AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
During the six-month period ending 30 June 2024, the UK economy showed signs of recovery from the inflation and cost of living challenges that emerged in 2022. The UK economy exited a mild recession, with growth rates still below pre-crisis levels. Inflation steadily declined, reaching the Bank of England's 2% target in May 2024 for the first time since July 2021. Despite steady base rates from the Bank of England during the review period, anticipated interest rate reductions in the UK, US, and Europe could positively influence global market sentiment.
Company Performance Relative to Benchmark
The FTSE All Share Index grew by 7.4% over the review period, while JPMorgan Claverhouse Investment Trust plc achieved a net asset value (NAV) return of 9.2%, surpassing its benchmark. This performance was attributed to stock selection strategies. The Company’s share price increased by 7.3% during this period, though the share price discount relative to NAV widened slightly. Over the past decade, the Company achieved a 77.8% return on a NAV basis and an 85.0% return in share price terms, outperforming the benchmark return of 77.3%.
As of 30 June 2024, the Company’s NAV per share was 748.6p, and the share price stood at 714.0p. By 7 August 2024, the NAV had decreased to 739.9p, while the share price remained at 714.0p.
Dividend Policy and Revenue
The Company maintains a policy of increasing total dividends annually, aiming to keep pace with or exceed inflation over time. The total dividend for the financial year ending 31 December 2023 was 34.50p, consisting of three interim dividends of 8.0p each and a fourth of 10.5p. For the current financial year, the first quarterly dividend of 8.25p was paid on 3 June 2024. A second quarterly dividend of 8.25p is scheduled for 2 September 2024. The revenue per share for the six months to 30 June 2024 was 16.02p, compared to 15.80p in the same period of 2023.
Discount Management and Share Repurchases
Discounts in the investment trust sector have widened over the past 18 months due to a shift from equities to fixed income and money market funds. The Board aims to manage share price imbalances through repurchase and allotment authorities. During the reporting period, the Company repurchased 717,782 shares at a cost of £4.9 million. As of 7 August 2024, an additional 50,000 shares had been bought back for £364,000.
Gearing and Borrowing
The Company's gearing policy allows for a range of 5% net cash to 20% gearing under normal market conditions. The Company ended the review period approximately 7.0% geared, compared to 6.3% at the end of the previous financial year. The Company holds £30 million in 3.22% private placement notes maturing in March 2045. The previous revolving credit facility with Mizuho Bank Limited was replaced with a new £40 million one-year revolving loan facility with The Royal Bank of Scotland International Limited.
Board Succession and Management Changes
The Chairman will retire at the Company's next AGM in April 2025, with Victoria Stewart appointed to succeed. Efforts are underway to appoint a new Director before then. A change in portfolio management is underway, with William Meadon leaving JPMorgan Asset Management in August 2024. Anthony Lynch and Katen Patel have joined Callum Abbot as portfolio managers from 1 July 2024. Lynch and Patel have extensive experience within JPMorgan and will bring their expertise to the Company.
Outlook
Geopolitical uncertainties, including ongoing conflicts and strained international relations, pose risks for investors. In the UK, market conditions are improving, with anticipated interest rate cuts and rising wages boosting confidence. Despite this, UK equity valuations remain appealing, and increased M&A activity indicates growing recognition of market value. The Company’s managers are positioning the portfolio to capitalize on dividend growth opportunities, with expectations for steady returns and income growth over the long term.
