A Stalwart Navigates Choppy Waters: F&C’s H1 2025
F&C Investment Trust (FCIT), that venerable titan of the London market (founded in 1868, no less), has unveiled its half-year results for the period ending 30 June 2025. It’s a tale of resilience amidst significant global headwinds, underscored by a commitment to its shareholders that remains impressively steadfast. The headline? A flat Net Asset Value (NAV) total return but a reassuring continuation of its legendary dividend growth streak.
The Numbers: Steady as She Goes, Mostly
Let’s cut straight to the figures:
- NAV Total Return: Precisely 0.0%. This slightly trailed the benchmark FTSE All-World Index, which managed +0.8%.
- Share Price Total Return: A more positive +0.8%, reflecting a slight narrowing of the discount (from 9.2% to 8.5%).
- NAV per Share: Edged down to 1,210.8p (from 1,219.6p at end-2024).
- Gearing: Increased modestly from 5.0% to 5.2% (debt at fair value).
- Buybacks: Continued, albeit at a reduced pace (1.35 million shares bought back, accretive to NAV).
- Dividend: The first interim dividend for 2025 is 3.8p (paid 1st August). Critically, the Board confirmed its intention to deliver the 55th consecutive annual dividend increase.
Chairman Beatrice Hollond neatly summarised the core philosophy: “We continue to believe that our diversified approach creates more resilience in terms of outcomes for shareholders.” In volatile times, that diversification is being thoroughly tested.
Market Mayhem: Tariffs, Geopolitics & The Dollar Dive
H1 2025 wasn’t exactly a walk in the park for global investors. Fund Manager Paul Niven pointed to the dominant themes:
- The Trump Tariff Shock: April’s announcement of widespread US tariffs sent shivers through markets, disrupting expectations of deregulation and tax cuts. While a 90-day pause for non-retaliatory countries offered temporary respite, uncertainty lingered.
- Geopolitical Flare-Ups: Escalating tensions in the Middle East added another layer of volatility.
- Dollar Demise: Sterling surged against the greenback (+9.7% in H1), marking the dollar’s worst first half since 1973. This significantly dented the sterling returns of FCIT’s substantial US holdings.
- Regional Divergence: US equities materially lagged, while Europe (especially after German fiscal shifts) and Emerging Markets outperformed. This divergence was one of the widest in decades.
- Central Bank Caution: The Fed held steady amidst tariff uncertainty, while the BoE (-0.5%) and ECB (-1.0%) cut rates.
This potent cocktail led to significant equity market volatility and a challenging environment for active management.
Portfolio Performance: A Mixed Bag Across Regions & Styles
FCIT’s diversified approach saw varied results across its strategies:
- North America (-3.3% vs -2.5% benchmark): Struggled. While the JPMorgan large-cap growth strategy showed relative resilience, value strategies diverged. UnitedHealth (-43.1% on fraud probe concerns) was a major detractor for one manager.
- Europe inc. UK (+9.2% vs +12.3% benchmark): Strong absolute return but lagged the surging benchmark. Financials like National Bank of Greece (+53.1%) and Bank of Ireland (+46.3%) shone, while Pearson (-15.3%) suffered.
- Japan (+4.7% vs +2.6% benchmark): A bright spot, led by Nintendo (+50.5%) and its Switch 2 success.
- Emerging Markets (+6.1% vs +2.7% benchmark): Newly managed by Invesco, this segment performed strongly, boosted by Telefonica Brasil (+43.0%).
- Global Strategies: Global Income (+3.3%) and Global Enhanced (+4.0%) outperformed, aided by stocks like NRG Energy (+63.8%). Global Focus (-0.1%) was marginally behind.
- Private Equity (-3.8%): Facing tough exit conditions, though core mid-market buyouts showed resilience.
The “Magnificent Seven” saw starkly divergent fortunes: Nvidia (+7%), Meta (+25% in USD), and Microsoft (+8.1%) held up, while Apple (-25%), Tesla (-28%), Alphabet (-14.8%), and Amazon (-8.7%) struggled.
The Income Engine: Still Firing
This is where FCIT’s heritage truly shines:
- Net revenue return per share rose 8.6% to 10.47p (H1 2024: 9.64p).
- This supports the declared first interim dividend of 3.8p and the planned 55th consecutive annual increase.
- The Board explicitly aims for long-term dividend growth exceeding inflation and maintains substantial revenue reserves to support this objective.
In a world starved of reliable income, this track record remains a cornerstone of FCIT’s appeal.
Looking Ahead: Cautious Optimism & Strategic Positioning
Niven acknowledges the risks (tariff uncertainty, geopolitics) but expresses cautious optimism:
- Broadening Opportunity: Expects market returns to broaden beyond recent narrow leaders, potentially benefiting FCIT’s diversified style.
- US Exceptionalism Debate: While acknowledging the US growth premium, FCIT has been marginally reducing US exposure due to valuations and dollar risks, seeking opportunities elsewhere.
- Emerging Markets Hope: A weaker dollar and potential rate cuts offer a tailwind. Valuations look attractive after prolonged underperformance.
- AI’s Long-Term Promise: Believes AI will ultimately boost productivity and benefit capital owners.
The outlook hinges on navigating persistent uncertainty, but Niven concludes: “We remain confident that we can continue to deliver our investment objectives, to grow both capital and income for our shareholders over the long term.”
A Board in Transition
The period saw Edward Knapp step down after nine years of service. He is replaced on the Board (from 1st September) by Josh Bottomley, CEO of dunnhumby, bringing significant digital, data, and financial services experience.
The Verdict: Resilience Tested, Track Record Intact
F&C Investment Trust’s H1 2025 results reflect a battle against powerful external forces. A flat NAV return in such a climate, while slightly behind the benchmark, isn’t disastrous. The real story lies in the underlying resilience: the active management navigating regional and stock divergence, the continued commitment to judicious buybacks to manage the discount, and, above all, the unwavering focus on delivering that 55th consecutive annual dividend increase. For income-focused investors seeking global diversification and a trust with genuine staying power, FCIT continues to offer a compelling, if sometimes bumpy, journey. The diversified approach championed by Hollond and Niven isn’t about shooting the lights out every quarter; it’s about weathering storms and compounding returns over the very long term. On that measure, the oldest investment trust in the business remains very much in the game.
