15th Jan 2019 12:22
LONDON (Alliance News) - Aberdeen Diversified Income & Growth Trust PLC said Tuesday it lagged behind its medium-term goal in its financial year due to a drop in the value of its Markel CATco investment.
The investment trust aims to outperform LIBOR by 5.5% per annum net of fees and over rolling five-year periods.
However, with debt at fair value, the company's net asset value total return for its year ended September 30 was 7.3%, while LIBOR plus 5.5% per annum was 9.3% net of fees.
Aberdeen Diversified I&G invested GBP25.3 million in the Markel CATCo 2018 Fund, an insurance-linked security. The fund was hurt by the California wildfires, with insured wildfire losses likely to be more than USD20 billion.
"The loss to the portfolio associated with these events is clearly very disappointing. Nevertheless, the asset class retains the potential to provide an attractive, diversifying return over the long term and also to contribute to portfolio income," the company's investment manager said.
The investment trust's net asset value at par was 130.31 pence at the end of its financial year on September 30, down from 132.73p the year before.
At fair value, net asset value declined to 124.17p from 126.44p year-on-year.
The dividend per share for the year fell to 5.24p from 5.89p after the company adopted a new dividend policy.
In its year to September 2019, the company intends to pay dividends totalling 5.36p.
"The company's new financial year has started with a sharp fall in global equities and, inevitably, commentators are suggesting that the bull market is over," said Aberdeen Diversified I&G Chair James Long.
"From October 2018 to January 9, the MSCI World Index had fallen 8.1%, as compared to a decline in the company's NAV of 5.9% with debt at fair value, both in total return terms."
"The board believes that, at times of great volatility such as these, the company's diversified portfolio of assets, each with differing return drivers and risk characteristics, continues to offer a sound investment proposition for shareholders," Long added.
The company will also appoint Davina Walter, former managing director at Deutsche Asset Management Ltd, to its board as an independent non-executive director.
Walter is also chair of JPMorgan US Smaller Companies Investment Trust PLC. She joins the board on February 1 and will stand for election February 27.
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