21 Sep 2009 07:00
City of London Group (the Company)
Investment Policy
As an investment company under Chapter 15 of the Listing Rules, the Company's investment policy is to produce total returns at least equivalent to the higher of:
3% above UK RPI; or
twice what could be earned on UK bank term deposit.
In each case, the returns would be measured on a 5 year rolling basis.
The Company meets this by investing in a portfolio comprising cash deposits, fixed or zero income securities, convertibles, preference shares and stocks of micro, small, mid and large capitalisation companies diversified over different countries, sectors and currencies ("the Investment Portfolio").
The proportions of the Investment Portfolio which can be invested in each of the above categories are as follows:
In each of the above categories, holdings will be spread between the UK and international markets both developed and emerging.
An emphasis will be given in each of the above categories to the mining, resource, property and financial service sectors where the Company has experience and knowledge.
The maximum exposure of the Investment Portfolio to different asset classes at any given time is intended to be:
| Equities | 85% |
| Cash Deposits | 50% |
| Fixed and Zero Income Securities | 50% |
| Convertibles | 25% |
| Currencies | 30% in any one currency and 75% in total in different currencies outside of pound sterling |
| Individual holdings | No individual holding should represent more than 50%, at acquisition, of the total value of the Investment Portfolio both quoted and unquoted |
The Articles of Association allow the Company to borrow in furtherance of its objectives. Borrowing will take place when the Board believes it to be in the best interests of shareholders but the amount borrowed will not exceed 50% of the value of the Investment Portfolio assets at the time of borrowing.
The investment policy will be on a long only basis and will not include short positions or derivatives other than for risk mitigation purposes.
Part of the Investment Portfolio will be invested in unquoted companies where such companies plan a flotation or a trade sale within 5 years. The Company holds and will, in the future, invest in fixed asset investments in private companies primarily in the financial services sector. Such investments will only be contemplated from time to time in the Company's chosen sectors with the following criteria:
intended IRR's in excess of 20 per cent.; and
not to account for more than 20 per cent. of the Company's net assets.
Application of the investment policy will follow the above principles from the time of investment and no corrective measures will be taken so long as there is an appropriate spread of investment risk.
Further info:
City of London Group Plc
Henry Lafferty
Tel: 020 7628 5518
Seymour Pierce Limited
Chris Howard
Tel: 020 7107 8000