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Data as at: 17/04/2024

Gearing

Gearing (%)
0
Net cash (%)
1
Historic gearing 3yr low/high (%)
0 / 0
Gearing range (%)
0 / 8
Gearing policy

The Board, taking account of advice from the Portfolio Manager, determines the maximum level of borrowings the Company will undertake at the time of borrowing. The Company will not invest in derivatives but may hold derivatives for efficient portfolio management and hedging purposes.

Borrowing limits

The Board believes shareholders’ returns may be enhanced if the Company borrows money at appropriate times for the purpose of investment. The Company has an unsecured lending facility through its Custodian, Lombard Odier. The Board have agreed to a nominal maximum loan of £30m, subject to there being sufficient value and diversity within the portfolio to meet the lender’s borrowing requirements. The Portfolio Manager is able to utilise that facility as required up to the upper limit available.

Ways in which investment companies can magnify income and capital returns, but which can also magnify losses.

At its simplest, gearing means borrowing money to buy more assets in the hope the company makes enough profit to pay back the debt and interest and leave something extra for shareholders.

how gearing works table

However, if the investment portfolio doesn’t perform well, gearing can increase losses. The more an investment company gears, the higher the risk.

Investment companies can usually borrow at lower rates of interest than you’d get as an individual. They also have flexible ways to borrow – for example they might get an ordinary bank loan or, for split capital investment companies, issue different classes of share.

Not all investment companies use gearing, and most use relatively low levels of gearing.

An indication of the maximum and minimum levels that the company would expect to be geared in normal market conditions.

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