British Portfolio Trust plc – diversified UK equity portfolio
British Portfolio Trust plc aims to provide growth in capital and income over the long term through investment in a diversified portfolio of UK equities. It consists mainly of the shares of FTSE 100 companies, but has the flexibility to include medium-sized and smaller companies. Jeremy Thomas who manages the trust says, “The UK equity market has a broad range of sectors to achieve a balanced portfolio of stocks.”
Aim
The Trust’s objective is to provide shareholders with growth in capital and income over the long term through investment in a diversified portfolio of UK equities. The Trust invests mainly in the shares of FTSE 100 companies, although its portfolio also includes some medium-sized and smaller UK companies.
History
The launch of the Trust in December 2001 followed offers to holders of Loan Notes issued by Lafarge Minerals Ltd (former shareholders of Blue Circle Industries PLC) and Shopgoal Ltd (former shareholders of Fairbar Ltd, which was de-merged from Whitbread plc), effectively to exchange their Loan Notes for Ordinary shares. In addition, Ordinary shares were available through a Placing and Offer for Subscription by Cazenove. The Trust has issued new shares on subsequent occasions at the planned wind-up dates of other quoted investment trusts and also in exchange for loan rates issued in cash takeovers.
Risk & Features
Investment trusts are quoted companies listed on the London Stock Exchange. Their share prices are determined by factors including the balance of supply and demand in the market, which means that the shares may trade below (at a discount to) or above (at a premium to) the underlying net asset value.
The Trust seeks to enhance returns for its shareholders through gearing, in the form of bank borrowings. Gearing can boost the Trust’s returns when investments perform well, though losses can be magnified when investments lose value.
This investment trust charges 75% of its annual management fee to the capital account and 25% to revenue. This could lead to a higher level of income but capital growth will be constrained as a result. Your capital could also decrease if income paid out of capital exceeds the growth rate of the trust.
(i) Share price source: Lipper, as at market close mid price.
(ii) A trust’s net asset value (NAV) is calculated as available shareholders’ funds divided by the number of shares in issue, with shareholders’ funds taken to be the net value of all the company’s assets after deducting liabilities. It is the capital NAV that is shown, which excludes any income.
British Portfolio Trust PLC is incorporated in England and Wales. (Company registration no. 4223927). Registered Office: 155 Bishopsgate, London, EC2M 3AD. The Company is a member of the Association of Investment Companies - Category: UK Growth.
Manager's Review as at 30.07.2010
British Portfolio Trust net asset value (total return) rose 8.5% during July, outpacing a strong FTSE Share which rallied 6.9%. The market's recovery in July offset the losses in June and leaves the index broadly flat year to date. The Trust benefitted from a bid for Dana Petroleum, the oil exploration and development company, and PartyGaming's announced deal with bwin Interactive Entertainment. Corporate activity is becoming more prevalent as low financing costs, cheap equity valuations and an improving outlook for corporate profitability encourage greater board room confidence. The Trust also benefitted from the June's purchases of BP, which rallied from an extremely oversold valuation on marginally better newsflow. Portfolio gearing, which averaged 7% during July, was a positive contributor to net asset value during the month.
The only new addition to the portfolio during July was Debenhams, the department store retailer. Although we remain somewhat wary of the outlook for the UK consumer, department stores tend to be reasonably defensive, the Company announced an attractive refinancing of its rapidly reducing debt and the valuation is highly appealing. We also added to Carnival, Travis Perkins and Keller during the month, funded from reductions to Wood Group, BG, Lancashire and, following the bid approach, Dana. The low headline valuation of equities and positive recent announcements on corporate profits are encouraging, but Federal Reserve chairman Ben Bernanke's characterisation of the economic outlook as "unusually uncertain" is germane. The result is a sustained heightened level of volatility as the market schizophrenically moves between a state of greed and fear. Over time an active approach to stock selection and the use of gearing should enable us to exploit the opportunities such volatility presents.
Trust Manager
Jeremy Thomas,
CIO, UK Equity
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Jeremy is CIO of UK Equities and joined RCM in September 2004 from ISIS Asset Management. Jeremy was formerly a Director in the UK Equity Portfolio Management Team at ISIS where he was responsible for stock selection and portfolio construction for UK pension funds. He also set sector strategy and had specific sector research responsibilities. Between 1996-2002 he was an Associate Director at Schroder Investment Management, where he managed the Schroder Portfolio Fund.
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The information contained herein including any expression of opinion is for information purposes only and is given on the understanding that it is not a recommendation and anyone who acts on it, or changes their opinion thereon, does so entirely at their own risk. The opinions expressed are based on information which we believe to be accurate and reliable, however, these opinions may change without notice.
(i) Share price source: Lipper, as at market close mid price.
(ii) A trust’s net asset value (NAV) is calculated as available shareholders’ funds divided by the number of shares in issue, with shareholders’ funds taken to be the net value of all the company’s assets after deducting liabilities. It is the capital NAV that is shown, which excludes any income.
British Portfolio Trust PLC is incorporated in England and Wales. (Company registration no. 4223927). Registered Office: 155 Bishopsgate, London, EC2M 3AD. The Company is a member of the Association of Investment Companies - Category: UK Growth.
Source: RCM (UK) Ltd, all data as at 30.07.2010
(i) Share price source: Lipper, as at market close mid price.
(ii) A trust’s net asset value (NAV) is calculated as available shareholders’ funds divided by the number of shares in issue, with shareholders’ funds taken to be the net value of all the company’s assets after deducting liabilities. It is the capital NAV that is shown, which excludes any income.
British Portfolio Trust PLC is incorporated in England and Wales. (Company registration no. 4223927). Registered Office: 155 Bishopsgate, London, EC2M 3AD. The Company is a member of the Association of Investment Companies - Category: UK Growth.
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(i) Share price source: Lipper, as at market close mid price.
(ii) A trust’s net asset value (NAV) is calculated as available shareholders’ funds divided by the number of shares in issue, with shareholders’ funds taken to be the net value of all the company’s assets after deducting liabilities. It is the capital NAV that is shown, which excludes any income.
British Portfolio Trust PLC is incorporated in England and Wales. (Company registration no. 4223927). Registered Office: 155 Bishopsgate, London, EC2M 3AD. The Company is a member of the Association of Investment Companies - Category: UK Growth.
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