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View the article online at http://citywire.co.uk/wealth-manager/article/a728252

Trust Insider: Foreign & Colonial risks being left behind by investor fashion

by James Carthew on Jan 21, 2014 at 00:01

In FRCL’s asset allocation at the end of November the biggest equity exposures were to the US (28%), UK (21%) and Europe (10%). Private equity investments made up 15% and net gearing was 9% but they had been reducing this.

FRCL is good at disclosing how the regional portfolios have performed against its local benchmarks so it is easy to see where it has been adding value. The European portfolio was doing well at the interim stage and we will get figures to the end of December 2013 in the annual report to be published in March.

In November 2013, British Assets, a stable mate of FRCL, announced it would shift from operating a collection of regional portfolios to using one global portfolio. FRCL’s highly diversified approach is now quite unusual.

I can see how it might still appeal to some cautious private investors, however. It will be interesting to see whether FRCL’s board feels it needs to make a change.

James Carthew is a director of Sapient Research

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1 comment so far. Why not have your say?

Keith Cobby

Jan 21, 2014 at 09:30

Good feature, thanks James. I have been a long term investor in FRCL and my son is also invested through his CTF. I think the private equity investments have been a mistake and am pleased that these are being reduced over time.

The other drag on performance, which James didn't mention, is the expensive debenture which expires this year. This will give a nice boost to the income account.

I see FRCL as a core holding to be held (probably) indefinitely. I would trim the 600+ holdings a bit but the Trust is an alternative to the more focussed portfolios of Alliance, Scottish Mortgage, and Murray International (all of which I like).

When the markets and commentators are full of doom and gloom, for reassurance, I re-read the histories of these old global trusts. They have survived wars and economic collapse.

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