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

    The value of your investments can go down as well as up, and you may not get back what you originally invested.

  • 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 Trust invests predominantly in UK equities and equity-related securities of companies across the market capitalisation spectrum.
    • The trust has two classes of share - Ordinary shares and B shares - which pay the same level of quarterly cash distributions. The cash distributions on the Ordinary 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 Ordinary shares and one B share.
  • Fund manager commentary

    Over the month, the Company’s net asset value total return rose 0.5% which was marginally behind the 0.7% rise in the FTSE All-Share 5% Capped Index.

    There has been plenty for us to discuss through the earnings season. Firstly, Astrazeneca announced that their cancer drug Mystic had failed to deliver any meaningful benefits versus the current therapy, causing the share price to fall 15%. We felt that we had no informational advantage on the outcome of this trial and therefore held a neutral position into the announcement which mitigated the risks in both directions. We currently have the stock under review and will work through the cash-flow and valuation before making a decision to hold on or exit the position. The second big announcement came from the U.S. Food and Drug Administration (FDA) who are reviewing allowable nicotine levels in cigarettes. This saw double digit falls across the whole sector before the market digested the fact that the FDA would need evidence to back their claims which would take years. We therefore felt the market reaction to this announcement was overdone so added to our position in British American Tobacco and Imperial Brands.

    In terms of activity we exited a couple of names, WPP and BAE Systems. We have done a significant amount of work on WPP, and their peers, over the last few months as we could see there was a structural shift in the industry taking place. There are clear threats emerging from both the consultants and the likes of Google and Facebook as the industry transitions to the digital era. During our analysis we found a level of opacity that made it difficult to pinpoint exactly where their competitive advantage was being eroded. What was clear though was that it’s happening and while this may take time we didn’t feel the risk reward trade-off was attractive. The exit of BAE was more about their recent delivery, strong share price performance and a yield that is less attractive today. We used some of this capital to initiate on GVC Holdings post a good meeting with management. They are a pure-play online gambling business and having acquired Bwin, who were underperforming, are delivering on their turnaround strategy.

    We also added Spanish housebuilder Neinor to the portfolio. This is a business I have followed closely since it came to the market and one I feel has significant potential over the coming years. Neinor has first-mover advantage in a market that is still recovering from the excesses of the last cycle. They have an attractive land bank of 11 thousand homes which they will look to deliver over the next three to four years as the ramp-up towards their target run-rate of 3.5-4k homes per annum. It is early days but they already have most of 2018 sales covered and with house price inflation starting to come through they are well placed to deliver on their target of a 20% margin.

    As at 31 July 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 £150.5 million (as at 30.06.17)
    Currency Sterling
    ISIN (Units) GB00B1N4H933
    (Ordinary Shares) GB00B1N4G299
    (B Shares) GB00B1N4H594
    SEDOL (Units) B1N4H93
    (Ordinary 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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