Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by F&C Investment Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
Broadening equity market strength may mean FCIT’s diverse portfolio is well placed to benefit…
Overview

F&C Investment Trust (FCIT) provides investors with a one-stop-shop investment portfolio, characterised by longstanding manager Paul Niven’s highly diversified, yet actively managed global equity strategy. As discussed in Portfolio, Paul utilises the expertise of specialist fund managers to pick stocks for their respective mandates, with Paul working closely with them to ensure these strategies target prescribed risk and performance characteristics. Paul has the responsibility for determining a long-term strategic asset allocation which will deliver both capital and income growth over the long term. He also tactically manages the portfolio considering his shorter-term outlook for markets.

A greater focus on value and income over the past two financial years has helped the trust to deliver its 53rd consecutive year of dividend growth making it one of the longest-standing AIC ‘dividend heroes’ within the investment trust universe (see Dividend). However, this positioning, alongside the diversified nature of the portfolio, proved detrimental to relative performance over 2023 due to a relatively low allocation to the ‘Magnificent Seven’. Over the past 18 months, Paul has been reducing the portfolio’s value exposure, returning to a growth tilt which reflects his more positive outlook for equity markets and the prospect of easing macroeconomic conditions.

Over the longer term, being more diversified has provided investors with good downside protection and risk characteristics whilst generating good absolute returns leading to cumulative outperformance of the benchmark and a greater outperformance of the average delivered by the AIC Global sector peer group. The strategy also provides investors with an allocation to private equity (11%), which at times offers a benchmark-agnostic source of returns and outperformed the listed equities exposure for four out of five financial years pre-2023 (see Performance). FCIT’s Discount is 11.8% at the time of writing.

Kepler View

In our view, FCIT can provide a good all-weather global equity investment solution which includes an allocation to the harder-to-access investment opportunities within the private equity universe. These have, at times, provided investors with a less correlated source of returns and alpha in weaker markets. Although FCIT’s performance struggled over 2023, the trust was not alone, and it was very difficult for active managers to outperform global equity indexes, given the concentration of performance in a very narrow cohort of stocks. In our view, the longer-term characteristics of the portfolio are attractive, and with investor sentiment likely to improve over the course of 2024, broadening the rally in markets, FCIT’s diversified portfolio could come back into form. In addition, we believe that Paul’s rotation back into growthier strategies, including new private commitments into Venture Capital and Growth Equity, may benefit the portfolio when rate cuts do eventually materialise.

The increasing use of internal strategies has reduced the look-through cost burden. Furthermore, the low long-term borrowing costs associated with FCIT’s Gearing may also prove useful should the broader market pick up. Alongside the potential for a narrowing of the discount, which has traded at a premium in the past, this may present a good long-term entry point for investors.

Bull

  • Diversified strategy may benefit from a broadening of equity market returns
  • Discount presents a good long-term entry point for a core strategy
  • 53rd year of consecutive dividend growth

Bear

  • Performance may lag more concentrated strategies in a style-driven environment
  • Diverse strategy limits diversification benefits
  • Gearing can exaggerate losses
Continue to Portfolio

Fund History

17 Jul 2024 Balancing act
We ask why trusts with a more flexible approach have outperformed…
17 Jun 2024 Fund Analysis
Broadening equity market strength may mean FCIT’s diverse portfolio is well placed to benefit…
17 Apr 2024 Pretty, pretty, pretty good
Do investment trusts really protect capital and income against inflation? Let's take a look…
13 Nov 2023 Fund Analysis
FCIT’s discount may provide an attractive entry point…
12 Jul 2023 Many hands make light work
We break down how multi-managers have performed over the past five years and their positioning for the inevitable uncertainty that lies ahead…
12 Jun 2023 Fund Analysis
FCIT’s core global equity characteristics have offered steady growth in a volatile environment…
23 Mar 2023 The first course: week one of our ISA event in review
We look at the first four presentations of our ISA season event…
06 Mar 2023 Value and growth, and why both matter, with F&C's Paul Niven
Paul Niven
Rewatch this webinar from our month-long online series 'A feast of ideas for your ISA' hosted by the team at Kepler Trust Intelligence throughout March...
Watch Recording
26 Oct 2022 Money for nothing
Debt measured at fair value has had a positive impact on NAV returns for a number of investment trusts this year...
27 Sep 2022 Fund Analysis
FCIT has provided consistent performance in an uncertain market environment…
17 Aug 2022 The world for sale
While investment trusts are lagging their open-ended cousins in the global sector, their discounts may provide an attractive entry point...
30 Mar 2022 You say tomato…
Do it yourself or put it into a global fund and leave it to the experts - our analyst debate the merits of each approach...
02 Mar 2022 Spread 'em!
We explore how much dispersion in returns of stocks drive the differing fortunes of trusts…
13 Dec 2021 Fund Analysis
FCIT’s broad-based approach to global equity investing has let it capitalise on current markets, being one of the sector’s best performers recently…
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
19 Aug 2021 Pandemic immunity
We ask which global equity trusts have outperformed through the different stages of the pandemic…
04 Aug 2021 60/40 and other dinosaurs
A simple practical step to take your portfolio from the 1990s into the 2020s...
10 Jun 2021 Green is good!
2021 will see billions dedicated to sustainable initiatives, which brings with it a host of possible investment opportunities...
21 May 2021 Fund Analysis
FCIT is celebrating its 50th year of consecutive dividend growth…
12 Mar 2021 Results analysis: F&C Investment Trust
We examine the full year results released by the board of FCIT, assessing what has driven the trust’s performance and how it continues to offer a unique proposition in the global equity space…
19 Nov 2020 Fund Analysis
FCIT offers a well-diversified global multi-strategy portfolio at an attractive discount…
23 Oct 2019 Fund Analysis
One of the world’s oldest investment trusts, F&C Investment Trust is on course for its 49th year of consecutive dividend increases...
13 Dec 2018 Fund Analysis
The world’s oldest investment trust is on course for its 48th consecutive year of dividend increases having paid a dividend every year since launch...
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