3rd Apr 2019 14:31
LONDON (Alliance News) - City Merchants High Yield Trust Ltd on Wednesday said its net asset value declined in 2018 due to "deteriorating" market sentiment as well as volatility in retail and
services firms such as House of Fraser.
The bond and fixed-interest securities investor said its net asset value per share on December 31 stood at 178.69 pence, down 8.6% from 195.40p the year before.
"The negative returns reflected a deterioration in sentiment attributable to multiple factors," said City Merchants HYT. These factors included trade tensions, Brexit, and a 40% crude oil price decline in the final quarter of 2018. A reduction in central bank stimulus was also presented as a factor.
Volatility within certain companies, especially within the retail and services sector, was also blamed for the net asset value decline.
The trust maintained its dividend for the year at 10p per share, which was its target, and will target a 10p per dividend in 2019 as well.
City Merchants HYT Chair Tim Scholefield said: "The economic backdrop currently appears to be one of slowdown rather than widespread or protracted recession and while corporate profit margins are likely to have peaked in 2018, their decline over the coming year seems likely to be gradual."
"The re-pricing of the market in 2018 has undoubtedly provided greater opportunities to invest in bonds which provide sufficient compensation for the risk to investors. This is an encouraging development, and the board is confident that your investment manager is in a strong position to exploit these opportunities within the portfolio."
The trust also announced its intention to appoint two new non-executive directors, Heather MacCallum and Stuart McMaster. MacCallum is a non-executive director at both Kedge Capital Fund Management Ltd and Blackstone/GSO Loan Financing Ltd.
McMaster was previously investment director of Fixed Income at Alliance Trust Investment, and was also head of Multi Asset Bond Fund Management at Scottish Widows Investment Partnership.
Shares in City Merchants HYT were up 0.2% at 181.60p on Wednesday.
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