Dunedin Income Growth Investment Trust PLC

Selecting a diverse portfolio of high-quality UK and overseas companies to deliver a resilient quarterly income and long-term capital growth potential

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Latest news

An update from our investment managers, Ben Ritchie and Louise Kernohan - 15 April 2020

The FTSE All Share fell very sharply over the first three weeks of March, dropping 25%, before staging a rally in the last few days of the month which has continued into April. The fall from the 20th February to the market trough on 23rd March was over 35% and marked one of the quickest declines into a bear market in financial history. The subsequent bounce back has also been one of the sharpest rallies in modern times. The negative impact on markets was primarily driven by the rapid global spread of Covid 19 and the increasingly stringent social measures being taken to arrest the pandemic with consequently significant effects on the economy. At the same time the Opec+ cartel were unable to agree on production restrictions, leading Saudi Arabia to increase oil output at a point when demand was collapsing. This had the effect of driving down the price by more than 50% with a very large knock on effect for oil related stocks. In terms of performance over this time, banks and companies exposed to discretionary consumption and aviation have been hit very hard as were those perceived to have weak balance sheets. In contrast gold miners, supermarkets, consumer staples and pharmaceutical stocks all proved relatively resilient.

Amidst the sharp decline in the equity market we took the opportunity to draw down some borrowings from our variable bank facilities which raised our gearing by about one percentage point. We reinvested this capital, along with some of our existing cash, into a number of companies that we believed would be relatively resilient in tough markets but where the share prices had declined sharply. This included additions to recent purchases SSE and Coca-Cola HBC as well as Direct Line Insurance and Rio Tinto. Towards the end of the month we made further additions to SSE, Coca-Cola HB, emerging market fund manager Ashmore and insurer and asset manager M&G, attracted by a combination of business resilience, yield and valuation. To help fund some of these purchases we made a number of small trims to companies where the share price had proven more resilient and where yields were relatively low such as Abcam, Dechra Pharmaceuticals, Diageo, Experian and London Stock Exchange. We also exited Italian listed hearing aid retailer Amplifon given an increasingly tough outlook for the business, a relatively high degree of leverage and an expectation that the dividend would be cancelled.

Economies continue to face a triple threat of collapsing demand, supply chain disruption and tightening financial conditions. Significant policy response has been deployed by central banks and governments with interest rate cuts, further quantitative easing, fiscal stimulus and regulatory forbearance being actioned. The signs are that the most worrying indications of systemic distress in the financial system have brought under control. That notwithstanding the depth of the ensuing recession is likely to be the greatest since the depression in the 1930's and the long-term impact on economies is highly uncertain. The duration of social restrictions remains the key determinant of the ultimate financial impact and markets increasingly seem to be pricing in a relatively rapid recovery. Yet while isolating people at home is almost certain to stop the spread of the virus, the ability to safely relax the restrictions and restart the economy is as yet untested and we would be wary of using the Chinese experience as a comparable template for the western democracies.

In such conditions we are remaining focussed on closely monitoring the financial strength of our holdings with an emphasis on operational and financial leverage and cash generation. We have adopted a cautious stance for some time and see little reason to shift from this conservative focus on higher quality businesses. We cannot fully mitigate the impact of falling markets, nor offset entirely the income impact of the number of dividend cuts we have seen so far. But we want to make sure that the companies we hold are in a position to minimise the impact on franchise value and their ability to pay and grow their dividends over the long term. In particular experience has taught us to be particularly wary of chasing yield at the expense of total return. As a result we remain watchful for opportunities but for the moment are quite happy to retain a relatively defensive tilt to our overall positioning.

About us

Hear more about the Trust from our investment manager Louise Kernohan

 

Key people

Ben Ritchie

Ben Ritchie

Head of European Equities

Ben Ritchie is Deputy Head of European Equities at Aberdeen Standard Investments and originally joined Aberdeen Asset Management in 2002 as a graduate, having interned with Aberdeen in 2000 and 2001. Ben graduated with a BA (Hons) in Modern History and Politics from Pembroke College, University of Oxford and is a CFA Charterholder.

Louise Kernohan

Louise Kernohan

Investment Director

Louise Kernohan is an Investment Director in the UK Equities team at Aberdeen Standard Investments, having joined Aberdeen Asset Management via the acquisition of Deutsche Asset Management businesses in 2005. Louise graduated with a BSc (Hons) in Mathematics, Physics and Philosophy and an MA in Management from the University of Durham and is a CFA Charterholder.

  • Ben Ritchie

    Head of European Equities

    Ben Ritchie is Deputy Head of European Equities at Aberdeen Standard Investments and originally joined Aberdeen Asset Management in 2002 as a graduate, having interned with Aberdeen in 2000 and 2001. Ben graduated with a BA (Hons) in Modern History and Politics from Pembroke College, University of Oxford and is a CFA Charterholder.

  • Louise Kernohan

    Investment Director

    Louise Kernohan is an Investment Director in the UK Equities team at Aberdeen Standard Investments, having joined Aberdeen Asset Management via the acquisition of Deutsche Asset Management businesses in 2005. Louise graduated with a BSc (Hons) in Mathematics, Physics and Philosophy and an MA in Management from the University of Durham and is a CFA Charterholder.

David Barron

David Barron

Chairman

David Barron is a Chartered Accountant. He was, until November 2019, Chief Executive of Miton Group plc and is currently a non-executive director of Premier Miton Group PLC. He was, until 2013, Head of Investment Trusts of JP Morgan Asset Management and, until 2014, a director of The Association of Investment Companies.
Catherine Claydon

Catherine Claydon

Non-Executive Director

Catherine Claydon worked for Goldman Sachs International from 1992 until 2007, most recently as a Managing Director in its Pension & Insurance Strategies Group. Previously, she was Global Head of Goldman Sachs Commodity Index marketing. Catherine was an MD at Lehman Brothers in its Pension Advisory Group from 2007 until 2008. She is also a director of the Barclays UK Retirement Fund, chairman of the BBC Pension Trust and a trustee of the British Steel Pension Scheme. She is the Senior Independent Director.

Jasper Judd

Jasper Judd

Non-Executive Director

Jasper Judd is a Chartered Accountant. Until 2012, he worked for Brambles Limited, a listed Australian multinational, where he held a number of senior executive roles including Global Head of Strategy. He is also a non-executive director of JP Morgan Indian Investment Trust plc.
He is Chairman of the Audit Committee.

Christine Montgomery

Christine Montgomery

Non-Executive Director

Christine Montgomery has over 30 years of investment management experience, most recently as Head of Global Equities at AustralianSuper in Melbourne from 2016 to 2019. She previously held roles as a global equities portfolio manager at Fidelity Worldwide Investments, Martin Currie and Edinburgh Partners.

Elisabeth Scott

Elisabeth Scott

Non-Executive Director

Elisabeth Scott worked for Schroders in Hong Kong from 1992 until 2008, most recently as Country Head. Previously she was responsible for Schroders’ institutional client business in Hong Kong and managed multi-asset portfolios. She chaired the Hong Kong Investment Funds Association between 2005 and 2007. She is also director of India Capital Growth Fund Limited, Fidelity China Special Situations Investment Trust PLC, Allianz Technology Trust PLC and the Association of Investment Companies.

Howard Williams

Howard Williams

Non-Executive Director

Howard Williams has over 35 years’ of fund management experience and was, until October 2017, Chief Investment Officer and Head of the Global Equity Team at JPMorgan Asset Management. Prior to joining JPMorgan Asset Management in 1994, he held a number of senior positions at Shell Pensions and Kleinwort Benson Asset Management. He started his career at James Capel & Co. He is also a non-executive director of Schroders Unit Trust Limited.

  • David Barron

    Chairman

    David Barron is a Chartered Accountant. He was, until November 2019, Chief Executive of Miton Group plc and is currently a non-executive director of Premier Miton Group PLC. He was, until 2013, Head of Investment Trusts of JP Morgan Asset Management and, until 2014, a director of The Association of Investment Companies.
  • Catherine Claydon

    Non-Executive Director

    Catherine Claydon worked for Goldman Sachs International from 1992 until 2007, most recently as a Managing Director in its Pension & Insurance Strategies Group. Previously, she was Global Head of Goldman Sachs Commodity Index marketing. Catherine was an MD at Lehman Brothers in its Pension Advisory Group from 2007 until 2008. She is also a director of the Barclays UK Retirement Fund, chairman of the BBC Pension Trust and a trustee of the British Steel Pension Scheme. She is the Senior Independent Director.

  • Jasper Judd

    Non-Executive Director

    Jasper Judd is a Chartered Accountant. Until 2012, he worked for Brambles Limited, a listed Australian multinational, where he held a number of senior executive roles including Global Head of Strategy. He is also a non-executive director of JP Morgan Indian Investment Trust plc.
    He is Chairman of the Audit Committee.

  • Christine Montgomery

    Non-Executive Director

    Christine Montgomery has over 30 years of investment management experience, most recently as Head of Global Equities at AustralianSuper in Melbourne from 2016 to 2019. She previously held roles as a global equities portfolio manager at Fidelity Worldwide Investments, Martin Currie and Edinburgh Partners.

  • Elisabeth Scott

    Non-Executive Director

    Elisabeth Scott worked for Schroders in Hong Kong from 1992 until 2008, most recently as Country Head. Previously she was responsible for Schroders’ institutional client business in Hong Kong and managed multi-asset portfolios. She chaired the Hong Kong Investment Funds Association between 2005 and 2007. She is also director of India Capital Growth Fund Limited, Fidelity China Special Situations Investment Trust PLC, Allianz Technology Trust PLC and the Association of Investment Companies.

  • Howard Williams

    Non-Executive Director

    Howard Williams has over 35 years’ of fund management experience and was, until October 2017, Chief Investment Officer and Head of the Global Equity Team at JPMorgan Asset Management. Prior to joining JPMorgan Asset Management in 1994, he held a number of senior positions at Shell Pensions and Kleinwort Benson Asset Management. He started his career at James Capel & Co. He is also a non-executive director of Schroders Unit Trust Limited.

 

Financial calendar

Year End 31 January
Accounts Published March
Annual General Meeting May
Dividend Paid August, November, February, May

Trust details

Dunedin Income Growth Investment Trust PLC

Registered Office:
1 George Street,
Edinburgh
EH2 2LL

Registered in Scotland as an Investment Company Number SC881

Launch Date: February 1873

Risk Warning
Risk warning
The value of investments and the income from them can go down as well as up and you may get back less than the amount invested. The tax benefits relating to ISA investments may not be maintained. Investors should review the relevant Key Information Document (KID) brochure prior to making an investment decision.
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