25th Mar 2015 12:29
LONDON (Alliance News) - North American Income Trust PLC Wednesday said its performance lagged against that of the S&P 500 in its last financial year, citing its underweight positions in healthcare and information technology relative to the index.
The trust, which aims to provide above-average dividend income and capital growth in the long term, said its net asset value per share rose by 18.9% on a total return basis in sterling terms in the year ended January 31. The S&P 500 index - used as a point of comparison but not as an official benchmark - provided a total return of 25.0% in sterling terms and 14.2% in dollars.
"Much of the difference in performance compared to this index came from sector allocation - primarily in the healthcare and information technology sectors. These were the two sectors in which we were most underweight and which contributed most to the performance of the index over the period," James Ferguson, chairman, said in a statement.
"This below-index weighting reflected the difficulty in finding good quality companies with sustainable and growing dividend streams within these sectors. Sterling's appreciation against the Canadian dollar was also unhelpful to the sterling-based performance of our four Canadian investments. We continue to believe that overall the underlying companies in the portfolio can provide above-average dividend growth as well as good performance in capital terms," Ferguson added.
The chairman said the trust expects the uptick in volatility that began in the second half of 2014 to persist for "some considerable time" and cause challenges, but said that investment manager Aberdeen Asset Managers Ltd should be able to add to its holdings at lower prices as a result of that.
"Using the manager's own company earnings forecasts and the belief in sustainability of profit margins, company prospects look fairly valued with scope to improve if official interest rates stay lower for longer than expected. We believe that a concentrated portfolio of high quality companies paying attractive and growing dividends will provide a solid foundation for future capital appreciation and income growth for shareholders," Ferguson said.
The company's share price rose to 865.0 pence from 775.0p in its last financial year, with the shares trading at a 7.9% discount to net asset value at the end of January, compared with a 5.0% discount at the end of the prior year. Midday Wednesday, they were quoted at 883.60p, up 0.2%.
The trust bought back 399,500 shares at a GBP3.5 million cost in its last financial year and has since bought back a further 598,450 shares at a cost of GBP5.2 million.
"The company aims to try to manage the level of discount at which the shares trade: we will exercise our discretion to repurchase shares if the discount at which they trade exceeds 5% for any significant period of time, assuming normal market conditions," Ferguson said.
By Samuel Agini; [email protected]; @samuelagini
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