TRUST
CALEDONIA INVESTMENTS
Numis Securities says Caledonia Investments is one of the few trusts available on a
significant discount that offers value over the long term
significant value for longterm investors on its current
discount.”
Within its four “pools”, Wyatt
holds 28 per cent in quoted
stocks, which include the likes
of AG Barr and Close Brothers,
and 31 per cent in unquoted
companies such as Park
Holidays and Bowers & Wilkins.
He holds 20 per cent in both
open and closed-ended funds
and another 13 per cent in
“income and growth” – primarily
global blue chip companies
with strong balance sheets,
above-average returns and a
demonstrable history of creating
shareholder value.
While the trust only yields 2.1
per cent, it is renowned for its
commitment to a progressive
dividend: the board has increased
Caledonia Investment’s payout in
48 consecutive years.
PERFORMANCE OF TRUST
VS SECTOR AND INDEX OVER 3YRS
IT Global (56.99%)
FTSE All Share (52.21%)
Caledonia IT - Caledonia Investments PLC (108.27%)
120%
100%
80%
60%
40%
20%
0%
Apr
Feb 15
Dec
Oct
Aug
Jun
Apr
Feb 14
Dec
Oct
Aug
Jun
Apr
Feb 13
Dec
Oct
-20%
Aug
MANAGER: William Wyatt
LAUNCHED: 18/07/1960
DISCOUNT: 19%
OCF: 1.03%
CROWN RATING:
have so far paid off – the trust
has significantly outperformed
its sector and FTSE All Share
benchmark over three years.
“We believe that Caledonia now
has a clear strategy to deliver
strong long-term performance
in both absolute terms and
relative to equity market indices,”
Numis said.
“The investment process
through the four pools is far
more rigorous than in the past,
in our view, and this is starting to
be reflected in performance.”
“However, Caledonia is
still trading on a discount of
approximately 19 per cent. In
part, we believe this reflects
the fund’s substantial exposure
to unquoted assets and the
portfolio cannot be expected to
perform in-line with markets.”
The team added: “However,
we believe that Caledonia offers
Jun 12
W
ide discounts are
now much harder to
come by than they
have been in the past, thanks
to the implications of the Retail
Distribution Review and the
increasing use of share buy-backs.
Therefore, trusts that trade on
a wide discount are usually best
left alone as they are either of a
poorer quality than their peers,
are too small to trade or focus on
overly risky areas of the market.
That doesn’t mean there
isn’t the odd anomaly, though.
One such example has been
flagged up by the team at Numis
Securities; namely Caledonia
Investments, on a current
discount of close to 20 per cent.
The trust is designed to be a
core holding, but while it has
always been relatively wellknown, it has struggled over the
past 10 years or so.
William Wyatt took charge in
July 2010 and made changes
to the trust’s strategy, such as
splitting its assets into four
pools (namely quoted, unquoted,
funds and income and growth)
and making the portfolio more
concentrated.
These changes, while they
took some time to implement,
Source: FE Analytics
trustnet.com
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