Caledonia Investments has underperformed its investment trust sector, global growth, over three and five years. However, in July the trust appointed a new chief executive, Will Wyatt, who is looking to rebalance the portfolio with the objective of improving investment returns and generating income to support the progressive dividend policy. This will include having a specific portfolio allocation to income producing investments, and reducing the number of holdings.
"This may take a little time to achieve but the prospect of an increasing dividend over the longer term is attractive," says Simon Elliott, head of investment company research at Winterflood Securities.
You can buy the trust on a discount of nearly 17 per cent at the moment, so if performance does turn around this could tighten considerably.
Caledonia was launched out of the investments of the Cayzer family and aims to preserve wealth like other investment trusts that originate from family fortunes, such as RIT Capital. Caledonia aims to be a core investment which increases value by investing in longer-term in a range of assets. It aims for a return in excess of the FTSE All Share Total Return and a positive total return over rolling five year periods, while maintaining a progressive annual dividend.
As well as holding investments for the long-term, Caldonia's investment team sits on the boards of some of the companies it holds.
Its defensive approach means it is likely to underperform rising markets, though should in theory cushion against market falls. However, that didn't happen in 2008.
CALEDONIA INVESTMENTS (CLDN) | |||
|---|---|---|---|
| PRICE | 1,815p | 1 YEAR NAV PERFORMANCE | 14.88% |
| MARKET CAP | £1.06bn | 3 YR NAV PERFORMANCE | -2% |
| No OF HOLDINGS: | 86* | 5 YR NAV PERFORMANCE | 22.08% |
| SET UP DATE | 18 July 1960 | 2008 NAV PERFORMANCE | -26.51** |
| GEARING | 100% | TOTAL EXPENSE RATIO | 1.17% |
| NAV | 2,150.9p | YIELD | 1.98% |
| PRICE DISCOUNT TO NAV | -16.85% | MORE DETAILS | www.caledonia.com |
Source: Investors Chronicle, *Caledonia Investments, **Morningstar.
Performance data as at 6 December 2010.
TOP 10 HOLDINGS as at 30 November 2010
| Holding | Percentage |
|---|---|
| Close Brothers | 12.4 |
| British Empire Securities | 9.7 |
| Avanti Communications | 6.7 |
| Cobepa | 6.0 |
| Bristow Group | 5.5 |
| Oval | 3.4 |
| AG Barr | 3.1 |
| Dewan Housing Finance | 3.0 |
| London & Stamford Property | 3.0 |
| Satellite Information Services | 2.9 |
Sector breakdown
| Sector | Percentage |
|---|---|
| Funds | 25 |
| Financial | 22 |
| Property | 9 |
| Industrial | 11 |
| Other Assets | 5 |
| Oil & Gas | 9 |
| Consumer | 19 |
