Manager Commentary

Please read in conjunction with the Performance section above.

30 November 2020Nick Greenwood

The big story in November was the positive news from Covid vaccine makers. With a roadmap to a return to normality now firmly in sight markets rebounded strongly.

Artemis Alpha was our largest positive contributor over the month. This trust, which has a value focus in UK companies highlights the change in leadership in the markets. The strong performance in the NAV has only recently been caught up by the share price and we have seen some narrowing of the discount and have therefore been selling down into that strength.

Duke Royalty rose 50% in share price terms having been one of our worst performers this year. Although some of the trust’s lessee companies have struggled to make payments the covenants on the loans has enabled Duke to take equity stakes in these companies. Once the world recovers from the pandemic and the companies can service their debt these stakes could be very valuable.

Our biggest detractors were Alpha Real Trust and Life Settlement Assets. Both these trusts are thinly traded with large insider holdings and therefore the share price can drift on a small amount of selling.

Although it will take time for countries to successfully vaccinate enough of their populations, we can now be more confident that the end of the pandemic is in sight. The next stumbling block could prove to be Brexit however we believe that the UK is so under owned and undervalued that much of the disruption is baked into the price. In the investment trust market, we still see trusts sitting on historically wide discounts and next year could see a continuation of the corporate activity we have seen in the past few months.