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Foreign & Colonial discount falls to 20 year low

Foreign & Colonial discount falls to 20 year low

The Foreign & Colonial investment trust has raised its dividend by 3.3%, which represents its 44th consecutive year of dividend growth.

The trust, managed by Paul Niven (pictured), ended 2014 on a discount of -8.1%, its lowest at year-end for 20 years after a solid 12 month run of performance, and down from a high of -11.34% in May.

In its full-year results, the trust said its 10.3% net asset value (NAV) return was below the FTSE All World index’s 11.3% rise, but ahead of its AIC Global peer group’s 8.2% average NAV gain.

The board said that performance was hit by weak stock selection and being underweight the US in the first half of the year, but this was ‘much improved’ in the second half.

‘As previously reported, in the early part of the year we reduced our UK portfolio as part of our strategy towards establishing a truly global portfolio, largely investing the £340 million proceeds in a global multi-manager portfolio of funds and raising our European equity exposure,’ the board said.

The fall in the discount enhanced performance with each percentage point reduction adding £25 million to shareholder returns. The board added that this also resulted in a reduced need to buyback shares to manage the discount.

The Foreign & Colonial trust was flat in mid-morning trading at 456p.

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Profile: Kevin Doran's formula for success at AJ Bell

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