(Alliance News) - F&C Investment Trust PLC on Monday said it underperformed against its benchmark in the first half of 2020 due to borrowings, though has promised to increase its annual dividend.
Net asset value per share was 740.27 pence on June 30, down 1.8% from 753.90p at the end of 2019.
The company's NAV total return for the six months ended June 30 was negative 0.4%, compared to a positive return of 0.9% for the FTSE All-World Index in the same period.
F&C Investment Trust explained the difference between its NAV total return and that of its benchmark was "largely due to the impact of borrowings" as the repricing of the fair value of F&C's debt detracted 0.9% from its returns.
Starting 2020 at 9.9% gearing, the company managed a small reduction to 8.1% in the six month period.
The company noted that, as a consequence of other corporates cutting or skipping dividend payments, its net revenue return per share fell 29% to 5.74 pence. Despite a GBP500,000 income gain from sterling weakness in the period, this was less than the GBP1.6 million gain in the first half of 2019. Special dividends received fell to GBP700,000 from GBP2.3 million.
The company's revenue reserve exceeds a year's worth of dividends, however, allowing F&C to pay an interim dividend "despite the fall in earnings" of 2.90 pence per share. This is equal to its interim dividend in 2019.
Hollond stated that: "Shareholders can expect an increased dividend for 2020 that will not only mark 50 consecutive years of increases, but also 152 years of annual dividend payments."
F&C's fund manager, Paul Niven, said: "Markets have recovered strongly from their recent lows, driven by the expectation of a return to growth and aided by unprecedented levels of policy stimulus. Looking forward, we expect that the economic and corporate earnings recovery will continue and that, while short term risks remain and volatility is to be expected, equities still contain many attractive opportunities for the patient investor."
Shares in F&C were down 0.6% at 682.00 pence in London on Monday morning.
By Anna Farley; annafarley@alliancenews.com
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F&C Investment Trust (FCIT)