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QuotedData’s Investment Companies Roundup – May 2020

Investment Companies Roundup

Kindly sponsored by Baillie Gifford and Aberdeen Standard Investments

 Table of contents 

 New research

Here is a list of research we published over April:

An update note on Seneca Global Income & Growth Trust – Triple whammy but standing by the dividend:

“Seneca Global Income & Growth Trust (SIGT)’s manager believes that a very negative scenario is currently priced in and that under a less negative outcome, many positions will see material re-ratings. If true, the current market malaise may well be a good entry point for the longer-term investor, who can afford to be patient. We explore this in our latest update note.”

An update note on Strategic Equity Capital – Focused on fundamentals:

“Strategic Equity Capital (SEC)’s shares were at all-time highs two months ago. Its NAV has been relatively resilient compared to many smaller companies funds of late and However, we believe that SEC’s managers will see current market weakness as an opportunity to add to positions in companies that they know and like at attractive valuations.”

An update note on Civitas Social Housing – Proved its mettle:

“In our latest update note on Civitas Social Housing (CSH), we make the point that some market commentators appear to have overstated the impact of regulatory concerns on CSH. During the whole of this period, it collected its rents, paid its dividends and increased its NAV.”

Civitas Social Housing - Proved its mettle

Investment companies quarterly review – First Quarter 2020:

“It was the most eventful quarter in living memory. The collapse in asset prices over the latter part of March, brought the curtain down on an up-market that lasted more than ten years. In amongst this, there were pockets, such as the technology sector, that held up well. These themes are all explored in our review of the first quarter of 2020.”

Real estate quarterly review – First Quarter 2020:

“Within real estate, companies focused on the retail, leisure and hospitality property sectors were particularly badly affected over the first quarter, as the country was put on lockdown. Later in the quarter, the extent of the problem for property companies was revealed with rent collection announcements. Some retail-focused companies had.”

 In this issue

  • Performance – Small-cap strategies performed particularly well, while Gold is seen as a hedge against the monetary debasing taking placing, as central banks provide record levels of stimulus. Golden Prospect Precious Metal led NAV returns over April. On the negative side, property is particularly affected by the lockdown, with swathes of tenants not able to meet rent obligations;
  • Discounts/premiums – Augmentum Fintech‘s discount narrowed with fintech seen as relatively resilient. US-focused Gabelli Merger Plus+’s main two sector exposures are technology and healthcare, both of which have been among the best performers. Discounts in the private equity sector had been widening before the pandemic, helping to explain the presence of a few private equity funds in the ‘getting more expensive’ section, as investors looked for value. Discount widening was led by the debt, property and financials sectors. A number of debt funds have suspended dividends;
  • Money in and out – The big story was Supermarket Income REIT raising £139.9m – nearly twice its target. Supermarkets should have far fewer problems meeting rent obligations. There is unmet demand for income, with the real estate, equity income and debt sectors under pressure; an
  • Major news storiesPolar Capital Global Financial’s life was extended indefinitely following a shareholder vote

 Performance data

Markets turned the tide after sentiment completely collapsed for a brief period over March. Despite the global economy facing its most severe downturn in a generation, unprecedented fiscal and monetary support has been providing enough confidence for investors to buy into sectors that were perceived to have been heavily oversold. The median total share price return from investment companies was 8.5%, following a (19.1%) decline over March.

We have included sector specific performance this month, shown in the tables below. Please refer to the ‘appendix‘ section for a comprehensive list. Readers interested in the most recent briefings from the industry can click here to access our economic and political roundup.

Best performing sectors over April:

wdt_ID Sector Median share price total return (%) Median NAV total return (%) Change in median discount (%) Median discount (%), Median discount (%), 31/03/20 Number of companies in the sector Median sector market cap. (£m)
1 European Smaller Companies 22.00 12.80 7.40 -10.00 -17.40 4 350
2 Infrastructure Securities 19.30 9.40 6.80 -0.40 -7.20 2 83
3 Global Smaller Companies 18.50 13.00 10.20 -7.10 -17.30 5 671
4 Environmental 15.90 7.20 7.60 0.20 -7.40 4 67
5 North America 14.90 9.70 3.80 -2.30 -6.00 6 246

Small-cap stocks had the best month, with Europe leading the way. Compared to the UK, A number of European countries are either further along in their lockdowns (and therefore closer to easing restrictions) or have been less affected (Germany notably). The US had a particularly good month, though much of this was drive by technology. Secured regulated income flows found in infrastructure benefitted the Infrastructure Securities sector. At the other end of the scale, the relative uncertainty of income across the property spectrum, led to further share price falls.

Worst performing sectors over April:

wdt_ID Sector Median share price total return (%) Median NAV total return (%) Change in median discount (%) Median discount (%), Median discount (%), 31/03/20 Number of companies in the sector Median sector market cap. (£m)
1 Financials -10.70 0.00 -10.10 -12.10 -2.00 4 103
2 Property - UK Commercial -4.50 0.00 -5.00 -30.30 -25.20 16 313
3 Property - Rest of World -4.00 -1.70 -0.80 -50.50 -49.70 7 37
4 Property - Europe -2.70 0.00 -2.10 -28.40 -26.30 8 149
5 Property - Debt 0.00 0.00 4.80 -20.90 -25.70 5 93

April’s biggest movers in NAV and price terms are shown in the charts below:

On the positive side:

  • Gold resumed its resurgence, propelling Golden Prospect Precious Metal to the top of the monthly NAV table. CQS Natural Resources Growth and Income also benefitted, with gold and silver exposure account for about 20% of the portfolio;
  • Augmentum Fintech’s portfolio of ‘disruptive’ companies is seen as relatively resilient, particularly if covid-19 leaves a lasting imprint on how people conduct their lives. One of Augmentum’s holdings, Onfido (it focuses on identity verification and authentication), raised $100m over April;
  • The turnaround in sentiment benefitted growth strategies almost across the board. Baillie Gifford US Growth, River and Mercantile UK Micro Cap and Miton UK Microcap rallied strongly as a result of this;
  • Vietnam Enterprise had a good month too. Already amongst the fastest growing economies before the pandemic, Vietnam is increasingly being recognised as a long-term beneficiary from a likely drive by companies and countries to reduce their reliance on Chinese manufacturing;
  • Menhaden’s large allocation to Google’s parent company, Alphabet (about 18% of its portfolio), was well rewarded, with tech driving the wider US market; and
  • Investors saw value in BMO Private Equity and LMS Capital, after their discounts widened sharply over March

On the negative side:

  • A number of companies within alternatives, that report NAVs periodically, are likely to see declines over time, following asset appraisals;
  • JZ Capital Partners said it would make no news investments and a great deal of the existing portfolio needs to be sold to meet debt repayments;
  • Direct lending company, Leasing company SQN Asset Finance, has been the worst performing investment company this year (counting those with market caps above £15m). Its portfolio of anaerobic digestion plants was revalued down and after the suspension of its dividend over March, there are concerns over the impact of the crisis on lease payments;
  • US-focused Marble Point Loan Financing was the worst performing company in share price terms – it is heavily exposed to the CLO market, which has been handicapped by a series of credit ratings downgrades on the underlying loan collateral;
  • Aquila European Renewables and Greencoat Renewables reported lower NAVs, likely reflecting the valuation impact of lower power price forecasts; and
  • BMO Real Estate’s exposure to the lockdown’s impact on trading saw its shares decline by nearly 25%

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 Discounts and premiums

The tables below shows the top five movers in either direction (more or less expensive relative to NAV):

More expensive relative to NAV:

wdt_ID Fund 30 Apr (%) 31 Mar (%)
1 Menhaden -16.70 -40.30
2 Gabelli Merger Plus+ -17.40 -39.50
3 BMO Private Equity -10.30 -29.80
4 Augmentum Fintech -24.20 -43.40
5 LMS Capital -36.50 -53.80
6 Starwood European Real Estate -10.40 -26.40
7 Crystal Amber -15.70 -31.40
8 GCP Asset Backed -12.90 -25.90
9 Riverstone Credit Opportunities -47.90 -60.70
10 CQS New City High Yield 6.40 -6.10
  • We discussed  Menhaden, BMO Private Equity and LMS Capital in the ‘winners and losers’ section above;
  • US-focused Gabelli Merger Plus+’s main two sector exposures are technology and healthcare, both of which have been among the best performers;
  • Starwood European Real Estate says that though hospitality accounts for more than 30% of invested assets, the loan book has been structured defensively with significant collateral in place to protect its exposure; and
  • Activist fund, Crystal Amber, also benefitted from the bounce in small and medium-sized companies

Cheaper relative to NAV:

wdt_ID Fund 30 Apr (%) 31 Mar (%)
1 SQN Asset Finance -66.50 -47.70
2 BMO Real Estate -47.80 -30.60
3 EJF investments -14.60 2.50
4 Standard Life Investments Property -18.90 -4.60
5 CVC Credit Partners European Opps. -22.90 -9.70
6 Globalworth Real Estate -30.00 -18.30
7 HWSI Realisation -53.00 -41.80
8 Pollen Street Secured -37.90 -27.30
9 Custodian REIT -12.90 -2.60
10 Chenavari Toro -33.90 -23.80
  • BMO Real Estate and SQN Asset Finance were discussed earlier;
  • Standard Life Investments Property also finds itself  exposed to non-rent payments, though it did recently re-affirm its first quarter dividend;
  • EJF Investments posted its worst monthly return since launch and took off its currency hedging;
  • CVC Credit Partners European Opportunities cut its dividend target, though it stopped short of suspending dividends, like other debt funds; and
  • Direct lending company, HWSI Realisation, formerly Hadrian’s Wall Secured, began a managed wind-down prior to the pandemic

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 Money in and out

Fundraising highlights from the month:

Money coming in:

  • Supermarket Income REIT raised £139.9m, a remarkable figure in the current climate – the original target was £75m. Such a heavy oversubscription demonstrated investors’ need for certainty of income at this time. Supermarkets should have far fewer problems meeting rent obligations;
  • Elsewhere, Worldwide Healthcare,  Allianz Technology, Finsbury Growth & Income and Smithson took advantage of their premiums to grow the funds; and
  • Nick Train’s Finsbury Growth & Income holds a number of relatively resilient consumer staples companies such as Unilever and the food company, Mondelez International (owner of brands such as Cadbury and Toblerone)

Money going out:

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 Major news stories

Portfolio developments:

Corporate news:

Managers and fees:


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The following funds announced their full year dividends in April (please refer to the attached PDF document for a list of the notes around the numbers):

wdt_ID Fund Year ended Dividend (pence)* Change over year (%) Revenue / earnings (pence)* Cover
1 Aquila European Renewables 31 Dec 2019 €1.5c N/A (€0.04c) N/A
2 Axiom European Financial Debt 31 Dec 2019 6 Nil 15.2 2.53x
3 BlackRock Latin American 31 Dec 2019 34.9 48.2 18.1 0.52x
4 BMO Private Equity 31 Dec 2019 15.3 6.3 3.5 0.23x
5 Dunedin Income Growth 31 Jan 2020 12.7 1.6 12.1 0.95x
6 EJF Investments 31 Dec 2019 10.7 4.9 20.8 1.94x
7 Gresham House Energy Storage 31 Dec 2019 4.5 N/A 3.1 0.69x
8 Henderson High Income 31 Dec 2019 9.8 2.1 10.6 1.08x
9 ICG Enterprise 31 Jan 2020 23 4.5 116.6 5.07x
10 Impax Environmental 31 Dec 2019 3 Nil 3.6 1.2x

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Here is a selection of upcoming events:

Master Investor – the UKs largest private investor show – 5 December 2020


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 – April performance by sector

wdt_ID Sector Share price total return (%) NAV total return (%) Share price return YTD (%)* Change in discount (%) Discount (%), 30/04/20 Discount (%), 31/03/2020
1 Insurance & Reinsurance Strat. 52.30 -1.70 19.30 13.90 -12.60 -26.50
2 European Smaller Companies 22.00 12.80 -18.00 7.40 -10.00 -17.40
3 Infrastructure Securities 19.30 9.40 -7.20 6.80 -0.40 -7.20
4 Global Smaller Companies 18.50 13.00 -7.40 10.20 -7.10 -17.30
5 Environmental 15.90 7.20 -12.20 7.60 0.20 -7.40
6 European Emerging Markets 15.30 7.40 -33.50 6.00 -13.40 -19.40
7 North America 14.90 9.70 -14.10 3.80 -2.30 -6.00
8 Country Specialist: Asia Pac. ex Japan 13.30 12.50 -17.40 2.40 -13.90 -16.30
9 Biotechnology & Healthcare 13.10 12.10 3.10 -1.50 -0.30 1.20
10 Japanese Smaller Companies 13.10 10.80 -10.80 0.80 -3.10 -3.90

 The legal bit

This note was prepared by Marten & Co (which is authorised and regulated by the Financial Conduct Authority).

This note is for information purposes only and is not intended to encourage the reader to deal in the security or securities mentioned within it.

Marten & Co is not authorised to give advice to retail clients. The note does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

This note has been compiled from publicly available information. This note is not directed at any person in any jurisdiction where (by reason of that person’s nationality, residence or otherwise) the publication or availability of this note is prohibited.

Accuracy of Content: Whilst Marten & Co uses reasonable efforts to obtain information from sources which we believe to be reliable and to ensure that the information in this note is up to date and accurate, we make no representation or warranty that the information contained in this note is accurate, reliable or complete. The information contained in this note is provided by Marten & Co for personal use and information purposes generally. You are solely liable for any use you may make of this information. The information is inherently subject to change without notice and may become outdated. You, therefore, should verify any information obtained from this note before you use it.

No Advice: Nothing contained in this note constitutes or should be construed to constitute investment, legal, tax or other advice.

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No information contained in this note shall form the basis of, or be relied upon in connection with, any offer or commitment whatsoever in any jurisdiction.

Investment Performance Information: Please remember that past performance is not necessarily a guide to the future and that the value of shares and the income from them can go down as well as up. Exchange rates may also cause the value of underlying overseas investments to go down as well as up. Marten & Co may write on companies that use gearing in a number of forms that can increase volatility and, in some cases, to a complete loss of an investment.

May 2020 Investment Companies Roundup

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