Independent Investment Trust sees increase of 17.7% thanks to housebuilders
Max Ward's Independent Investment Trust has benefited from its high exposure to UK housebuilders. The trust saw its NAV rise from launch on 19 October 2000 to 31 March 2001 by 17.7%. While the trust is listed in the global growth sector it benchmarks its performance against the All-Share, which fell 4.5% over the same period.
The trust, managed by Max Ward and chaired by Douglas McDougall, both formerly of Baillie Gifford, is managed without any defined process or style, and without reference to any benchmark. There are three major influences that the managers have identified as dominating the market during the recent investment period: the deteriorating prospects for global activity, the improving outlook for interest rates in light of this deterioration, and the painful adjustment of investors' expectations in the fields of telecommunications and technology.
According to Cazenove research, the trust's big investment in housebuilders proved rewarding over the past year, a combination of good trading, industry rationalisation and falling interest rates all helped stimulate interest in the industry.
The managers continue to favour the sector but are conscious that its market valuation tends to be disproportionately influenced by perceptions of the interest rate outlook. The trust's retailing investments in DFS and Signet produced good results and have seen their shares perform well. However, holdings in Matalan were sold at a loss following disappointing trading over Christmas and the portfolio's exposure to New Look was reduced after it produced disappointing results.
Investments in telecommunications and technology did disappoint but, according to Cazenove, the managers retained the view their companies were coping relatively well within a tough trading environment and, as long as this remains the case, they expect to continue with investment in the two industries.
The managers of the fund have taken the advantage of the freedom incorporated in the portfolio investment mandate by drawing on their £20m facility with the Bank of New York Europe. At 31 May, £12m of the fund's borrowing facility had been drawn down, giving a gearing level of 16%.
The managers are currently happy with the businesses represented in the portfolio and, for the most part, with the valuations commanded by their shares in the stock market. However, according to Cazenove, it is likely that some adjustment to the weightings of individual companies and industries will be necessary.
Partner Insight: For Blackfinch, the arrival of its IHT portfolio services was a 'natural evolution' in the group's offering and points to an established track record of returning cash to investors.
Senior Managers Regime
Interest rate outlook unchaged
FCA made demands last week