James Gard: Welcome to Morningstar. For our stock of the week I’m actually looking an investment trust. F&C, formerly known as Foreign and Colonial, was founded in 1868, when Queen Victoria was still on the throne. It’s just put out annual results.
F&C is one of those global trusts that investors favour as a diversified “buy and hold” option. Recently it’s outpaced rivals like Alliance Trust and Witan and was promoted to the FTSE 100 in September last year. For 2022 the share price and NAV lost ground, but that’s in the context of last year’s volatility. Year to date the trust’s shares are up more than 5% and it remains at a discount.
The dividend has also been increased, maintaining a 50+ year record of rises.
Manager Paul Niven thinks that equity markets will remain under pressure as the low interest rate era ends. While the US was the big winner of the last decade, he sees the best opportunities away from here. In emerging markets, for example, which have been unloved and undervalued for a while.
What does the trust own? The portfolio is made up of nearly 400 stocks, with financial services, tech and healthcare among the biggest sector weightings. US companies makes up more than half of the trust, followed by Japan and the UK. It also owns unlisted stocks, and these did well last year amid the market chaos.
Chair Beatrice Hollond flags up a number of risks this year, including persistent inflation, more rate rises, a squeeze on corporate earnings and recession.
The trust currently has a Morningstar Analyst Rating of Bronze, with our analysts praising the manager’s pragmatic and well-executed approach, as well as the trust’s commitment to keeping costs down.
For Morningstar, I’m James Gard.
