F&C Investment Trust 13 December 2021
This is a non-independent marketing communication commissioned by BMO Global Asset Management. 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.
To secure long-term growth in capital and income through a policy of investing primarily in an internationally diversified portfolio of publicly listed equities, as well as unlisted securities and private equity, with the use of gearing.
F&C Investment Trust
BMO Global Asset Management
Association of Investment Companies (AIC) Sector
12 Month Yield
Dividend Distribution Frequency
Latest Market Capitalisation
Latest Net Gearing (Cum Fair)
Latest Ongoing Charge Ex Perf Fee
(Discount)/ Premium (Cum Fair)
Daily Closing Price
F&C Investment Trust (FCIT) offers investors a highly diversified, multi-manager approach to global equity investing. FCIT’s manager, Paul Niven, leverages both BMO’s own internal strategies as well as what he believes are best-in-class external managers, including a significant allocation to private equity. Paul’s role is not merely to select delegated managers, but also to modify overall exposures in accordance with his own views. Over the last 12 months Paul has made a number of changes to FCIT, cutting exposure to growth styles and emerging markets in favour of more value-oriented strategies. This is a reflection of his view that stock-picking will increasingly be rewarded, but also reflects the potential reversal of the historical outperformance of growth stocks over value. We cover FCIT’s portfolio, and the economic events which are shaping Paul’s view, in more detail in our Portfolio section.
FCIT’s Performance has been strong over the last 12 months, generating an NAV total return of 20.8% and beating both its benchmark and peers, thus resulting in FCIT being the third best-performing trust within the AIC Global peer group. Paul comments that FCIT’s performance reflects a market environment that is more suitable for a broad-based approach to equity investing, rather than being led by the narrow group of growth stocks which have supported FCIT’s more concentrated peers.
FCIT’s most recent Dividend marks its 50th straight year of consecutive dividend increases – one of the longest records of any investment trust – and the board remains committed to its future growth. FCIT continues to trade on a Discount (which is currently 7.5%), a situation that has persisted since the COVID-19 crash in 2020.
In our view, FCIT offers an attractive choice for investors looking for a ‘core’ equity product: that is to say, a strategy which can form the majority of a portfolio or offset more stylistically biased or concentrated strategies. Supporting our view is FCIT’s global remit, which captures all major regional economies and styles, as well as its attractive long-term historical return profile. In particular, we highlight FCIT’s consistent beta, meaning it has historically provided a good proxy for the risks and returns of global equities. Yet most importantly, FCIT preserves the attractions of active management, with the benefits of Paul’s active stewardship increasingly becoming apparent over the last 12 months given FCIT’s strong performance.
The future may continue to look bright for FCIT as the current market environment remains suited to stock-picking, rather than being driven by growth-stock momentum as it was previously. So long as global economies remain broadly positive, producing both strong earnings and inflationary pressures, then the environment will likely continue to be supportive. We believe FCIT may be particularly well placed to capitalise on this, thanks to Paul’s inclusion of top-down analysis and his willingness to actively position the portfolio around this. FCIT’s current discount remains an attractive entry point.
|Top-quintile performance over the last 12 months, combined with good long-term performance versus benchmark
||Can underperform when markets are driven by a single style of investment
|A well-diversified portfolio that also combines attractive private equity strategies
||Gearing can enhance losses on the downside
|One of the longest track records of dividend increases of any investment trust
||Does not offer the same diversification potential to other global strategies as a concentrated equity strategy does