F & C Investments

F&C UK High Income Trust plc

  • A relatively conservative investment profile

  • How to Invest

    Open an F&C Savings Plan

    Call: 0800 136 420

    Invest online now

    Or contact your usual investment broker

  • Key facts

    • F&C UK High Income Trust plc aims to provide shareholders with an attractive level of income together with the opportunity for Trust growth.
    • The majority of the Company's assets are invested in an equities portfolio comprising large and mid-size UK companies.
    • The trust has two classes of share - A shares and B shares - which pay the same level of quarterly cash distributions. The cash distributions on the A shares are paid as dividends while those on the B shares are paid by way of capital distributions and therefore taxed under capital gains tax (CGT) rules which can provide tax benefits to certain types of investors. The net asset value attributable to each class of shares is the same.
    • The shares may also be traded as units. Each unit consists of three A shares and one B share.
  • Fund manager commentary

    Over the month, the Company’s net asset value total return rose 5.1% which was ahead of the 4.3% increase in the FTSE All-Share 5% Capped Index.

    We continued the evolution of increasing our conviction behind names that we feel offer more upside. With markets continuing to make new highs and brush off the election results we remain focused on capital preservation. When there is no ‘margin of safety’ or downside protection we are looking to reallocate capital into building up our current positions whilst also adding a few new names that bring something unique to the Trust.

    We exited Bunzl on valuation grounds. This has been a very steady compounder over a number of years but on 22x P/E this was too rich. We completed the exit of Micro Focus on concerns around the recent acquisition of Hewlett Packard Enterprises. This is a huge acquisition where we felt the risks were significant and having announced a poor set of recent results for HP we exited our holding. My concerns around retailing in general was behind the exit of both Next and Land Securities. Bricks-and-mortar retailing is in terminal decline with the rise of the online players and there is a significant structural shift-taking place, which shouldn’t be ignored. Even the destination malls, as we have seen in the US will feel the pain with retailers unable to absorb inflationary rental pressures.

    We recycled some of this capital into a couple of new names most notably Just Eat and Cairn Homes.

    Just Eat is the market leader in the online takeaway food market. Just Eat dominates the UK with 25% of the £6.1 billion takeaway market being ordered through their platform. The competitive threat is minimal with the telephone still 50% of the market although this will be disintermediated in time. The platform creates a network effect with 17.6m active users, 69,000 restaurants and 9 million orders per month globally. The UK makes 51% EBITDA margins and the Group 31% with the medium term story the growth and maturing of their international markets, which make a combined 5% EBITDA margin. The business has £130m of cash on the balance sheet and is expected to surpass £500m at which point it will look to return capital or begin paying a dividend.

    Cairn Homes was an opportunistic acquisition as they did a placing to raise some additional capital. Cairn is Ireland’s leading house builder and a business that we have followed since IPO. They successfully raised capital back in 2015 and acquired land from banks at what were distressed valuations. Having built a land-bank of nearly 12k homes in quality sites in and around Dublin they have now turned to a phase of execution. They are planning to build around 400 homes this year with the peak run-rate of 1200 in 2019. The backdrop is hugely favourable with a structural shortage of housing, rents that are already higher than the financial crisis and a government supported help-to-buy scheme for first time buyers.

    As at 31 May 2017

  • Suitability for retail distribution

    The Company is an investment trust and therefore its shares are not subject to the Financial Conduct Authority's rules relating to the restrictions on the retail distribution of unregulated collective investment schemes and close substitutes which came into effect on 1 January 2014. The Company conducts its affairs so that its shares can be recommended by Financial Advisers to ordinary retail investors in accordance with the Financial Conduct Authority's rules relating to non-mainstream investment products and intends to continue to do so.

  • Fund facts
    Investment manager F&C Investment Business Limited
    Benchmark FTSE All-Share Capped 5% Index
    AIC sector UK Equity & Bond Income
    Launch date 1 March 2007
    Total assets £154.3 million (as at 31.05.17)
    Currency Sterling
    ISIN (Units) GB00B1N4H933
    (A Shares) GB00B1N4G299
    (B Shares) GB00B1N4H594
    SEDOL (Units) B1N4H93
    (A Shares) B1N4G29
    (B Shares) B1N4H59
    Key dates
    Annual general meeting June
    Year end 31 March
    Dividend payment date(s) August, November, February and May
    Ex-dividend date(s) July, October, January and April
  • Past performance is not a guide to future results. The value of investments can go down as well as up.

    The shares of the Company are listed on the London Stock Exchange. Information in this section of the website concerning the Company is directed solely at persons who are located in the UK. Nothing on this website is, or is intended to be, an offer, advice, or an invitation, to buy or sell any investments. Potential investors must read our full terms and conditions before proceeding further with any investment product referred to on this website. The information on this website may not be suitable for everyone, and retail investors unsure whether an investment product referenced on this website will meet their individual needs should seek advice before proceeding further with such product.

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