29th May 2014 15:59
LONDON (Alliance News) - Capital Gearing Trust PLC Thursday said it has failed to achieve absolute growth for the first time in over thirty years.
In a statement, Capital Gearing Trust said its net asset value per share fell to 3,119.7 pence, from 3,198.9 pence, in the year to April 5.
"For the most part, the fall of 2.5% in the NAV over the year reflects the portfolio's relatively high exposure to underperforming defensive asset classes and unfavourable currency movements," Chairman Tony Pattison said in a statement.
"Although performance may have been disappointing in the short term, the current asset allocation remains defensively positioned and continues to reflect a policy of capital preservation as much as sustainable asset growth," he added.
"For the risk-averse investor the short-term outlook remains challenging. The quantitative easing and low interest-rate policies that have been promoted by central banks have boosted equity prices and most markets are now looking fully valued. Certain asset classes such as residential property have also risen to levels not seen for some time and in prime locations look excessively overpriced. An increase in market volatility could materialise," Pattison said.
"Meanwhile traditional bond yields are stable for the moment, but with interest rates likely to rise at some stage in the foreseeable future they are unlikely to make much upward progress. It is therefore probable that a period of low absolute returns is more likely until valuations return to more attractive levels," Pattison added.
The trust's objective is to achieve capital growth in absolute terms rather than relative to a particular stock market index.
Capital Gearing Trust shares Thursday closed at 3,201.91 pence, down 1.1%.
By Samuel Agini; [email protected]; @samuelagini
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