Investment Objective

What we aim to deliver

Our objective is to achieve long term capital growth in real terms and steadily increasing income. The aim is to achieve a higher rate of total return than the FTSE Actuaries All Share Index through investing in a diversified portfolio of stocks.

We have grown or maintained our dividend for each of the last 40 years consecutively.

The Portfolio is managed by James Henderson of Janus Henderson Investors.

How James Henderson and Laura Foll invest

We take a bottom up approach, spending a great deal of time with the management teams of our portfolio companies and conducting detailed analysis of the strengths, weaknesses and long term growth prospects of those companies into which we invest your money.  We continue to identify organisations which are not trading at fair value or with respect of the long term prospects for the business. 

It also allows us to invest in businesses which have great long term qualities but for various reasons may have hit a bump in the road.  We will buy stocks that are slightly unfashionable but that we believe have a significant potential for growth.  They will typically be world class brands selling globally, that have fallen out of favour.

We are patient with our positions and invest for the long term.  We build up positions gradually - having taken the decision to invest in a stock we would typically begin by investing around 30bps, which we add to over time dependent upon the risk profile of an individual stock.  Our long list of stocks allows us to moderate our position size where we perceive the investment case is higher risk than may be the case elsewhere in the Portfolio.  This means that we take a risk based approach to our position sizing, while ensuring that if we get something right the sizing is sufficient to move the dial on the Portfolio performance as a whole.

Our strategy - guidelines

The Board sets the investment strategy and actively monitors both the Investment Managers’ and Executive Leadership team’s adherence through a series of guidelines and parameters in each scheduled Board meeting. The strategy is reviewed periodically to ensure we deliver on our objective.

Investments

Permitted types of investments are:

Restrictions:

 
  • Equity Shares
  • Trading is not permitted in suspended shares or short positions

 
  • Cash/Liquid Assets
  • No more than 15% of gross assets will be invested in other UK listed investment trusts

 

 
  • No more than 175 stocks

 

 
  • No investment may be made which raises the aggregate value of the largest 10 holdings, excluding holdings in collective investment vehicles that give exposure to Japan, Asia/Pacific or emerging market regions, to more than 40% of the Portfolio, including gilts and cash

 

 
  • The value of a new acquisition in any one holding may not exceed 5% of the total Portfolio value (including cash) at the time the investment is made

 

 
  • Further additions shall not cause a single holding to exceed 5%, and Executive approval must be sought (to be reported at the next Board meeting), to retain a holding should its value increase above the 5% limit

 

 
  • No investment in any investment vehicle managed or advised by Janus Henderson shall be made without prior Board approval

 

 
  • No investment other than in equity shares quoted on a major international Stock Exchange (including AIM for the avoidance of doubt) or instruments convertible into the same may be made without prior Executive approval

 

 
  • The Company may not make investments in unlimited liability companies

 

The current regional parameters are:

 

Minimum

Maximum

 

%

%

United Kingdom

55

100

North America

0

20

Continental Europe

0

20

Japan

0

10

Asia/Pacific

0

10

Other (including South America)

0

10

 

Derivatives

May be used with prior authorisation of the Board

Hedging

Currency hedges may be put in place with Board approval to protect against foreign exchange movements on the capital and income accounts

Stock-lending

Up to 30% of the market value of the Portfolio may be lent

Gearing

A ceiling on net gearing of 50% is applied. Typically net gearing, (i.e. gearing net of cash), is between 10% and 20% of the total Trust value. The Board retains the ability to reduce equity exposure so that net cash is above 10% if deemed appropriate

Daily dealing limit

Net purchases in any dealing day are to be limited to £30 million unless prior Executive approval is obtained

Underwriting

Permitted capital at risk up to 5% of the value of the Portfolio

Corporate approval

Where indicated, the Investment Manager must obtain prior approval to exceed permitted limits either through Board or Executive approval. Executive approval shall be the approval of either the Board Chair or the Chief Executive Officer. The Board may make non-material adjustments or changes to the investment policy from time to time. Any changes to the investment policy, which the Board deem to be material, require prior shareholder approval