Citywire printed articles sponsored by:
View the article online at http://citywire.co.uk/wealth-manager/article/a666927
Investment Trust Insider: which trusts have topped the rally - and which have more to go?
by James Carthew on Mar 19, 2013 at 09:30
The FTSE has no shortage of climbers, but who is topping the investment trust charts year-to-date? Top of the leader board in price terms is Treveria, one of the highly leveraged German property funds.
Like many of these vehicles, Treveria has been struggling under the weight of its debt. It did, however, manage to scrape together enough cash to make a distribution equivalent to 70% of its share price at the start of this year. If you think German property is about to leap in value, the shares might be worth a punt, but otherwise I would steer clear.
Next on the list is 3i , which has been ramped up on the back of Sherborne’s stake-building. It turned out that Sherborne amassed a larger stake in 3i than most had thought and so it is sitting on a much bigger profit than I estimated in my article a couple of weeks ago. Again, I cannot see the point of continuing to buy shares at this level – I am curious to see what its next move will be.
The third best-performing fund in price terms is Indian property company Ishaan. Its shares leapt at the end of February when it announced it was selling its entire portfolio and returning the proceeds to shareholders – it estimates shareholders will get 51 pence per share.
The meeting to approve this will have taken place by the time this feature has gone to press. The proposed sale price is a long way short of the net asset value (NAV) – about a third lower than the valuation of the portfolio at 30 September last year. This means that shareholders are being asked to give up about £24 million to the buyer in exchange for cash now.
It will be interesting to see if they go for this – I think that for a lot of them their breakeven price will be well north of 51 pence.
Net asset value climbers
A different set of stocks have been performing in NAV terms. Premier Energy & Water’s (PEW ) ordinary shares are up more than 44% year to date and the shares now trade about 130 pence, having languished below £1 for much of the second half of 2012.
PEW is designed to produce a decent yield and long-term capital growth by investing in utility and infrastructure stocks and has been around for almost 10 years. The portfolio is global – there is quite a big bias to Asia, with China accounting for more than a quarter of the fund.
It is a split capital trust because it is geared with zeros that were issued with a gross redemption yield of 6% and mature at the end of December 2015. A wind-up date for the fund is scheduled to coincide with the repayment of the zeros, but I would expect that Premier will be hopeful of restructuring the fund in advance of that and securing an extension to the fund’s life.
News sponsored by:
Subscribe to Wealth Manager magazine and rack up CPD points
Citywire Wealth Manager has partnered with CISI to enrich the experience of subscribers to our magazine.
Today's top headlines
More about this:
Look up the shares
Look up the investment trusts
- 3i (Ordinary Share)
- Premier Energy and Water (ZDP 2015)
- Baillie Gifford Japan (Ordinary Share)
- Baillie Gifford Shin Nippon (Ordinary Share)
More from us
- Sherborne's turnaround fund lifts 3i stake to 4%
- Investment Trust Insider: The pick of the PE trusts
Aberdeen Live supplement: Fundamentals point to ongoing flows and solid returns from EMD
After a record year for inflows and market-leading performance in 2012, emerging market debt has taken a large step towards the mainstream. Our recent debate covers the outlook for the asset class this year and where opportunities can be found.
On the road
J.P. Morgan Elect on investment growth, income and cash. More information on J.P. Morgan investment trusts.