Last checked at 
LONDON (Alliance News) - Majedie Investments PLC on Wednesday reported a decrease in net asset value over its financial year due to making higher dividend payouts and redeeming debentures, as its biggest fund underperformed its benchmark.
At September 30, the investment trust's NAV per share with debt at par value was 334.3 pence, down 2.1.% compared to 341.6p last year. With debt at fair value, Majedie's NAV per share decreased slightly in the same period to 326.2p at September 30 from 327.8p the year before.
Majedie's NAV total return at par value was 0.9% and at fair value was 2.7%. The trust did, however, note the redemption of its 2020 9.5% debentures in December 2017, which diluted the NAV at par value by 1.6% and by 0.6% at fair value.
The trust said it redeemed the debenture in order to reduce its gearing "as markets were at all time highs". Majedie's gearing reduced to 10% at September 30 from 17% a year before.
A gearing ratio is a measure of financial leverage, meaning the degree to which a firm's operations are funded by equity capital versus creditor financing. A higher gearing ratio indicates a higher degree of leverage.
The trust's net assets decreased 2.1% to GBP178.6 million from GBP182.5 million last year.
Majedie's net assets were hurt by its increased dividend payout and by a premium paid on redeeming the 2020 debentures.
Majedie upped its total dividend payment for the year by 13% to 11.00 from the 9.75p last year.
The FTSE All Share Index rose by 5.9% in the period and the MSCI World Index gained 12.9%. Majedie has no overall benchmark; instead its funds have their own separate benchmarks.
The biggest contributors to the trust's net assets were funds run by its manager Majedie Asset Management. Majedie Investments holds a 17% stake in Majedie Asset Management.
Majedie Investments noted the Majedie Asset Management UK Equity Segregated portfolio, which represents 29% of Majedie Investments total assets, underperformed it benchmark.
The fund returned 3.0% net of fees to Majedie Investments, which is a 2.9% underperformance against its benchmark - the FTSE All Share Index. The biggest detractors from the fund were overweight positions in general retail, gold mining and fixed line telecoms. Specifically, overweight positions in Barrick Gold Corp and Saga PLC hurt the fund's performance, as was not holding AstraZeneca PLC, Majedie said.
Chief Executive Officer William Barlow said: "Against a background of rising political concerns notably Brexit in the UK, but also in the US and Europe and rising economic concerns as quantitative easing turns to quantitative tightening, interest rate rises due to inflationary concerns, early signs of leading economic indicators rolling over and the Chinese economy slowing; the company's positioning has been defensive throughout the year. In retrospect this was too early but the recent market turbulence suggests the defensive positioning will be more appropriate in the current year."
Shares in Majedie Investments were down 1.7% Wednesday at 264.50 pence each.
