F&C Investment Trust Beats Benchmark, Targets 56th Straight Dividend Increase

Key Points

• F&C Investment Trust delivered a 12.8% shareholder total return in the first half, slightly outperforming its 12.6% benchmark as global equities rose and its share-price discount narrowed. The trust also repurchased about 0.7% of its shares.
• Net revenue return per share rose 8.4%, and the board declared a 0.99-pence interim dividend. It intends to raise the full-year dividend in 2026, potentially marking the 56th consecutive annual increase.
• The trust reduced U.S. equity exposure, increased emerging-market allocations and modestly raised gearing, while maintaining a constructive outlook for equities and private equity despite geopolitical and energy-market risks.

F&C Investment Trust LON: FCIT reported a 12.8% shareholder total return for the first half of the year, modestly ahead of its 12.6% benchmark return, as strong global equity markets and a narrowing share-price discount supported results.

Fund Manager Paul Niven said net asset value total return was 12.4%, while the underlying portfolio returned 11.8%. The trust’s discount narrowed to 6.6% at the end of June from 6.8%, contributing to the higher shareholder return. The company also repurchased about 0.7% of shares in issue during the six-month period.

Net revenue return per share increased 8.4%, and the trust declared a first interim dividend of 0.99 pence per share. Niven said the board intends to increase the full-year dividend in 2026, which would represent the trust’s 56th consecutive annual dividend increase.

Stock selection and regional performance

Niven described the period as one of substantial dispersion among individual stocks, particularly companies linked to artificial-intelligence infrastructure spending. While the so-called Magnificent Seven group underperformed broad market indices during the first half, several semiconductor-related stocks generated outsized gains.

Among the examples cited were Applied Materials, which rose 186%; SK Hynix, up 284%; and ASML, up 85%. Niven also noted that holdings or lack of exposure to certain stocks had a meaningful effect on relative performance. Micron rose 310%, Intel increased 284%, and SanDisk advanced 872% during the period, according to the presentation.

All of the trust’s principal regional and global components generated positive returns. Emerging markets were the strongest geographic contributor, returning 18.7%, followed by global strategies at 13.5%, Japan at 11.6%, Europe at 9.1%, and North America, which lagged its benchmark.

Within the global allocation, the Global Focus quality-growth strategy returned more than 20%, while the Income Focus and Global Enhanced strategies returned 9.7% and 9.2%, respectively. In the U.S., the trust’s relative tilt toward value stocks helped as value outperformed growth, although stock selection within value mandates detracted from performance.

Portfolio changes and private equity

F&C Investment Trust continued to reduce U.S. equity exposure during the first half, selling approximately £240 million of U.S. core and U.S. large-cap growth holdings. It increased emerging-market equity exposure by around £135 million and added to its Global Focus strategy, while making divestments from European equities.

The trust also used market weakness following the onset of conflict involving Iran to purchase about £80 million of futures contracts on U.S. and emerging-market indices. Niven said the positions had been profitable as markets recovered.

Private equity, which represented about 11% of the portfolio, returned 9.1% during the period but lagged listed equity markets. Niven highlighted a roughly 40% gain for Schiehallion, a listed trust managed by Baillie Gifford, and an approximately 11% return from Pantheon’s future-growth program.

The trust modestly increased gearing during the period. A €42 million long-dated loan matured, and the trust established a revolving credit facility that was invested in equities. Its blended cost of debt was about 2.6% including the revolving facility, or approximately 2.4% excluding it.

Outlook remains constructive despite geopolitical risks

Niven said the trust would remain focused on listed equities and private equity rather than pivoting toward wealth-protection assets or large cash holdings. He said the long-term return potential of growth assets remained superior, while acknowledging geopolitical and market risks.

He said the conflict in the Middle East and disruption around the Strait of Hormuz could continue to create volatility in energy markets. However, he said F&C’s central expectation was that incentives remained for a resolution and that oil prices could moderate if a ceasefire held and shipping conditions improved.

Despite the uncertainty, Niven said global economic growth had proved more resilient than expected, supported by fiscal policy, financial conditions, corporate balance sheets and AI-related investment. He also cited substantial upgrades to corporate earnings forecasts, particularly in the U.S. and emerging markets.

On technology, Niven said the trust’s underlying managers had reduced semiconductor exposure following recent volatility, with the Global Focus strategy cutting its relative semiconductor position from roughly 18% to around 10%. Nevertheless, managers remained constructive on AI investment beneficiaries, particularly where recent share-price declines had improved valuations.

Niven said the trust remained constructive on emerging markets after increasing allocations over the past year. Although AI-linked semiconductor stocks and deleveraging had contributed to sharp declines in some markets, including South Korea, he said emerging-market valuations appeared attractive relative to developed markets and earnings expectations had risen faster than share prices.

The trust’s ongoing charges figure was unchanged at 0.45%. Niven said that figure includes Columbia Threadneedle fees, external-manager fees and administrative expenses.

About F&C Investment Trust (LON:FCIT)

F&C Investment Trust was founded in 1868 to bring the benefits of investing to a wider audience, we're the oldest investment trust in the world. F&C aims to provide a reliable foundation to deliver steady, long-term capital growth and a health dividend income. F&C has delivered increasing dividends for 54 years and is classified by the Association of Investment Companies (AIC) as a Dividend Hero. The value of investments and any income from them can go down as well as up and you may not get back the original amount invested.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.