(Alliance News) - Edinburgh Investment Trust PLC on Wednesday said its net asset value total return was behind its benchmark in the first half and, as a result of its "disappointing" performance, changed its investment manager.
At September 30, the investment company's NAV per share, with debt at market value, stood at 660.16 pence, down 5.3% from 696.91p six months prior.
Edinburgh IT's net assets slipped 10% in the period to GBP1.24 billion from GBP1.38 billion at March 31. The trust's number of issued shares was reduced by 5.5% during the period to 184.76 million, explaining the discrepancy.
The trust did up its interim payout, however, to 6.40p, 2.4% higher from the 6.25p paid out in the first half last year.
In the six months to the end of September, Edinburgh IT's NAV total return was negative 3.1%, significantly behind its benchmark - the FTSE All-Share - which rose 4.6% in the same period.
Over the past 3 years, the trust has returned 1.6%, compared to the FTSE All Share rising 22%.
"This is another very disappointing set of results. Since 2018 your board has worked hard to understand the causes of this underperformance, cognisant of the long-term investment objective of your company and the recent trends in the UK equity market," said Chair Glen Suarez.
As a result, the trust has decided to change its investment manager - replacing Invesco with Majedie Asset Management.
Suarez added: "The company remains committed to its twin objectives of capital growth that exceeds the FTSE All-Share Index and dividend growth that at least matches the rate of inflation."
Edinburgh IT said its portfolio will be "closely aligned" to the sub-portfolio that new investment manager James de Uphaugh manages at Majedie. Edinburgh IT noted the sub-portfolio has outperformed the FTSE All Share by 3% per annum since 2006 and has has not previously been directly available to retail investors.
De Uphaugh runs Majedie's UK Equity and UK Focus strategies, where he directly manages about GBP3 billion in assets.
Majedie will receive an annual management fee of 0.48% of the market capitalisation of the Edinburgh IT up to GBP500 million and 0.465% on amounts above GBP500 million. This represents a significant reduction from the current levels of fees paid to Invesco of 0.55% of market cap. The change will become effective in the fist quarter of 2020.
Shares in Edinburgh Investment Trust were 1.4% higher in early trading in London on Wednesday at 612.19 pence each, giving a market cap of GBP1.09 billion.
Turning back to its interim performance, the trust's outgoing manager Mark Barnett commented: "The company's investments have continued to generate meaningful growth in income that has supported the growth in dividends. However, the capital returns have been disappointing as a consequence of the challenging backdrop facing UK domestically orientated companies, some particular stock specific challenges, and also the consequences of a large forced seller in the UK equity market."
Barnett pointed to lawsuit financier Burford Capital Ltd and guarantor loans provider Amigo Holdings PLC as particularly significant detractors from the trust's performance.
By Paul McGowan; paulmcgowan@alliancenews.com
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Edinburgh Investment Trust PLC (EDIN)