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Dunedin Income Growth Investment Trust PLC on Thursday posted a lower total return than its benchmark during the first half, but maintained optimism for its portfolio. The UK-focused investment trust said its net asset value was 318.85 pence at July 31, up from 317.55 pence at January 31. NAV total return was 3.1%, down from 9.0% in financial 2024 and below the firm’s benchmark, the FTSE All-Share index, which posted a 7.1% return for the six months ended July 31. Dunedin IG describe the firm’s performance as ‘disappointing’, considering that the UK equity market had achieved ‘a healthy return’ despite geopolitical volatility and the impact of US tariffs. The firm suggested most of the underperformance took place in July ‘when the portfolio struggled to match the strong return from the market, which returned nearly 4%.’ ‘A significant factor in the underperformance overall was the investment manager’s quality investment style which remained out of favour with investors, particularly in the second half of the period,’ Dunedin IG added. Investment managers Ben Ritchie and Rebecca Maclean explained that the firm’s benchmark index ‘was heavily concentrated in a narrow selection of large-cap stocks’ such as banks, tobacco and aerospace & defence, while Dunedin IG’s ‘focus on quality and sustainability means we are typically underweight in sectors such as banks.’ Detractors in the firm’s portfolio included Antwerp-based chemical firm Azelis and Novo Nordisk. The Danish GLP-1 drug maker in July cut its full-year sales growth guidance to between 8% and 14%, down from 13% to 21%, noting slower-than-expected Wegovy uptake and a competitive lanscape for Ozempic in the US. Dunedin IG said it has sold its holdings in Azelis and Novo. Still, the firm said trading for most of the portfolio remained ‘robust... in line with the investment manager’s expectations.’ Contributors to performance included Prudential, animal genetics firm Genus and Assura, which was acquired by healthcare real estate peer Primary Health Properties at the beginning of September. ‘With a return to a more favourable market environment (perhaps driven by an economy struggling to grow and the need for further interest rate cuts), and combined with the new dividend policy, the board expects that additional demand for the company’s shares, especially from retail investors, can reduce further the current discount to NAV,’ Dunedin IG said. Earlier this month, the firm said it planned to ‘significantly increase’ dividends. For the year ending January 31, Dunedin IG expects its dividend to be at least 6.0% of NAV as at July 31, which was 324.4p per share. This would lift the total dividend for financial 2026 to at least 19.1p per share, around 35% higher than 14.20p the previous year. The firm has already declared a second interim dividend per share of 4.25p, and expects to pay a further interim dividend of the same amount, before a final dividend of at least 7.40p. Dunedin IG shares were down 0.7% at 286.00 pence on Thursday morning in London. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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