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Investment Trust Insider: which trusts have topped the rally - and which have more to go?
Markets
by James Carthew on Mar 19, 2013 at 09:30
PEW’s dividends have been nudging upwards over the years and have grown by 65% since launch leaving the ordinaries on an attractive yield of just over 7%.
Where the fund falls down is on the capital side. Ordinary shareholders have made money since launch and the zeros are covered 1.3x, but the gearing provided by the zeros and quite big moves in the discount have made the share price quite volatile.
PEW was hit quite badly by the credit crunch and although the ordinaries bounced back, they drifted off when investors began to get nervous that utilities would be targets for cash-strapped governments. The slowdown in China in 2012 meant the Asian exposure was not helpful last year.
In 2013, though, with signs of life in the Chinese economy, things may be looking up for the fund.
Japanese plays prosper
The second and third spots for year-to-date performance in NAV terms are occupied by Baillie Gifford Japan and Baillie Gifford Shin Nippon .
I am a happy long-term holder of the former and have been a fan of, but unfortunately not an investor in, the latter for a while. For both funds, the rerating really took off after the yen started to slide against the US dollar last autumn, making Japanese exporters more competitive.
In Shin Nippon’s case, the upsurge in interest in the fund has been sufficient to allow it to issue shares at a premium to asset value and they are even considering a C share issue. I will take a closer look at these two funds in a couple of weeks.
James Carthew is director at Sapient Research
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