20th Mar 2020 18:12
(Alliance News) - City Merchants High Yield Trust Ltd on Friday moved to reassure investors over its financial position in light of the coronavirus outbreak.
City Merchants High Yield said there was significant cash within the portfolio and was confident the manager is in a strong position to take advantage of opportunities within the high yield market. The company added that its dividend policy remains unchanged and that it will continue to "monitor market developments closely".
Rhys Davies, portfolio manager, said: "Shareholders in the company have experienced a decline in the share price that extends far beyond the movement in the company's net asset value. Thankfully, the company entered this crisis on a relatively strong footing. The portfolio was cautiously positioned by the end of 2019, which was a natural response to yields having fallen so much and our sober view on valuations.
"At the very early stages of the virus outbreak I raised cash in the portfolio significantly. As the crisis developed, I also put a hedge in place via a credit default swap. This defensive stance has meaningfully reduced the impact of market volatility on the company's NAV and leaves the company with a solid base from which to invest."
The stock closed up 7.3% at 133.00 pence on Friday.
By Arvind Bhunjun; [email protected]
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