Largely for nostalgia, but also to see what we can learn, we have taken a look back at the December 2002 Investment Trust Newsletter.
In December 2002 we were looking back after a poor year that saw the FTSE 100 Index drop by 24.5%, after falls in both 2001 and 2000. We noted that property was one of the few sectors that could raise fresh equity, reporting on the launch of the Standard Life Investments Property Income trust, later to become abrdn Property Income (API).
Jeremy Tigue, the manager of Foreign & Colonial Investment Trust, now F&C Investment Trust (FCIT) was discussing borrowings, and the shift away from long-term debentures to short-term borrowing at lower rates of interest – at the time around 4% for a sterling loan. The trust was starting to increase its gearing as it gained more confidence in markets, which proved to be good call as markets bottomed in March 2003 and rallied strongly for four years thereafter. The trust was on a 10.3% discount at the time, compared to 2.8% today.
We reported on a venture capital trust called Rutland Trust, and were struck again by the number of trusts that are no longer around in the same format, including Electra Investment Trust, Scottish Value Trust, Charter European Trust, Govett Strategic, Baring Emerging Europe, F&C Pacific, LeggMason Investors Enterprise, Schroder Ventures, Undervalued Assets, and Thompson Clive.
The sector continues to evolve, although some things do not change. In the 2002 issue we reported on the need to limit the size of discounts, a trust effectively giving its manager a deadline to improve performance, Gervais Williams explaining the large valuation gap between large and small companies in the UK, Polar Capital Technology talking about the ‘clouded’ outlook for the technology industry, and a private equity trust undertaking a tender offer to return cash to shareholders. Those items could all be current content.
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