Trustnet Magazine Issue 21 September 2016 | Page 21
/ FUND, PENSION, TRUST /
Pension
SENECA GLOBAL
INCOME & GROWTH
The trust has comfortably outperformed its sector over
the past three years and has done so with the lowest
maximum drawdown
40%
Seneca Global Income & Growth Trust (37.48%)
35%
IT Global Equity Income (26.77%)
FTSE All Share (20.39%)
LIBOR GBP 3m + 3% (11.11%)
30%
25%
20%
15%
10%
5%
0%
Jul
May
Mar
Jan 16
Nov
Sep
Jul
May
Mar
Jan 15
Nov
Sep
Jul
May
Mar
-5%
Jan 14
MANAGERS: Alan Borrows and
Peter Elston
DISCOUNT/PREMIUM: -0.6%
GEARING: 9%
OCF: 1.52%
FE CROWN RATING:
PERFORMANCE OF TRUST VS SECTOR
AND INDICES OVER 3YRS
Nov
FILE
performance in this regard to its
aversion to government bonds and
foreign currency.
“Lower exposure to foreign
currency is a sensible position to
have for investors in the income
fund who, let’s face it, are probably
in retirement and shouldn’t be
taking those sorts of risks,” he said.
One area in which the managers
are happy to take on risk, however,
is in mid caps, which have been one
of the worst performing areas of the
market since the UK voted to leave
the EU at the end of June. This has
been the main cause of the trust’s
underperformance against its peers
in 2016 so far.
However, you should invest for
the long term even in the drawdown
stage of your pension, meaning
Sep 13
W
HEN IT COMES TO THE
DRAWDOWN STAGE
OF YOUR PENSION, you
should look for a fund that pays a
decent yield and delivers capital
growth without taking unnecessary
risks with your money.
One trust that ticks all these
boxes is Seneca Global Income &
Growth. Run by Peter Elston and
Alan Borrows, the trust aims to
outperform 3 Month LIBOR plus
3 per cent over the longer term,
while minimising volatility, through
investing in a multi-asset portfolio.
It also offers the prospect of capital
and income growth.
The £69m trust has made 37.48
per cent over the past three years,
compared with 26.77 per cent from
the IT Global Equity Income sector
average and 11.11 per cent from its
benchmark.
It has also been the least volatile
trust in its sector over the period,
with the highest Sharpe ratio –
which measures risk-adjusted
returns – and the lowest maximum
drawdown – the most an investor
would have lost if they bought and
sold at the worst possible moments.
Elston attributes the trust’s strong
periods of underperformance are to
be expected. It is also worth noting
that the trust is in the top quartile of
its sector over the last month after
mid caps began to recover from the
aftermath of the referendum result.
As Elston put it: “These things
take time to recover – mean
reversion doesn’t happen overnight.
You have started to see mid caps
come back, you have started to see
them outperform large caps and
I think that this will continue for
some time.”
“Yes, you can have these
short term events that affect
performance, but as a value investor
you just have to buy things with a
long-term perspective and then ride
out any short-term difficulties that
you face.”
The four crown-rated trust is 9
per cent geared, is trading on a 0.6
per cent discount to NAV and is
yielding 3.9 per cent.
Source: FE Analytics
trustnetdirect.com
19