Miton's Investment Company sees broadly flat NAV across first half

Closed-ended balanced mutual fund The Investment Company reported a broadly flat net asset value for the six months leading to 31 December, as constraints to investments in the UK due to retail prices outpacing wage gains offset gains seen in the US after the White House opted to fund the majority of its public spending from reserves as opposed to bond issuance.

The Investment Company, launched by Miton Asset Management Limited, said there had been a "pick-up in world growth" over the half, as the US Federal Reserve's decision to pay for most of its expenditure from reserves, but the devaluation of the pound as a result of the 2016 Brexit vote held it back in the UK.

However, TIC acknowledged that the FTSE All Share Index had risen 5.5%, driven by recovering oil and metal prices, but, in contrast, the FTSE Actuaries UK Conventional Gilts All Stocks Index rose just 0.1% over the period, as the decades of bond yield reductions came to an end.

The Investment Company, which invests in equities and fixed income securities, saw its NAV drop 0.5% over the six-month period to £17.65m.

The firm also paid two dividends amounting to 10.7p during the half-year, roughly half of the previous trading year's total dividend of 20.70p.

Phoenix Life remained the largest corporate exposure in the portfolio through a 7.25% perpetual note together with a smaller holding of ordinary shares, and Stobart Group, which performed strongly in previous periods, remained the largest equity holding for TIC.

New holdings over the half-year were established in Strix, a kettle switch manufacturer with a global market position, and Sabre Insurance, a car insurance business that helps those that need non-standard policies, both of which TIC said "offer the prospect of an attractive dividend income, along with good opportunities for share price appreciation".

"Going forward," Sir David Thomson, TIC's chairman, said, "the absence of global productivity improvement will ultimately stifle dividend growth. Certainly, the ultra-low level of bond yields implies asset returns generally may be more modest over the coming ten years, with more numerous corporates vulnerable to disappointment."

"Therefore we believe that an actively managed strategy is all the more appropriate in future since adding value is just as much about avoiding stocks and corporates that disappoint, as it is about backing those that have the most promising upside," he concluded.

As of 0920 GMT, shares had dropped 1.87% to 315.00p.