F&C Investment Trust (FCIT) recently changed its name from Foreign & Colonial Investment Trust (FRCL). However, there is no change to the objective of generating long-term growth in capital and income, or the strategy of investing in listed and private companies across the globe, using both internal and external managers. While 2018 proved to be a tricky, more volatile period for investors than 2017, with a sharp correction in world markets in the last quarter of the year, FCIT modestly outperformed its FTSE All-World benchmark in both NAV and share price terms, helped by its private equity exposure. Manager Paul Niven acknowledges that the investment cycle is mature, but believes there is potential for further share price appreciation, as the US has adopted a more dovish stance towards monetary policy and equity valuations are now looking more attractive following the Q418 market sell-off.
While macroeconomic uncertainties continue, such as the US-China trade dispute and protracted Brexit negotiations, the significant pullback in global equity markets in Q418 has led to more reasonable equity valuations. The world market is trading on a forward P/E multiple of 14.5x, which is a 7% premium to its 10-year average compared with a c 20% premium in September 2018.
Longest-established investment trust. Distribution paid every year since FCIT’s launch in 1868. Dividend growth in each of the last 48 consecutive years. Broad global equity exposure – both listed and private companies. Increased shareholder demand; now trading close to NAV. Long-term record of double-digit NAV and share price total returns
FCIT has experienced a meaningful re-rating. Its shares now regularly trade close to NAV compared with a c 15% discount in mid-2016 following the Brexit vote, and average discounts between 0.3% and 8.3% over the last one, three, five and 10 years. The board no longer employs a hard discount control policy, but would repurchase shares in response to a sustained widening of the discount. FCIT has a progressive dividend policy; the FY18 annual distribution was 5.8% higher year-onyear, and has compounded at a 5.5% average annual rate over the last 10 years. Gearing of up to 20% of NAV is permitted (7% net gearing at end-February 2019).