Port in a storm: City of London duo climb ratings after reliable returns

The managers of Scottish Oriental Smaller Companies and the former JPMorgan Russian trust have also delivered three-year gains ahead of rivals.

City of London (CTY ) duo Job Curtis and David Smith have risen up the tables for Citywire’s latest investment trust manager ratings, as the trust’s steady style and focus on FTSE 100 stalwarts offers a bolthole in a turbulent market.

Janus Henderson’s Curtis has climbed to an AA rating, while his deputy Smith – who also runs Henderson High Income (HHI ) – has moved up to A-rated in April. CTY’s dividend reliability has helped push the trust to a premium rating, with the shares closing 1.8% above portfolio value on Friday.

The trust’s strong performance in the three years to end of March places it third out of 18 names in its Citywire’s Equities – UK Equity Income sector, with a net asset value (NAV) return of 29.8% versus 16.1% from the average trust in the sector.

Over one year, the fund ranks in second place with a return of 14.8% against an 8.1% sector average.

City of London, which has been running since 1888, offers capital growth alongside steadily growing dividends, which have increased each year since 1966, making it the Association of Investment Companies’ leading ‘dividend hero’.

The focus on companies that can deliver sustainable dividends through the market cycle has ensured City of London, with its 4.6% yield, remains a popular choice for those investors with retirement in mind.

Although the fund has a UK focus, Curtis said in the trust’s latest factsheet that two-thirds of revenues earned by his holdings are from outside the UK, providing ‘useful diversification’.

‘Given the low growth expected from the UK economy over the next 12 months, we think some further interest rate cuts are likely… This should be supportive of equities,’ he said.

‘We also think the valuation of UK equities is compelling compared to their equivalents overseas, possibly due to the low allocation from domestic, institutional investors. In particular, we find the dividend yield of UK equities attractive relative to the main alternatives.’

Emerging winners

Hopes that Vladimir Putin will allow the sale of some Russian stocks have propelled JPMorgan Emerging Europe, Middle East & Africa Securities (JEMA ) to a 400% premium.

Meanwhile, the trust may be a bit of an exceptional case, but its manager Oleg Biryulyov also won his first Citywire rating this month.

Biryulyov has entered the rankings with an A rating for his work navigating the portfolio through the Ukraine war, the subsequent (close to 100%) write down of Russian stocks, a change of strategy and name change from JPMorgan Russian Securities, and legal battles with Russian banks.

While the past three years have been decidedly chaotic, the fund – which has assets of just £19m following the Russia write-down – is the best performer in its Equities – Global Emerging Markets sector.

It ranks number one of nine trusts in the sector, with a three-year NAV return of 35.9% versus a 14.3% sector average. It is also the top-ranked fund over one year with a 16.4% return against a 5.5% average.

Scottish Oriental Smaller Companies (SST ) co-manager Martin Lau has also won his first AAA trust manager rating this month. 

Since November, Lau has been running the London-listed fund with Sree Agarwal, who was promoted from deputy to lead manager after Vinay Agarwal jumped ship.

The portfolio of Asian smaller companies has delivered a 40.1% three-year return, well above rivals Fidelity Asian Values (FAS ) and Abrdn Asia Focus (AAS ), which have delivered total returns on net assets of 20.3% and 16.3%, respectively.