17th Sep 2015 09:14
LONDON (Alliance News) - The North American Income Trust PLC Thursday reported a decline in net asset value in the first half of its financial year, missing its benchmark for total return, as the market's strongest performing stocks were those in which it was underweight and higher-yielding companies lagged the overall market.
The trust said its net asset value per share at July 31 was 885.4 pence, down 5.7% from 938.9p at January 31, while its NAV total return was a negative 3.9% missing its benchmark, the S&P 500 Index, which posted a 2.6% positive total return.
The North American Income Trust said that higher-yielding companies, which are its focus, lagged the overall market as growth-oriented companies continued to diverge from their value-oriented counterparts.
It added that the portfolio's relative underweighting to the lower yielding sectors, such as healthcare and consumer discretionary caused relative underperformance, as these areas of the market were the strongest performers. The higher yielding sectors, such as utilities, underperformed by more than 10%, while many industrial and materials companies also lagged given a slower economic backdrop.
"The macroeconomic backdrop remains constrained, but business fundamentals should provide support for the equity markets. Balance sheets remain healthy and will allow for continued investment into businesses as well as additional shareholder distributions," Chairman James Ferguson said in a statement.
"Corporate appetite for deal-making has also increased. It is expected that the Federal Reserve will start to raise interest rates later this year, or in early 2016, which should provide support for equities although perhaps slower growth abroad is a broader concern. We continue to believe that our manager's bottom-up investment process should help in this environment, finding value in these markets and delivering on the trust's objectives of above-average dividend income together with long-term capital growth," he added.
Shares in the trust were trading down 1.1% in London at 757.38 pence Thursday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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