Trust results round-up: Finsbury Growth’s £200m buyback, JPM Asia duo, Odyssean lags
Finsbury Growth & Income (FGT )
Performance
The £1.3bn UK equity trust extended its run of poor performance in the six months to end of January, with a 2.1% gain for the underlying portfolio, on the basis of net asset value (NAV) total return, versus a 4.1% increase in the benchmark FTSE All Share. While the portfolio managed to stay ahead of the index for much of the period, it gave up ground around the start of this year as rising concerns about the impact of US tariffs hit home given the trust’s exposure to big name UK stocks with large global exposures.
The board declared a first interim dividend of 8.8p per share, in line with last year, according to interim results published last week.
Portfolio changes
Over the past five years, manager Nick Train has increased exposure to UK companies selling software and data-related services, but he said the shift has ‘not yet produced the sustained improvement in investment performance that all FGT shareholders want to see’. However, he maintained that the portfolio is now ‘better prepared to withstand the effects of tariffs and possible trade wars than it otherwise would have been’.
He noted Diageo (DGE), which he said will ‘gain share and get stronger, while weaker competitors struggle’ with tariffs.
Corporate actions
The board bought back 22.5m shares at a cost of £200m over the six-month period, helping to narrow the discount from 8.7% to 7%.
On Monday, Train also purchased 25,000 shares at an average price of 913p per share, to take his total holding to 3.92% of the trust.
The board will hold a continuation vote at the company’s January 2026 annual general meeting.
What the manager says
‘I look at FGT’s portfolio and I think – here is a collection of outstanding, predominantly global, companies, with obvious growth opportunities,’ said Train.
‘Then I look at our NAV performance and wonder why it isn’t better. Then I think to myself I should probably buy some more FGT shares for myself. I do hope all shareholders will be rewarded for their patience, including me.’
JPMorgan Asia Growth & Income (JAGI )
Performance
The NAV of the £285m portfolio of Asia Pacific equities, excluding Japan and Australia, declined 1.1% over the six months to end of March but still kept ahead of its struggling MSCI Asia Pacific ex-Japan benchmark, which was down 2.2%. However, when dividends were taken into account, shareholders enjoyed a positive total return of 1.4%, Monday’s half-year results highlighted.
The Chinese market was a bright spot over the period, rising 10.4%, thanks to ‘more coordinated government action’ to address real estate issues, as well as the launch of the DeepSeek artificial intelligence (AI) model. However, gains were offset by weakness in other markets, notably Taiwan, South Korea, and India – the latter of which corrected heavily.
Portfolio changes
The biggest contributor to performance was the decision of managers Robert Lloyd and Pauline Ng to open an overweight position in e-commerce giant Alibaba over the period. They previously avoided the stock due to ongoing market share losses in domestic e-commerce, but its growing influence in cloud computing and digit media combined with ‘an attractive valuation’ enticed them in.
Corporate actions
Historically the board has paid a quarterly dividend of 1% of NAV but shareholders approved increasing this to 1.5% of NAV, or a notional yield of 6%, from 31 March. Dividends will continue to be funded from a mix of income and capital gains, or taking profits on holdings.
The board believes an enhanced dividend is preferable to returning funds to shareholders via share buybacks, differentiating JAGI from peers and hopefully creating more demand for the shares to narrow the discount.
However, the board did buy back 7.5m shares in the period, moving the discount from 11.2% to 9.2%, within the board’s target range of 8% to 10%.
Outlook
The threat of US tariffs has shifted the global economy ‘considerably’ and trade-sensitive Asian countries will suffer. However, the managers noted the more ‘pro-growth and pro-business’ policies adopted by the Chinese authorities and the fact North Asia is becoming an ‘integral part of the expanding global AI supply chain’.
‘Regardless of near-term fluctuations, the region continues to grow more strongly than developed economies, and China’s economy is still growing, even if the recovery will take longer to unfold than originally envisaged,’ said the managers.
CT UK Capital & Income (CTUK )
Performance
While the FTSE All-Share index rose 4.1% in the six months to end of March, the £340m closed fund managed by Julian Cane saw its NAV total return retreat 1.6%. In interim results published last Thursday, this was blamed on the fact the UK rally was heavily concentrated in a small number of large caps, while the fund is biased towards small and medium-sized companies.
The half-year dividend of 5.9p per share represented a 3.5% increase year-on-year, equivalent to a yield of 4%, and keeping the fund on the Association of Investment Companies’ ‘dividend hero’ list with 31 years of consecutive dividend increases.
The dividend is only 85% covered by earnings but chair Nicky McCabe said the trust ‘anticipates a higher level of income receipts’ in the second half. The fund also has a reserve of £9.2m that ‘provides a solid base from which to aim for further dividend growth’.
Corporate actions
The board bought back 1.6m shares at an average discount of 4.1% over the period. Over the period, the shares traded at an average 3.5% discount to NAV, ending the period on a discount of 4.1%, widening from 2.9% over the six months.
Outlook
McCabe urged investors to focus on the long-term in the face of unprecedented volatility and uncertainty in global markets.
‘Without risking hyperbole, in recent decades it is difficult to think of a parallel for the current economic and geopolitical situation and there is very considerable uncertainty as to how this will evolve,’ he said.
He noted that Cane believes ‘valuations are one of the strongest indicators of future investment performance’, and therefore the UK market continues to look attractive.
Odyssean Investment Trust (OIT )
Performance
OIT reported disappointing NAV returns of -10.7% in annual results to the end of March, significantly worse than the 0.4% decline from the Deutsche Numis Smaller Companies index (including AIM but excluding investment companies).
Stuart Widdowson and Ed Wielechowski, managers of the £199m portfolio of special situations and recovery stocks, said the period was ‘a year of two halves’, with the portfolio rising almost 10% to the end of September but progressively declining into 2025.
The portfolio’s concentration and allocation towards more cyclical industrial names detracted over the period, according to last week’s annual report. Since March, NAV total returns are 5.8% versus a 9.4% return for the index.
Portfolio changes
The portfolio was ‘little changed’ over the year but the manager put £68m into purchases, including £25m across three new positions, while £49m was realised from sales.
Buys included connected safety devices company Blackline Safety (BLN) and animal genetics specialist Genus (GNS). Exits were from media company Ascential (ASCL), defence technology group Chemring (CHG), and camera accessories group Videndum (VID).
Corporate actions
A total of 11.6m shares were issued during the period, equivalent to 9.6% of opening share capital, at a premium to NAV meaning there was no dilution for existing shareholders. Of the total, 6.5m were issued via a small placing in July catalysed by a large buy order from a new shareholder.
Since 31 March, a further 700,000 shares have been issued.
Outlook
The managers said the direct risk from tariffs was low as in ‘the vast majority of cases’, the portfolio companies which could have been caught up in tariffs were either insulated, ‘due to “local for local” manufacturing’, or operating in areas where there are exemptions.
What the analysts say
Deustche Numis analyst Ash Nandi was confident the trust could ‘turn around performance’, pointing to its ‘consistent premium rating’ – a rarity in the sector – and the managers’ track record.
‘Though performance has been strained in the last couple of years, the managers…have a strong track record through using a private equity approach in public markets,’ she said.
JP Morgan Japanese (JFJ )
Performance
JP Morgan Japanese has notched up another solid six months, building on its long-term record, although absolute returns were more muted.
The NAV total return over the half year to end of March was 2.4% versus 1% for the benchmark. The share price total return was 2.3%, according to last Thursday’s interims.
Managers Nicholas Weindling and Miyako Urabe attributed the relative success to their focus on companies embracing reforms to governance and capital efficiency, noting ‘this positioning continued to pay dividends, literally, over the past six months.’
Manager changes
Xuming Tao has joined Weindling and Urabe on the management team. Tao has been a member of the Japanese equity team at JPM in Tokyo for five years and already works closely with the other managers, particularly on small and mid-cap strategies.
Portfolio changes
The JFJ managers made some significant changes over the period, making several acquisitions. The most significant included heavy industries group IHI and Mitsubishi UFJ Financial Group.
The report also detailed that as part of the trust’s combination with JPMorgan Japan Small Growth & Income (JSGI ) last year, in addition to all holdings that were common to both funds, they retained six names held solely by JSGI.
The new acquisitions, as well as significant top-ups, were funded by a number of reductions and disposals including the sale of telecoms business Softbank Group and auto parts producer Denso.
Outlook
The managers said they ‘remain positive about the outlook for Japanese equities and confident in the positioning of our portfolio’.
‘While the market has performed strongly over the past two years, we believe the transformation underway in Japan is still in its early stages,’ they said.
‘The full impact of corporate governance reforms and other structural changes, such as increased focus on capital efficiency and shareholder returns, has yet to be realised, and these shifts should continue to support investor interest well into 2025 and beyond.’
BlackRock Frontiers (BRFI )
Performance
A small NAV total return of 0.3% in the six months to 31 March was enough to put the £307m fund ahead of its MSCI Frontier Markets index, which declined 2.5% (both in dollar terms). Favourable currency movements saw the shareholder total return hit 4.4% in sterling, including dividends.
The fund declared an interim dividend of 3.65 dollar cents per share, a 4.3% increase on the previous interim dividend. Revenue earnings were just 1.9 dollar cents, down from 3.30 dollar cents a year ago, due to timing differences in dividend payments. However, dividend cover is expected to improve.
Portfolio changes
Managers Sam Vecht and Emily Fletcher increased exposure to Turkey in the period, reflecting a positive long-term outlook for the country. They bought Turkish bank Akbank.
They also started rebuilding Eastern European exposure, including adding clothing company LPP in Poland, which they ‘believe has the right ingredients to expand its footprint across the region’.
‘Another example is Raiffeisen Bank International, which has a significant portion of its profitability stuck in Russia that was effectively written off to zero by the market following Russia’s invasion of Ukraine. Any steps towards an amicable resolution here should be significantly positive for the bank.’
Outlook
Geopolitical polarisation will lead to increased competition among the world’s biggest economies and signals the start of a period of market volatility, according to the managers. Markets that are largely underrepresented in global portfolios and ‘receive less sell-side attention’ therefore offer ‘significant alpha potential’.
‘These frontier and smaller emerging markets generally trade at lower valuations compared to developed markets and display lower correlation among themselves,’ said Vecht and Fletcher.
‘This provides an opportunity to diversify risk and reduce overall volatility.’
