City of London (CTY) offers probably one of the simplest ways for investors to gain broad exposure to the UK equity market. The trust has existed in one form or another since 1860 (coincidentally the same year as the IC's launch), but now falls under the auspices of Henderson Global Investors.
Managed by industry veteran, Job Curtis, the Trust employs a relatively conservative investment strategy, together with a four per cent benchmark cap that allows for a greater degree of diversification, thereby spreading risk. At any one time the portfolio will be made up of around 100 companies, although the trust's bias towards large-caps means that, typically, 80 per cent of investments will be FTSE 100 constituents.
At just 0.37 per cent, the Trust's Total Expense Ratio is the lowest in its AIC sector. It is partly comprised of a 0.25 per cent management fee for amounts in excess of £400m, together with a contingent performance element. The annual fee structure certainly compares favourably when set against actively managed Oeics
Despite the broad spread of securities, CTY still delivered returns in advance of the UK Growth & Income sector average since last September as a result of its underweight positions in the banking and mining sectors. It is also worth noting that the Trust's shares have also recovered significantly from a position two years ago, when they were trading at a 14 per cent discount to the underlying assets.
CTY prides itself on having delivered rising dividends over 42 consecutive years, so it will be interesting to see if Mr Curtis manages to maintain this record in an environment where investee companies have typically been bolstering their balance sheets at the expense of dividend payments.
| PRICE | 224.3p | NAV | 233.09 |
| SIZE OF FUND | £533m | PRICE DISCOUNT TO NAV | -2.83% |
| No OF HOLDINGS: | 97 | 1 YEAR PERFORMANCE (PRICE) | -1.38%* |
| SET UP DATE | 04 May 55 | 3 YEAR PERFORMANCE (PRICE) | -1.49%* |
| MANAGER START DATE | 01 Jan 91 | 5 YEAR PERFORMANCE (PRICE) | 8.38% |
| BETA | 0.72* | TOTAL EXPENSE RATIO | 0.37%* |
| VOLATILITY (3-YR STD. DEV.) | 16.58%* | YIELD | 5.82% |
| TRACKING ERROR | na | GEARING | 109.759 |
| SHARPE RATIO | -0.46* | MORE DETAILS | henderson.com |
Source: Henderson Global Investors & *Morningstar
Notes: Performance figures as at 27 August 2009
Top ten holdings
| Holding | Percentage |
|---|---|
| BP | 6.5% |
| BAT | 6.5% |
| Royal Dutch Shell | 5.9% |
| GlaxoSmithKline | 5.1% |
| HSBC | 5% |
| Diageo | 4.9% |
| Vodafone | 4.9% |
| Scottish & Southern Energy | 3.3% |
| Tesco | 2.9% |
| National Grid | 2.8% |
Sector breakdown
| Sector | Percentage |
|---|---|
| Consumer Goods | 18.3% |
| Financials | 15.6% |
| Oil & Gas | 13.6% |
| Consumer Services | 12.6% |
| Industrials | 10.2% |
| Utilities | 9% |
| Healthcare | 8.4% |
| Telecommunications | 6.6% |
| Basic Materials | 5.2% |
| Technology | 0.4% |
| Cash | 0.1% |
