F&C (FCIT), the £5bn FTSE 100 listed global investment company, bounced back with a positive return last year but failed to beat its FTSE All-World benchmark as a good performance in Europe was not enough to offset the impact of trailing the US tech stock led rally.

The Columbia Threadneedle flagship achieved an 11.3% underlying total return with dividends included and the net asset value (NAV) of its investments rising from 932.1p to £10.22 per share, according to its 2023 annual report.

This lagged the 15.1% total return from the FTSE All-World index but marked a better outcome than 2022 when the multi-manager fund NAV fell 7.9%. 

Chair Beatrice Hollond said the global economy had fared much better than expected, avoiding recession despite further interest rate hikes by central banks.

The actual shareholder return was lower at 8.1% as the share price also lagged the NAV with the discount, or gap, nearly doubling from 3% to 5.9% during the year. The shares have continued to trail the NAV in 2024, rising just 2.8% despite a 7.1% gain in asset value up to 6 March. That’s seen the discount widen to nearly 10%.

Hollond said: ‘2023 saw a reversal of many of the performance trends which dominated equity markets in 2022 and we delivered strong absolute performance for most of our underlying strategies.’

In the US, where portfolio manager Paul Niven has 38.6% of F&C invested in two external fund managers as well as Columbia’s own, the trust scored a 16.6% return but underperformed the S&P 500’s 18.9% advance due to its underweight positions in the dominant ‘Magnificent Seven’. However, it did hold four of the market leaders, namely Amazon, Apple, Microsoft and Nvidia.

The US result was a turnaround from the previous year when F&C’s US assets dropped 9.2% largely due to a 29% slump from growth fund manager T Rowe Price, which Niven subsequently replaced with funds from JP Morgan.

Europe, where F&C was 12.2% invested, outperformed strongly though, scoring a 22.7% return against a 13.4% benchmark return.

However, Columbia’s global equity strategies, accounting for 27.1% of assets, rose 10.7% but badly lagged the 15.1% of their benchmarks.

Smaller allocations to Japan and emerging markets also underperformed and the 11.3% in private equity, where F&C uses Pantheon and HarbourVest funds in addition to Columbia’s, slipped 1.7% into the red after a 3.6% return in 2022.

Over 10 years to 31 December, the company said it had delivered a total shareholder return of 203%, equivalent to 11.7% per annum, beating the 178.6% total and 10.8% annualised returns from the FTSE All-World.

Niven said: ‘All main geographic regions in our listed portfolio gained in value over the year, with Europe and North America the best performing areas. While the NAV total return was behind our benchmark, mainly due to lagging private equity returns, we remain optimistic on the prospects for our holdings over the longer term.’

Testifying to the long-term approach of the UK’s oldest investment trust launched 156 years ago, F&C announced its 53rd consecutive rise in annual dividends. A final dividend of 4.5p lifted the total for the year by 8.9% to 14.7p per share, ahead of 4% inflation. The quarterly payments were covered by earnings of 15.8p per share, up 13.7% from 13.9p in 2022. The payout is also supported by revenue reserves equal to a year’s distribution.

While yielding a relatively low 1.4%, dividends play a significant part in F&C’s return with the payouts growing 63.3% in the past 10 years at double the rate of inflation.

Hollond was pleased F&C had retained its listing in the FTSE 100 having regained entry to the blue-chip index in 2022 for the first time since 2009.

‘While there is much debate over the challenges facing listed UK companies and the performance delivered by our domestic market, our decision to adopt a truly global approach to consideration of investment opportunities has served shareholders extremely well.

‘Although it is not our primary comparator index, since the FTSE 100 index was launched in 1984 your company has delivered a cumulative total return of approximately double the return of this index, with a gain of over 7,800% over the forty-year period, equivalent to 11.6% total return per annum.’

F&C has 10% of its assets invested in the UK which is more than the 4% of leading global equity benchmarks.