, PSH Gareth Powell Polar Capital Global Healthcare
6 August AEMC, ANW, CREI, DRIP Matthew Howard BMO Commercial Property
13 August AIF, SSON Andrew Bell Witan
20 August APAX, ELTA, PSH Abbie Glennie Aberdeen Smaller Companies Income
27 August GRP, SHB David Smith Henderson High Income
3 September AIF, BRET Ian Lance Temple Bar
10 September GSEO, ASLI, SLI Craig Baker Alliance Trust
17 September APAX, GABI, SUPP Robin Parbrook Schroder Asia Total Return
24 September NCYF, RNEW, FEML, USF Peter Hewitt BMO Managed Portfolio
1 October AIE, CAT, IGC, VNH Tim Creed Schroder UK Public Private
8 October FEML, GRP Steven Tredget Oakley Capital
15 October ATS, CGL, GHS Nicholas Yeo Aberdeen China
22 October FEML, SCIN Claire Shaw Scottish Mortgage
29 October EPG, SHED Richard Pindar Literacy Capital
5 November UKW, GHS, ACIC Rory Bateman Schroder British Opportunities
12 November PINT, SMT, GSEO Helen Steers Pantheon
19 November TIGT, ROOF Iain McCombie Baillie Gifford UK Growth
26 November MTU, JLEN, GRIT, CORD David Cornell India Capital Growth
3 December AAS, TEEC Rob Crayfourd CQS Natural Resources Growth & Income
10 December EWI, TLEI Nicholas Ware Henderson Diversified Income
  Coming up  
7 January QuotedData Andrew McHattie 2021 roundup
14 January LABS Simon Farnsworth Life Sciences REIT
21 January NCYF Ian Francis New City High Yield
28 January SEIT Jonathan Maxwell SDCL Energy Efficiency
4 February PNL Sebastian Lyon Personal Assets


Our Independent Guide to quoted investment companies is an invaluable tool for anyone who wants to brush up on their knowledge of the investment companies’ sector.


Appendix – December 2021 median performance by sector

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