Profile: City of London Investment Trust
It is a model of stability. Manager Job Curtis has been at the helm since 1991. His philosophy is to look for those companies which can provide steady, long-term growth, compounded over time, with no nasty surprises.
As a result, his portfolio reads like a roll call of the great and good in British business – Unilever, GlaxoSmithKline, HSBC, BP, and British American Tobacco. Mr Curtis invests with not only an eye to the potential returns from any holding, but also with a forensic analysis of any downside risks. It may not be exciting, but it is not designed to be; it is firmly positioned as a steady, dependable option for a turbulent world.
This does not translate into knock-out performance, but the trust has still beaten the FTSE All Share index over five years with a return of 83% versus 60%. Investors would expect the trust to do better than its peers at times of market turbulence; resilience over racy.
Another key selling point for the trust is that it has grown its dividends every year for the past 50 years. This is a key priority for Mr Curtis. “We focus on dividend sustainability and growth as well as capital growth,” he says. “We believe that’s an important anchor. This helps us to avoid the noise of the market.”
Finding companies with good cash generation is vital for Mr Curtis. This enables companies to pay their dividend and grow it over time. It’s not exciting, but the trust should be a steady ship in a turbulent world.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.