Investment Strategy

Investment Trust Limits and Restrictions for The Law Debenture Corporation p.l.c.

Investment Objectives

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 portfolio diversified both geographically and by industry.

Corporate Approval

Where stated below, the investment manager must obtain prior approval to exceed permitted limits.  This will either be by Board Approval (and evidenced by Board Resolution) or Executive Approval, which shall derive from the Chairman or Chief Executive.

Portfolio Size and Concentration

The portfolio should consist of no more than 150 stocks.  The value of the largest 20 holdings (excluding holdings in collective investment vehicles held to give exposure to the Japanese, Asia/Pacific or emerging market regions) shall not exceed 40% of the portfolio.

Individual Stock Limits

New acquisitions shall not constitute more than 5% of the portfolio.  Additions to existing stocks shall not cause each total holding to exceed this 5% limit.  If an individual holding increases in value to the extent that it becomes more than 5% of the portfolio (including cash), Executive Approval shall be sought before determining whether sufficient sales are transacted to ensure that the stock remains at or below the 5% level (that approval to be reported to the next board meeting).

Country Limits

Geographical allocation as agreed by the board from time to time and notified to the investment manager.

Current guidelines are: 

  Minimum% Maximum%
UK 55 80
North America 0 20
Continental Europe 0 10
Japan 0 10
Asia/Pacific 0 10
Other (including South America) 0 10

For purposes of calculating limits, cash shall be excluded.

Stock Type Limits

  • No investment other than equity shares quoted on a major international Stock Exchange (including AIM for the avoidance of doubt) may be made without prior Executive Approval
  • No investment in any investment vehicle managed or advised by Henderson shall be made without prior Board Approval.
  • No investment in unlimited liability companies.


Derivatives may not be used without the prior Board Approval.  In any event, instruments used must never exceed the value of assets being hedged and will be used solely to protect the portfolio against its diminution in value.  Hence all transactions will be capital in nature.

Currency hedging may be undertaken with Board Approval and executed by the Corporation's finance department.

Borrowing Limits

All borrowing shall be subject to Board Approval, and this will be arranged by the Corporation's finance department.


No stocklending shall be permitted in any circumstances.


Permitted capital at risk up to 5% of the value of the portfolio.

Daily Dealing Limit

Net  purchases in any dealing day are to be limited to £15.0 million unless prior Executive Approval is obtained.

Prohibited Investments



  • No new investment in suspended shares
  • No short positions
  • No more than 15% of gross assets to be invested in other UK listed investment trusts

Corporation to maintain eligibility for investment trust status

Note that the directors may make adjustments to the strategy from time to time, but any significant amendments - say, a change to the AIC categorisation 'global trust' - would require advance shareholder approval.

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