It’s a happy 150th birthday to the Foreign & Colonial Investment Trust, as it announced its 47th consecutive annual dividend increase recently. This ensured a dividend has been paid to shareholders in each of its 150 years since inception in 1868. The Company also reported strong investment performance for the year, significantly exceeding its benchmark.
The proposed annual dividend for the year is 10.4 pence per share, an increase of 5.6% on the previous year. Subject to shareholder approval, a final dividend of 2.7 pence per share will be paid on 1 May 2018.
With a share price total return of 21%, the Company comfortably outperformed the 13.8% return from its benchmark index, the FTSE All-World index. The net asset value (NAV) total return for the year was 16.9%*. The Board looks to the longer term and over a 10-year period the share price total return for the Company is 156.1%, the equivalent to 9.9% per annum, while over 20 years it is 453.4%, which equates to 8.9% per annum.
The Company’s share price discount to NAV narrowed to 4.3% by the end of the year while the average level of 6.7% over the period was the lowest seen for over twenty years. The Board has said that it will continue to use buybacks for the benefit of shareholders in pursuit of a sustainably low deviation between the price and NAV per share in normal market conditions. No reference will therefore be made in future to a specific attainment level for the Company’s discount.
Throughout the year the Company maintained a higher weighting than its benchmark index in each of the highly performing areas of Europe, Japan and Emerging Markets, which added to overall returns.
Commenting on the outlook for the remainder of the year, Paul Niven, Fund Manager of F&C Investment Trust, said: “The bullish earnings and growth backdrop looks set to continue into 2018. There is little, at present, to suggest a material slowdown in the overall growth trajectory in the global economy. Indeed, financial indicators suggest strong momentum continuing for the next twelve months, reflecting still supportive monetary and credit conditions. Barring some shock, it now looks more likely than not that the US economic cycle will extend to the longest on record, into 2019.”
The Chairman, Simon Fraser, commented: “It is remarkable to think that the original purpose of Foreign & Colonial Investment Trust has remained relevant throughout its long history. Indeed, the investment trust that launched an industry is as relevant today as it ever was. While our 150th anniversary will be marked in many ways, our focus will be on the Company’s future and on supporting broader financial education, particularly across schools and universities. The financial services industry needs simple to use transparent investment products that help all of us invest for our longer-term financial wellbeing. We still strongly believe that the best long-term investment approach is to hold a globally diversified portfolio of publicly listed and private equities. We are confident that Foreign and Colonial will remain an appropriate choice for any longer-term investor, however small or large, for many years to come.”