Dividend up again, but a tough year for performance
Athelney Trust has posted mixed results for 2025. The big positive: the dividend is up for the 23rd year in a row and the Trust rejoins the AIC’s “Dividend Heroes” list. The negative: portfolio performance was weak versus peers, and net assets fell.
Here are the key numbers at a glance.
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| NAV total return (change in NAV plus dividends) | (8.4)% | (10.4)% | n/a |
| Net asset value (NAV) per share | 169.5p | 186.1p | (8.9)% |
| Share price (year-end) | 165.0p | 175.0p | (5.7)% |
| Discount to NAV (share price vs NAV) | 2.6% | 5.9% | n/a |
| Revenue return per share | 11.4p | 7.4p | +54% |
| Total return per share | (6.6)p | (13.1)p | n/a |
| Total dividend | 10.0p | 9.9p | +1% |
| Shareholders’ funds | £3.657m | £4.015m | (8.9)% |
| Ongoing Charges Figure (OCF) | 3.91% | 3.13% | +0.78pp |
Why performance lagged and why it matters
Management calls 2025 “disappointing” on performance. The Trust’s NAV total return was (8.4)%, and the share price fell 5.7%. That’s a long way behind the UK Smaller Companies investment trust sector’s average share price return of 6.7% and the FTSE 100’s 21% rise.
The backdrop didn’t help small and mid-caps. UK equities saw persistent outflows, and while large caps rallied, smaller companies stayed out of favour despite low valuations. The manager also highlights a market skew – low-quality, highly leveraged names ripped ahead while quality small caps were ignored. That can reverse, but timing is unknowable.
Income engine revs up: dividend growth and coverage
The bright spot was income. Portfolio revenue rose 36% to £275,506, with revenue return per share up 54% to 11.4p. The Board recommends a final dividend of 7.6p (payable 7 May 2026 to holders on 10 April 2026), taking the full-year dividend to 10.0p – a 1% increase.
That’s the 23rd successive year of dividend growth, returning Athelney to the AIC’s “Dividend Heroes” list. The manager says investment income now exceeds the dividend and management fee, with the ambition to cover the dividend and all expenses from income over time. On the 2025 year-end share price, 10.0p equates to a dividend yield of roughly 6%, and the manager references a 6.1% payout rate.
Costs, fees and the move to external management
In January 2025 Athelney switched to external management under EC Pohl & Co on a performance-only fee model. If the portfolio does not beat a cash benchmark, no fee is paid. Given the weak year, no performance fee was charged in 2025 and the Trust saved the prior fixed manager’s fee (£31,325 in 2024).
However, the Ongoing Charges Figure (OCF) – a measure of annual operating costs as a percentage of NAV – rose to 3.91% (2024: 3.13%), mainly due to higher dealing costs and other expenses charged to capital. For a trust of this small size (£3.657m of shareholders’ funds), charges are always in the spotlight. The NED fee pool remains frozen at £10,500 per director.
Portfolio moves, winners and laggards
New and added holdings
The Trust added or increased positions in 4Imprint, AJ Bell, Boku, Dunelm Group, Impax Asset Management, Keystone Law, Mony Group, PayPoint, Rightmove, S&U, Spectra Systems and Wise.
Sales and trims
AEW UK REIT, Alpha Group, Cake Box Holdings, Cerillion, Games Workshop, Gamma, National Grid, NWF, Relx, Treatt and Tritax Big Box REIT were sold or reduced.
Contributors and detractors
- Top contributors: Alpha Group International, Games Workshop, AEW UK REIT and S&U (each up over 10%, with several up more than 30%).
- Key detractors: PayPoint, Treatt, Liontrust Asset Management and Impax Asset Management (each down more than 30% in 2025).
M&A activity
- Alpha Group received a takeover offer from Corpay; the Trust sold into the 55% premium, valuing Alpha at £1.81 billion.
- Treatt was targeted by Natara Global; Athelney sold into the offer, which was ultimately rejected by shareholders.
Valuation watch: discount blew out after year-end
At 31 December 2025 the shares traded at a 2.6% discount to NAV. By 28 February 2026, the unaudited NAV was 170.7p while the share price was 135p – a 21% discount. A “discount to NAV” means the shares trade below the underlying value of the portfolio; a wide discount can present opportunity if sentiment improves, but it also reflects liquidity and scale risks in a small trust.
How the macro feeds in
The Chair’s review doesn’t mince words about domestic headwinds: policy uncertainty, higher business costs, and outflows from UK equities. On the flipside, lower inflation and potential Bank of England rate cuts could be a tailwind for smaller companies with higher borrowing sensitivity. The manager also notes widespread AI deployment across holdings, with 88% using AI tools and 82% releasing new capabilities, aiming for tangible productivity gains rather than hype.
Risks to keep in view
- Small size and liquidity: the Trust is tiny at £3.657m; trading can be illiquid and the OCF is high.
- Market style risk: quality small caps underperformed in 2025; a reversal would help, but there’s no timetable.
- Operational costs: despite fee savings, dealing and other capital expenses lifted the OCF.
- Geopolitics: the report flags elevated global uncertainty and potential tariff risks.
My take: reasons to be interested – and cautious
What looks positive
- Dividend discipline: 10.0p for 2025, 23 years of growth, and a yield around 6% on the year-end share price.
- Income momentum: revenue up 36%, revenue EPS up 54%, and income now ahead of dividend plus management fee.
- Aligned fees: no performance, no fee – simple and sensible for shareholders.
- Deep discount now: 21% discount at 28 February 2026 offers potential upside if sentiment towards UK small caps improves.
What to question
- Persistent underperformance versus peers and large caps in 2025.
- High OCF at 3.91% for such a small vehicle, even after moving to performance-only fees.
- Scale limitations: with only 2,157,881 shares in issue and £3.554m of investments, liquidity and costs will be structurally challenging.
Housekeeping: AGM and dividend timetable
- AGM: 15 April 2026 at 12.00 noon, Druces LLP, 99 Gresham Street, London EC2V 7NG.
- Proposed final dividend: 7.6p, record date 10 April 2026, payment date 7 May 2026.
Further company updates are available at www.athelneytrust.co.uk.
Bottom line
If you want UK small-cap income with a long dividend record, Athelney’s 10.0p payout and “Dividend Hero” status stand out. The trade-off is clear: higher charges, a very small scale, and recent underperformance. For patient investors who believe UK small caps are undervalued and discounts can close, the current 21% discount could be the hook – but position sizing and patience are key.
