‘Conductor’ Niven keeps world’s oldest trust in perfect harmony
FOREIGNF & Colonial is the world’s oldest investment trust, dating backba to 1868. But it is far from staid and under the relatively new stewardship of Paul Niven is enjoying a minor renaissance.
Last month, it reported another year of dividend growth – the 46th on the trot – with its board signalling a steely determination to make it 47 this time next year.
With more than a year’s income already tucked away in reserves, another inflation-busting dividend rise seems on the cards. Only four trusts have longer records of sustained dividend growth.
The trust’s overall performance has also been strong, to the delight of its 100,000 private investors. It has outperformed the global growth average, delivering a return of 34 per cent last year and 64 per cent over three years. Its focus overseas, rather than on UK stocks, has reaped rewards, helped by a weak pound.
Despite the success, Niven is modest about his achievements since taking over in 2014. He says: ‘This is a unique trust that has had some fantastic managers – the likes of Jeremy Tigue, my predecessor, and before him Michael Hart. Yes, things have gone well so far, but it is early days for me. I am a small part in the 149-year history of the trust.’
Niven is more a conductor than a stock picker. Rather than select holdings himself, he delegates the task to a few internal and external managers. His prime role is to get the blend right.
‘The overriding aim is to generate long-term growth in both capital and income,’ he says.
‘While most managers adopt a focused investment strategy, I employ a more diversified approach in the expectation that together all the different strands I employ will add returns and reduce risks for the trust’s shareholders.’
So Niven draws upon the stock picking skills of colleagues across investment group F&C Management and its Canadian owner Bank of Montreal for key European and Japanese holdings.
He also uses the in-house range of ‘fund of funds’ managed by Robert Burdett and Gary Potter for global exposure. These funds invest in the best funds available across the market.
He then employs Baltimore’s T Rowe Price and Dallas-based Barrow, Hanley, Mewhinney & Strauss to manage the portfolios of US stocks.
Completing the jigsaw are Lloyd George Management, which runs the trust’s emerging markets exposure, and private equity managers Pantheon and Harbour-Vest.
This multi-manager approach provides Foreign & Colonial with exposure to more than 550 holdings, with nearly half its assets in North America.
Niven accepts that company valuations, especially in the US, are ‘nowhere near as attractive’ as they were, but he believes the global economy is still in a better place than it was a year ago.
He adds: ‘Earnings growth is improving, not just in the US, but across Europe and emerging markets. I am confident there is more to come in equity returns, but volatility will be a feature of stock markets this year.’
Like all investment trusts, Foreign & Colonial holds annual general meetings. So at this year’s event, to be held at the Merchant Taylors’ Hall in the City on April 25, shareholders can pose their questions to Niven and the board.