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Fund Profile

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This is a non-independent marketing communication commissioned by Columbia Threadneedle Investments. 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
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Overview

F&C Investment Trust (LON:FCIT) aims to provide both capital and income growth over the long term through a highly diversified, multi-manager investment strategy. FCIT’s long-standing portfolio manager, Paul Niven, has responsibility for deciding the trust’s strategic and tactical asset allocation by utilising a range of specialist fund managers. As discussed in Portfolio, Paul takes a highly active approach to portfolio management, with allocations determined by both his top-down and bottom-up strategic outlook. Over the past two and a half years, this flexibility has led to a gradual rotation away from growth to a more balanced portfolio, through increased exposure to value and income-focussed mandates.

Paul’s significant 12.3% allocation to private equity offers a differentiated way to generate alpha compared to most strategies in the global sector. Performance has been consistent over the past five years, with the naturally diverse and active management strategy minimising the impact of stylistic market sell-offs and volatility, compared to the equity market and the typically growthier global sector. In March 2022, the board refinanced the trust’s long-term debt, significantly reducing the blended rate from 7.1%, at the end of 2013, to its current level of 2.4% (see Gearing).

FCIT has marked its fifty-second year of consecutive Dividend increases and paid a fully covered dividend last year. The trust currently yields 1.5% and remains one of the AIC’s ‘Dividend Heroes’.

The growth and popularity of the strategy has led to the oldest investment trust within the AIC universe rejoining the FTSE 100 Index in September 2022. It has also contributed to strong share price performance over the past 12 months and a significant narrowing of the Discount from 12.9% to 5.6%, at the time of writing.

Analyst's View

In our view, Paul’s gradual shift to a more stylistically balanced portfolio naturally elevates FCIT’s status as a one-stop shop for investors seeking a broad global equity exposure. The diversified nature of the strategy is likely to lead to similar risk characteristics to the FTSE All-World Index benchmark. However, Paul’s active management and gradually increased allocation to high-quality, early-stage private equity offers the potential to generate alpha during periods of market turbulence. We believe Paul’s well-timed rotation out of growth into more value-focussed and income-generating strategies will likely reduce the volatility and offer a more diversified exposure in future.

FCIT has performed well over the past five years versus its global peer group. When combined with the resurgence in income growth, we believe this highlights the fundamental strengths of a diverse strategy. Given that equity market uncertainty looks likely to remain elevated for an extended period, we believe this will continue to be an attractive way to invest for long-term investors.

The strategic decision to significantly reduce FCIT’s long-term debt, coupled with the significantly increased level of cash in the portfolio, ensures Paul has a significant amount of firepower to allocate to more attractively valued opportunities. This may offer a potential source of long-term outperformance, should such opportunities present themselves in what is likely to continue to be an uncertain market environment.

Bull

  • Well-balanced portfolio provides some stability in a volatile market
  • Strength of income growth may prove valuable in low-return environment
  • Multi-manager approach reduces key-man risk

Bear

  • Performance may lag during stylistically driven markets
  • Does not offer a significant diversification opportunity compared to alternative higher-conviction strategies in the sector
  • Discount to NAV may widen
Continue to Portfolio

Fund History

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…
10 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...
20 May 2022 Is it time to ditch index funds?
Averaging out makes sense in a boom market but may be much riskier in the future…
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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