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LONDON (Alliance News) - Investment Co PLC on Wednesday reported a fall in its net asset value per share at the end of its 2018 financial year due to growing investment risk experienced in the year amid Brexit and global trade war worries.
At June 30, Investment Co's NAV per share was 363.24 pence, a 2.3% decrease from 371.68p at the end of June 2017. Investment Co's net assets also decreased by 2.3%, to GBP17.3 million from GBP17.7 million.
The company has a portfolio of both fixed income securities and equities. By comparison, the FTSE All Share Index rose by 5.0% and the FTSE Actuaries UK Conventional Gilts All Stocks Index decreased by 0.7% in the same period.
Investment Co hired a new investment manager during the period, stockbroker Fiske, and as a result of a portfolio review, the carrying value of some investments decreased by GBP234,000 - which represents a 4.9p decrease to NAV.
In Investment Co's fixed income portfolio, certain holdings were reduced or sold in order to protect the capital value of the portfolio "in light of generally rising market interest rates".
The company sold its Phoenix Life 7.25% perpetual notes. The bond had a call date in March 2021 but Investment Co believed the issuer was likely to redeem it early in order to re-finance its debt on better terms.
In its equity portfolio, Investment Co sold a number of holdings where liquidity was constrained.
The companies had performed well, and Investment Co perceived the current value was vulnerable to "weakening sales growth, softening margins or to an overly leveraged balance sheet".
"Equity markets dislike uncertainty and the combination of Brexit and global trade wars are a growing investment risk," said investment manager Fiske.
"However, once there is clarity over the post-Brexit regulatory and political environment the UK could start to look even more attractive especially to those investors who are not currently allocating to the UK."
Investment Co declared a full year dividend of 20.70p, flat on the year before.
Going forward, the company said it "must move" towards a policy of ensuring any dividend is covered by the income produced by the firm instead of the dividend being paid out of capital.
As a result, Investment Co expects its financial year 2019 total dividend to be reduced to 15.0p.
Shares in Investment Co were down 1.2% at 315.25 pence each.