|
M&G Credit Income Investment Trust PLC on Monday reported a lower net asset value and underperformance against its benchmark in 2025, as it highlighted recent market volatility driven by sector-specific sell-offs. The London-based investment manager said its net asset value total return was 6.2% for the year to December 31, down from 8.1% in 2024 and below its Sonia [sterling overnight index average] plus 4% per annum benchmark return of 8.5%. Net asset value per share fell to 92.91 pence as of December 31 from 95.11p a year prior. The company said markets have been volatile in recent weeks, citing the war in Iran alongside broader geopolitical concerns and an artificial intelligence-driven sell-off in software-related assets. Despite this backdrop, M&G Credit Income said its portfolio remains defensively positioned, maintaining a ‘solid investment grade’ profile with around 20% exposure to high-yield credit. Chair David Simpson said the portfolio had proved ‘extremely resilient’ and is well placed to benefit from future volatility. The trust said it kept a cautious stance throughout the year, prioritising credit quality over yield amid concerns that credit spreads do not adequately compensate for long-term corporate risk. This approach weighed on relative performance, as the portfolio activity focused on improving credit quality rather than chasing higher returns. The company paid total dividends of 7.62p per share for 2025, down from 8.53p and equivalent to a yield of 8.02% on the year-end share price. However, dividends exceeded the NAV total return, resulting in a modest decline in NAV over the period. M&G Credit Income said investor demand remained strong, issuing 58.6 million new shares between January 2025 and February 2026, increasing its market capitalisation by £47.8 million. The shares traded at an average premium to NAV of 1.9% during 2025. However, following the outbreak of war in the Middle East, the share price moved to a discount, prompting the company to resume buybacks in line with its zero discount policy. Around 250,000 shares had been repurchased as at March 27. Looking ahead, the company warned that the conflict in Iran represents a significant risk to global supply chains and could lead to a prolonged period of volatility. ‘Equity and credit markets are currently pricing in a short conflict, which makes them particularly vulnerable to a longer-term conflict that could trigger a major stagflationary shock,’ the investment manager said. It added that while oil and gas prices have surged, credit markets have so far remained relatively resilient, with spreads still appearing tight by historical standards. M&G Credit Income said it will maintain a disciplined investment approach, keeping the portfolio positioned to benefit from any widening in credit spreads or further market dislocation. Shares in M&G Credit Income were down 0.5% at 89.14p in London on Monday morning. Copyright 2026 Alliance News Ltd. All Rights Reserved.
|
