A specialist Investment company Value & Income Trust AGM Presentation Patrick Harrington OLIM Investment Management 5 th July 2019
A specialist Investment company Agenda • Year to 31/3/19 review • Performance highlights • Top 10 stocks • Dividend outlook • Market outlook 2 OLIM Investment Managers
A specialist Investment company Market Review – FTSE All Share Index (capital Return) Source: Bloomberg, data to 30/6/19 3 OLIM Investment Managers
A specialist Investment company Market Review – World Markets Capital Only – 31/3/18 – 31/3/19 Local Currency GBP UK - FTSE All Share Index 2.2% 2.2% FTSE World Index ($) 0.6% 8.2% USA – S&P 500 ($) 7.3% 15.4% Germany – Dax (Euro) -4.7% 2.4% France – CAC 40 (Euro) 3.5% 11.3% Japan – Nikkei (Yen) -1.2% 6.3% FTSE Emerging Markets Index -8.1% -1.2% Source: Bloomberg 4 OLIM Investment Managers
A specialist Investment company Market Review – World Markets 31/3/18 31/3/19 GBP/USD 1.40 1.30 GBP/EUR 1.14 1.16 10 Yr Gilt yield 1.4% 1.0% 20 Yr Gilt Yield 1.7% 1.5% US 10 Yr Yield 2.7% 2.4% Oil Price ($) $70.27 $68.39 Source: Bloomberg 5 OLIM Investment Managers
A specialist Investment company Economics Review Two distinct periods – 9 mths to 31/12/18 and thereafter First period – global Tightening monetary conditions China/USA trade war rhetoric deteriorates Economic growth expectations fall First period - UK Growth reasonable driven by high levels of job creation Continuing fiscal & monetary squeeze Brexit 6 OLIM Investment Managers
A specialist Investment company Economics Review Two distinct periods – 9 mths to 31/12/18 and thereafter Second period – global US Federal Reserves halts tightening, now moving towards easing China/USA trade war rhetoric still a concern Iran Second period - UK Bank of England has stopped raising rates – inflation at target Growth still OK but slowing Continuing fiscal squeeze, Brexit 7 OLIM Investment Managers
A specialist Investment company Performance Review VIT Equity Portfolio Total Return +5.5% FTSE All Share Index Total Return +6.4% Stock selection positive, asset allocation between sectors negative Sectors Positives: U/W Banks, Tobacco Negatives: U/W Mining, Oil & Gas, O/W Life Assurance Stocks Positives: Cineworld, Legal & General, Go-Ahead, Croda International Negatives: Restaurant Group, Babcock, Beazley, N Brown Source: Bloomberg 8 OLIM Investment Managers
A specialist Investment company Portfolio Changes Purchases: £21m Sales: £22m Complete Sales: Halma, British Land, N Brown, Wood Group, Daily Mail & General Principal Reductions: Beazley, Informa, Unilever, Cineworld New Holdings: Phoenix Group, DS Smith, Devro, Lloyds Banking Group, ITV Additions: Marston’s, Restaurant Group 9 OLIM Investment Managers
A specialist Investment company Top 10 Stocks Stock % of Equity Forecast Dividend Forecast Dividend Portfolio* Yield** Growth Unilever 6.0 3.3% 6.9% Beazley 5.6 2.2% 5.1% BP 5.4 5.9% 2.5% GlaxoSmithKline 4.8 5.0% 0.0% Croda 4.8 1.8% 8.0% Royal Dutch Shell 4.2 5.5% 0.0% HSBC 3.8 6.2% 0.0% Spectris 3.8 2.3% 8.0% Legal & General 3.7 6.6% 7.2% Cineworld 3.2 5.5% 16.5% • As at 31/3/19, ** As at 26/6/19 Source: OLIM 10 OLIM Investment Managers
A specialist Investment company Outlook • Economic growth slowing • UK reasonably robust, Brexit notwithstanding • £ should act as a safety valve in the event of a difficult Brexit • Real dividend growth expected • UK shares have lagged world markets • Significant income opportunity in UK equities 11 OLIM Investment Managers
A specialist Investment company Outlook UK Dividends Paid 100 90 80 70 60 50 40 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 UK Dividends Paid (£bn) Source: Capita UK Dividend Monitor 12 OLIM Investment Managers
A specialist Investment company Outlook FTSE All Share Index Ten Year Annual Compound Total Return 20.0% 15.0% 10.0% 5.0% 0.0% 1987 1992 1997 2002 2007 -5.0% FTSE All Share Index Ten Year Annual Compound Total Return Source: Bloomberg 13 OLIM Investment Managers
A specialist Investment company Outlook Returns versus Dividend Yield 18.0% 6.0% 16.0% 14.0% 5.0% 12.0% 10.0% 4.0% 8.0% 6.0% 3.0% 4.0% 2.0% 2.0% 0.0% 1987 1992 1997 2002 2007 -2.0% 1.0% FTSE All Share Index Ten Year Annual Compound Total Return FTSE All Share Index Dividend Yield (%) (RHS) Source: Bloomberg 14 OLIM Investment Managers
A specialist Investment company Outlook FTSE All Share Index Ten Year Returns 7.0% Starting Dividend Yield 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 10 Yr. Annual Compound Return Source: Bloomberg 15 OLIM Investment Managers
A specialist Investment company Outlook UK Stock Market Dividend Yield 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1985 1990 1995 2000 2005 2010 2015 FTSE All Share Index Dividend Yield Source: Bloomberg 16 OLIM Investment Managers
A specialist Investment company Outlook Value & Income Trust Plc Annual Dividend 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 1987 1992 1997 2002 2007 2012 2017 Dividend (p) RPI (re-based) Source: BNP Paribas 17 OLIM Investment Managers
A specialist Investment company Outlook Value & Income Trust income opportunity: • Modest real underlying dividend growth • Portfolio recycling • Brexit inspired sterling weakness • Property rental growth • Refinancing of 11% 2021 debenture 18 OLIM Investment Managers
A specialist Investment company Disclaimer This document is issued by OLIM Limited. Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and an investor may not get back the original amount invested. OLIM is portfolio manager for the Fund and nothing in this presentation constitutes investment advice. OLIM Limited is authorised and regulated by the Financial Conduct Authority. Data All data is for periods ending 31 March 2019 unless otherwise stated. Contact Patrick Harrington, OLIM Ltd, 1 Benjamin Street London EC1M 5QL (0)20 7367 5660 patrick.harrington@olim.co.uk www.olim.co.uk 19 OLIM Investment Managers
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