Caledonia Investments (CLDN ) grew its public and private company pools last year but a weakening dollar meant the global multi-asset fund trailed the market.

The £1.9bn Cayzer family-backed trust’s net asset value (NAV) rose 3.6% over the nine months to 31 December 2023 but it failed to keep up with the catch-all rally enjoyed by global markets in November and December, as it inched up just 0.4% over the final quarter of the year.

This is in contrast to the MSCI World index, which enjoyed an 11.6% rise over the nine months, and even the FTSE All Share, which was up 4.5% over the same period.

The portfolio of listed companies, which makes up 32% of the NAV, was the best performer, up 6.8% over the three-quarter timeframe.

The public company portfolio is split into capital and income stocks, and key performers in the former were Microsoft, computer technology group Oracle , and specialist barrier manufacturer Hill & Smith (HLS).

Manager Matthew Masters trimmed positions in both Microsoft and Oracle as technology stocks enjoyed a stellar comeback.

Within income stocks, new position analytics group Relx (RELX) contributed to gains, as did travel bookings software business Sabre and US fastener distributor Fastenal.

The private capital portion of the diversified trust, which is 35% of NAV, was up 6.1% over the nine-month period. Masters,who focuses on UK mid-market companies, recently agreed the terms for the sale of its majority stake in wealth management group Seven Investment Management (7IM) for £255m.

The remaining companies as at the end of September, excluding 7IM, were valued at embedded value/EBITDA multiples in a range of 9-14x.

Private companies include Cobepa, a Belgian-based investment company that owns a portfolio of private global investments; multi-family office Stonehage Fleming; pub business Liberation Group; cinematography lens maker Cooke Optics, and new position Air-serv Europe, which designs and manufactures air, vacuum and jet wash machines.

Masters said Air-serv was ‘trading ahead of expectations, demonstrating good year-on-year growth’, while the US actor and writers’ strike that had impacted Cooke Optics had been resolved and ‘demand for the company’s products is recovering’.

The private company part of the portfolio does not, however, contain up-to-date valuations given the companies are only valued every six months, with end of the year values expected in the annual results.

The remaining 33% of the portfolio that is invested in funds was the poorest performer, up just 1% over nine months reflecting as strong performance in North America was offset by the 3.1% strengthening in sterling versus the US dollar.

Ewan Lovett-Turner, Deutsche Numis analyst, said although sterling has been a drag on performance, the sale of 7IM is a ‘significant positive’, generating cash ‘at a good time in the cycle’.

He said the trust is differentiated from global peers by its ‘significant exposure to unquoted assets and approach as a long-term supportive shareholder’.

‘We believe given its record and unique approach, as well as its conservative approach to balance sheet management, leave it well placed to deliver an attractive return profile to investors,’ said Lovett-Turner.

‘The shares are trading on a 32% discount and are somewhat perennially cheap, given the large Cayzer family stake which limits liquidity and the ability to manage the discount, nevertheless we believe the downside to the discount is limited and therefore the company is well placed to deliver and attractive share price returns.’