Foreign & Colonial's net asset value rises in first half

Foreign & Colonial Investment Trust saw strong net asset value returns for the first half of the year as Brexit forced a widening of shareholder discount.

In its unaudited results for the six months ended 30 June, the company reported a 7.7% net asset value total return, which it said compared favourably with its peers, although lagged behind the 12% rise in the FTSE All World Index over the period.

Shareholder returns were 3% at 455p each, as uncertainty of the UK’s decision to leave the EU led to a widening in discounts across the sector.

The FTSE 250 listed company planned for another real rise in the dividends for 2016, which would be the 46th consecutive annual increase.

Net revenue return per share rose 26% in comparison to 2015 as income from investments posted strong gains. The first interim dividend of 2.35p will be paid on 1 August.

Underlying equity market returns were broadly flat in local currency terms over the first half of the year. The company’s portfolio is largely invested in overseas assets and benefited from weak sterling after Brexit. The private equity portfolio gained 13.7% and generated £36m of net cash flow.

The company said low interest rates over the period presented it with an opportunity to extend the maturity of its borrowings and introduced £75m of long term sterling denominated funding.

Chairman Simon Fraser said: “Modest economic growth, combined with relaxed monetary policy, has proven to be a supportive combination for equity markets. In addition negative cash rates and low yielding assets are proving supportive of high quality dividend paying equities. However, elevated geopolitical uncertainties coupled with the challenge of growing profits and improving margins in a low growth world leave us with a difficult corporate backdrop.

“Periodic bouts of investor optimism and fear will likely continue to be a feature of markets but, despite short term challenges, we remain focused on our objective of growing capital and income over the long term for the benefit of our shareholders.”

Shares in Foreign & Colonial Investment Trust were up 0.21% to 482p at 1318 BST.