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LONDON (Alliance News) - Majedie Investments PLC said Wednesday its net asset value decreased in the first half as the investment company's UK funds struggled.
Majedie Investments invests in a number of strategies managed by Majedie Asset Management, in which Majedie Investments holds a 17% stake. Majedie Investments said it has no current intention to sell any shares in its asset manager.
Majedie Asset Management's assets under management at the end of the half were down 8.5% to GBP12.4 billion, reflecting "stock market declines and a net outflow of funds".
Majedie Investment's net asset value at March 31 stood at GBP167.3 million compared to GBP178.6 million at September 30, a 6.3% decrease.
At March 31, the investment trust's NAV per share - with debt at par value - stood at 313.1 pence. With debt at fair value, Majedie's NAV per share was 304.4p.
Majedie's total NAV return, with debt at par value, was negative 4.2%. With debt at fair value, the trust's NAV total return was negative 4.5%.
Chief Executive William Barlow said the company's investment performance in the first half was "disappointing".
"There were two main reasons," explained Barlow, "first, the company's investment in MAM was written down by 5%. The board think it prudent to apply a discount to the formulaic valuation that has been used in previous years. Secondly, the UK Funds underperformed their benchmarks in the first quarter of 2019. In anticipation of more volatile markets their managers had tilted their portfolios to defensive value orientated stocks, but, as markets rallied, the more expensive momentum stocks out-performed. Whilst the defensive positioning of the funds has been premature the board remain confident that it should be relatively resilient should markets deteriorate."
Barlow added: "The six month period was a story of two very different quarters. In the quarter to December 2018 the FTSE All-Share Index fell by 10.3% and the MSCI All Country World Index fell by 10.7%. Markets became concerned that leading economic indicators were turning down at the same time that central banks were increasing interest rates and some economic forecasts suggested that the US economy could fall into recession in 2019. Stock markets, having traded at all-time highs and on historically stretched valuations, fell sharply.
"The new year brought a change of policy from central banks and a much more dovish outlook for monetary policy particularly in the US and China. Stock markets rallied, with the FTSE All-Share Index rising by 9.4% and the MSCI All Country World Index rising by 8.5%. It is noticeable however that expectations for global economic growth were not upgraded and forecast earnings growth is muted."
The trust declared an interim dividend of 4.4p, 10% higher than the 4.0p distributed the year before.
Shares in Majedie Investments were down 1.7% Wednesday at 256.60 pence each.