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Seneca Global Income & Growth Trust plc moves to zero weight in US equities

21 August 2017

  • High conviction position relative to peers and world equity indices
  • Reflects belief that the US economy has entered the expansion phase
  • Tightening of monetary policy will start to hold back equity prices

Peter Elston, chief investment officer, Seneca Investment Managers, says:
“The growth phase of any business cycle is made up of three sub-phases: ‘recovery’, ‘expansion’ and ‘peak’. The reduction in our US equity weighting to zero reflects the belief that the US economy has entered the expansion phase, during which the tightening of monetary policy will start to hold back equities prices.

“We’re at the point in the cycle when equity returns should start to fall, albeit remain positive, and the move to zero weight in US equities is consistent with the reduction in the Company’s overall equity weighting over the last year. Having moved from overweight to neutral, we are planning to move to an underweight position in equities, starting with the US.

“Other developed economies such as the Eurozone, Japan and the UK are still in recovery phase, as evidenced by interest rates that have yet to be increased. On a valuation basis, we also believe US equities look expensive relative to equities elsewhere.

“The reduction to zero in the US is more a relative call than an absolute one as it’s possible that US equities can continue to rise. However, the reduction is also based on the belief that the US dollar has turned – the possibility of interest rate increases in the medium term in other developed markets such as the Eurozone and the UK argue for strength against the US dollar in other currencies.

“As active managers, it’s essential we take high conviction positions to provide our investors with products that have the potential to deliver strong performance after fund costs. Our investing style, Multi-Asset Value Investing, is designed to then achieve this potential.

“The asset allocation calls we have taken in the last year have resulted in strong returns with the Company up by 25.5% in NAV terms* versus a benchmark increase of 3.5% and a sector return of 15.6%.”

Ends

Source: Morningstar data for SIGT and AIC Flexible Investment Sector NAV returns for the year to end June 2017


 

Media enquiries:
Roland Cross/Alastair Doyle, Four Broadgate
SenecaIM@fourbroadgate.com

Tel: +44 (0) 20 3697 4200

 

NOTES TO EDITORS:

About Seneca Investment Managers
Seneca Investment Managers, based in Liverpool with a national client base, operate a multi-asset value approach to investing. Investors range from institutions such as pension funds and charities, through to financial advisers, discretionary private client managers and personal investors.

Seneca Investment Managers has a heritage stretching back to 2002 and prides itself on the ability to identify and invest where there is both quality and unrealised value.

Past performance should not be seen as an indication of future performance. The value of investments and any income may fluctuate and investors may not get back the full amount invested.

The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily the views of Seneca and do not constitute investment advice. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.

Before investing in the Seneca Global Income & Growth Trust plc you should refer to the latest Annual Report for details of the principle risks and information on the trust’s fees and expenses. Net Asset Value (NAV) performance may not be linked to share price performance, and shareholders could realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital.

This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.

Seneca Investment Managers Limited (0151 906 2450) is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at 10th Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. FP17/324

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Next global economic contraction could start in 2020 – Seneca Investment Managers

19 July 2017

  • Equity returns will start to fall, but for the time being remain positive
  • Portfolio reductions in equity weights likely to continue for the next two years

Peter Elston, chief investment officer, Seneca Investment Managers, says:
“The global economy has been strengthening, and we’re getting further into the current business cycle that begun in 2009. This cycle has already been longer than average, though to a great extent this is a function of the severity of the contraction that preceded it – the worse the ‘accident’, the longer the recovery.

“We, therefore, feel that it’s now time to start thinking about the next global economic contraction, which we anticipate will occur in or around 2020. This prediction is based on an extrapolation of current employment and inflation trends, as well as taking account other factors such as structural slack in labour markets. If our timing is correct, the chances of which may be slim, the current cycle will have lasted 11 years, much longer than typical.

“As for asset allocation, we’re at the point in the cycle when equity returns should start to fall, albeit remain positive, and so we would anticipate the reductions in equity weights across the range of portfolios Seneca manages, that we have implemented in recent months, to continue for the next two years.

“It’s hard to say how severe the next downturn will be. Some argue that it will be mild, because this time monetary authorities have the tools to prevent economic weakness causing stress in financial markets. Others argue that it will be more severe, because debt levels are now higher and central banks will have less scope to lower interest rates or expand already bloated balance sheets.

“Frankly, we do not know which is more likely, but are fairly confident that the next economic downturn, however severe, will see declines in equity markets. Through a sensible asset allocation framework we can reduce market risk and will strive to protect investors.”

Ends


 

Media enquiries:
Roland Cross/Alastair Doyle, Four Broadgate
SenecaIM@fourbroadgate.com

Tel: +44 (0) 20 3697 4200

 

NOTES TO EDITORS:

About Seneca Investment Managers
Seneca Investment Managers, based in Liverpool with a national client base, operate a multi-asset value approach to investing. Investors range from institutions such as pension funds and charities, through to financial advisers, discretionary private client managers and personal investors.

Seneca Investment Managers has a heritage stretching back to 2002 and prides itself on the ability to identify and invest where there is both quality and unrealised value.

Past performance should not be seen as an indication of future performance. The value of investments and any income may fluctuate and investors may not get back the full amount invested.

The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily the views of Seneca and do not constitute investment advice. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.

This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.

Seneca Investment Managers Limited (0151 906 2450) is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at 10th Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. FP17/237

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Multi-asset value investing – applying the approach to the whole range of investable assets

10 July 2017

There’s ample academic evidence that value investing works. This is most apparent in equities, but it can also bring success in other asset classes. Value investing is simply about buying assets when they’re cheap, and selling them when they’re expensive – why shouldn’t this approach be applied to the whole range of investable assets?

At Seneca, value investing is at the core of everything we do. We believe our Multi-Asset Value Investing approach is unique and offers significant advantage.

How do we do it?
Adjustments to tactical asset allocation are made primarily in light of the yields available in different asset markets, relative to one another; their own histories; and where we sit in the business cycle. Yields which are higher than they ought to be are generally indicative of attractive future returns.

Value is predominantly apparent in UK equity mid-caps. We emphasise the combination of value and quality, expressed through companies’ ability to deploy capital effectively, and generate profit and dividend paying capacity. Our mid-cap holdings offer higher dividend yields, the same dividend cover, lower price to book ratios and significantly stronger returns on equity than their mid-cap peers. We can access secure dividends, significant re-rating potential and premium quality, without paying a premium price. What we do works, having comfortably out-performed both the mid-cap and all-cap UK markets over the five years to end 2016.

We access overseas equities indirectly, through funds, looking for like-minded fund managers who share our value ethos and invest in their own funds. Insisting on high active share, our open-door policy for experienced value managers starting out with new funds allows us to pick winners early. Prusik Asian Equity Income for example focuses on value, quality and high, sustainable dividend yields. The fund has significantly out-performed its benchmark since launch in 2011, when we first invested.

In fixed income, we invest directly and indirectly, though the former approach is reserved for developed government and investment grade debt, of which we currently hold nothing. Asset allocation decisions are a big determinant of fixed income positions, current thinking favouring the short end of the curve due to interest rate risk, and sub-investment grade for real yield pick up over the gilt. As with equities, yields which are higher than they should be point to strong future returns.

Specialist assets
Opportunities in asset classes like infrastructure, leasing, property and private equity include income streams that are more stable than those of equities, and more capable of growth than those of fixed income. We focus on the reliability of future cash flows, and the quality and future values of the assets from which the income is generated. Again, we’re happy to invest away from the crowd. We hold no mainstream property, rather, owning specialist vehicles such as Custodian, Civitas and AEW. These funds offer or aspire to higher yields than mainstream, and operate in niches which offer better returns than the relatively late cycle main-stream commercial property market.

Our clear value ethos, principles and selection criteria mean our clients know how we will behave as investors. We can’t guarantee the results we will achieve, but we can be clear as to how we manage money. We believe that this approach gives us the edge. We’re happy to be different and we’re aiming to win.

Ends


 

Media enquiries:
Roland Cross/Alastair Doyle, Four Broadgate
SenecaIM@fourbroadgate.com

Tel: +44 (0) 20 3697 4200

 

NOTES TO EDITORS:

Seneca Investment Managers
Seneca Investment Managers is based in Liverpool with a national client base. Investors range from institutions such as pension funds and charities, through to financial advisers, discretionary private client managers and personal investors. The firm specialises in multi-asset value investing.

Past performance should not be seen as an indication of future performance. The value of investments and any income may fluctuate and investors may not get back the full amount invested.
The views expressed are current at the time of writing and are subject to change without notice. They are not intended as investment advice or a recommendation to invest in any of the investments mentioned. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.
This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.
Seneca Investment Managers Limited is the Investment Manager of the Funds (0151 906 2450) and is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at Tenth Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. FP17/157

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Beware dividend concentration in UK large caps – Seneca Investment Managers

27 June 2017

Comment from Peter Elston, CIO, Seneca Investment Managers

  • Venture into the mid cap space and find many decent yielding stocks
  • No need to sacrifice dividend cover or quality
  • UK equity income sector is not the only choice, multi-asset makes sense

“Dividend concentration among UK large caps is a growing concern, and there could be extreme concentration risk for investors in UK large cap income funds.

“However, venture into the mid cap space, and you can find plenty of decent yielding stocks. This is the focus for the UK equity segment of our multi-asset funds, principally because over time mid caps tend to perform better than large caps, both in terms of returns and volatility-adjusted returns (since 1998, the FTSE 250 index has beaten the FTSE 100 index by 5 percentage points per annum). But this is not the only reason. Mid caps are also under-researched, so stock picking opportunities abound.

“Our UK stocks, most of which are mid caps, on average yield 4.3% compared with 3.0% for mid caps in general. You may think we’re sacrificing dividend cover but this is not the case. Average coverage for our stocks on a forward looking basis is 1.9 times compared with 2.1 times for the mid cap universe (and 1.6 times for large caps). Nor are we sacrificing quality: our return on equity is 21.4% on average compared with 13.8%.

“According to Trustnet, the median fund yield in the IA UK Equity Income sector at the end of May was 3.9%. Furthermore, the median FE Risk Score for the sector was 85 (this means that on average, the volatility of funds in the sector was equivalent to 85% that of the FTSE 100 index). Finally, the median two-year fund performance was 13.8%.

“A search for income does not need to be confined to the UK Equity Income sector though. Comparing these numbers with those of our CF Seneca Diversified Income Fund reveals some interesting results. Our fund yields 4.7% versus the median income yield of 3.9% for the IA UK equity income sector. Ah, but that’s because it is sacrificing total return, I hear you say. Not true. Two year total return has been 16.6% versus 13.8%. In that case it must be because the fund is more volatile. Again, no. The fund’s FE Risk Score is 43 half that of the UK Equity Income sector average! The merits of a multi-asset approach are, we think, obvious.”

Ends


 

Media enquiries:
Roland Cross/Alastair Doyle, Four Broadgate
SenecaIM@fourbroadgate.com

Tel: +44 (0) 20 3697 4200

 

About Seneca Investment Managers

Seneca Investment Managers, based in Liverpool with a national client base, operate a multi-asset value approach to investing. Investors range from institutions such as pension funds and charities, through to financial advisers, discretionary private client managers and personal investors.

Seneca Investment Managers has a heritage stretching back to 2002 and prides itself on the ability to identify and invest where there is both quality and unrealised value.

Past performance should not be seen as an indication of future performance. The value of investments and any income may fluctuate and investors may not get back the full amount invested.

The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily the views of Seneca and do not constitute investment advice. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.

This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.

Seneca Investment Managers Limited (0151 906 2450) is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at 10th Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. [FP17 199]

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Value Investing, whatever the fashion

22 June 2017

We adhere to our value ethos come what may.  Value investing is a patient game. It should never be out of fashion, but for most of the last five years the crowd has favoured other styles. We’re happy to be judged on our record over that period.

Here’s an overview of what makes us tick.

 

We work as a team

Each of our managers focuses on investment research for one discipline, be that asset allocation, areas of the equity market, bonds or specialist asset (e.g. infrastructure, leasing, private equity). We only invest in things we really understand. We like to dive deep – if we come up mucky, better before we buy than after.  Each specialist’s findings and recommendations must be value-based, and are subject to scrutiny from the team.  When ideas are implemented, it tends to be across all our portfolios.

 

Process rules! 

Ours is simple and strict.  Investors know what they will get.  We maintain target holding portfolios for each fund.  Each research specialist is responsible for target weightings in their area across every portfolio.  Any change to the target for an individual holding or change to asset allocation has to be approved by the team, and logged on our research intranet, the grid.  If it’s not on the grid, it doesn’t exist.  In our real portfolios, implementation is the responsibility of named pairs of individuals with oversight for each fund.  The deviation between each actual portfolio and its target holding portfolio is monitored closely, with a maximum deviation of ten percent to accommodate factors like income management.

 

Simple, active management

Multi-asset is a crowded space.  Traditional balanced funds invested purely in equities and bonds sit alongside smoke and mirrors funds, whose returns are obscured through the use of derivatives. We sit between these extremes.  Our funds are straightforward, long term, long only funds, investing in a wide range of risk assets.

 

How active are we?

Very.  We ignore the composition of indices.  We want our positions to count. For example, at the end of March 2017 in UK equities in the Seneca Global Income & Growth Trust plc, we owned twenty-two equally weighted stocks in position sizes of circa 1.5%, of which three were top 100 companies and 19 were mid-caps.  Our funds are diversified at asset class level and conviction driven within each asset class.

 

Multi-faceted approach to risk 

Risk can’t be reduced to a single number, and it’s absolutely not simply short term volatility.  The most significant risk is the permanent loss of real capital.  We strive to avoid this.  For example we hold no developed market government debt because it is screamingly expensive.  While not volatile, it will lose money in spades. A more rounded view is required, incorporating factors such as risk of loss, volatility, liquidity and more, with value offering a margin for error in every decision.

 

The value of investments and any income may fluctuate and investors may not get back the full amount invested.

The views expressed are current at the time of writing and are subject to change without notice. They are not intended as investment advice or a recommendation to invest in any of the investments mentioned. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.

This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.

Before investing in the Seneca Global Income & Growth Trust you should refer to the latest Annual Report for details of the principle risks and information on the trust’s fees and expenses. Net Asset Value (NAV) performance may not be linked to share price performance, and shareholders could realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital.

Seneca Investment Managers Limited is the Investment Manager of the Funds (0151 906 2450) and is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at Tenth Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. FP17/156

 

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Seneca adds social housing stock and private rented REITs to portfolios

7 June 2017

  • Civitas Social Housing, the first real estate investment trust (“REIT”) dedicated to existing portfolios of social homes in England and Wales added to Seneca portfolios
  • Investment also made in PRS REIT, the first quoted REIT to focus purely on the private rented sector (“PRS”)

Richard Parfect, fund manager, Seneca Investment Managers, says:

“Traditionally the REIT sector was all about shops and office space, but recently we’ve added two specialist REITs in very different sectors, both offering the opportunity for an excellent yield and potential for future growth.

“PRS REIT is the first REIT investing in the private rented sector. It floated on the London Stock Exchange on 31 May raising £250 million and is supported by the UK Government’s Homes and Communities Agency. We took part in the IPO as we recognise the potential for income, with an attractive dividend yield of 6%, and capital growth. In essence, the fund is focused on providing quality family housing to rent, which is a growing segment of the UK market where there is a great shortage of family properties. With the initial capital raised, the fund’s objective is to provide funding and work in conjunction with housebuilding partners to develop in excess of 2,500 new rental homes across key regions in the UK.

“Civitas is the UK’s first REIT dedicated to building up a portfolio of social homes. The company works in partnership with Registered Providers (RPs) such as housing associations and local authorities to support the provision of capital to deliver more social homes. It has an appealing deal flow as evidenced by the recent acquisition of a portfolio of social housing in Southampton. Through these acquisitions, RPs are able to free up capital to reinvest in further social homes. With a target yield of around 5% plus the potential for capital growth, we view this as an attractive stock for our specialist allocation across the Seneca portfolios.”

Ends

 

For further information, please contact:

Four Broadgate

Roland Cross / Alistair Doyle

Telephone: +44 (0) 20 3697 4200

Email: SenecaIM@fourbroadgate.com

 

NOTES TO EDITORS:

Seneca Investment Managers

Seneca Investment Managers, based in Liverpool with a national client base, operate a multi-asset value approach to investing. Investors range from institutions such as pension funds and charities, through to financial advisers, discretionary private client managers and personal investors.

Seneca Investment Managers has a heritage stretching back to 2002 and prides itself on the ability to identify and invest where there is both quality and unrealised value.

Past performance should not be seen as an indication of future performance. The value of investments and any income may fluctuate and investors may not get back the full amount invested.

The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily the views of Seneca and do not constitute investment advice. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.

This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.

Seneca Investment Managers Limited (0151 906 2450) is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at 10th Floor, Horton House, Exchange Flags, Liverpool, L2 3YL  FP17/159

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Seneca Investment Managers appoints new business development consultant

4 April 2017

Seneca Investment Managers (Seneca) the multi-asset value investment house based in the North West, has expanded its sales and distribution team with the appointment of Helen O’Loughlin as Business Development Consultant.

Reporting to Head of Business Development, Steve Hunter, Helen will focus on communicating Seneca’s distinctive multi-asset, value-driven approach to the IFA community.
Helen brings a wealth of expertise from her previous role as sales executive at Premier Asset Management, where she had specific responsibility for business growth within the retail adviser market.

Steve Hunter, Seneca’s Head of Business Development, says: “Helen’s wealth of experience will prove invaluable as we grow our presence with intermediaries and promote Seneca’s Multi-Asset Value Investing proposition. As our investment team continues to search wider for income and growth returns, we are delighted to have Helen on board to help spread the word”.

Helen commented: “It’s a great opportunity to join Seneca at such an exciting time. Multi-asset investing is an area of significant interest for advisers. I am looking forward to working with the whole team to raise Seneca’s profile and grow the business.”

Ends

 

For further information, please contact:

Four Broadgate

Roland Cross / Josh Voulters

Telephone: +44 (0) 20 3697 4200

Email: SenecaIM@fourbroadgate.com

 

NOTES TO EDITORS:

Seneca Investment Managers

Seneca Investment Managers is based in Liverpool with a national client base. Investors range from institutions such as pension funds and charities, through to financial advisers, discretionary private client managers and personal investors. The firm specialises in multi-asset value investing.

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Many Happy Returns for investors in the Seneca Global Income & Growth Trust plc

30 January 2017

The award winning* Seneca Global Income & Growth Trust plc (the Trust), is celebrating the fifth anniversary of its revised investment mandate with continued strong returns, growing dividends and low volatility.

Over the 5 year period to 19th January 2017, the Trust has:

  • Achieved a net asset value total return of 66.3%, versus a benchmark return (Libor + 3%) of 19.5%; a Flexible Investment Sector total return of 50.5%; and a UK equity market return of 51.8%.**
  • Delivered this return with an annualised volatility over the five years (standard deviation of returns) of 8.3%, significantly lower than either the AIC Flexible Investment Sector (10.6%) or the UK equity market (14.2%).**
  • Achieved a Sharpe ratio of 0.99, significantly higher than that of the AIC Flexible Investment Sector (0.55) and the UK equity market (0.43).**
  • Grown its dividends every year since 2013, whilst adding to revenue reserves.**

Seneca Global Income & Growth Trust plc is a well-established multi-asset trust managed by a knowledgeable team with extensive experience of closed-ended funds. The Trust adopts a straightforward investment policy in keeping with Seneca’s multi-asset value investing approach. The Trust’s portfolio comprises directly held UK equities, overseas equities and fixed-income holdings held via select third party managers and a range of specialist investments, including focused REITs, leasing businesses and infrastructure investments. The emphasis throughout is on growth of income, quality and value.

The Trust had net assets of £64.3m**, offered a current yield of 3.8%** paid quarterly, and operates a discount control mechanism aimed at managing its share-price very closely around its Net Asset Value. As of January 1st 2017, the Trust was re-assigned from the AIC Global Equity Income Sector to the AIC Flexible Investment Sector.

David Thomas, CEO of Seneca Investment Managers, says:

We are very proud of the success of the Seneca Global Income & Growth Trust, which has exceeded its objectives for investors over the last five years whilst sensibly managing risk. At Seneca, we look more widely for both growth and income, and firmly believe our multi-asset value approach will continue to stand shareholders in good stead as we work to build on this success.  We wish the Trust and its investors ‘many happy returns’.

Richard Ramsay, Chairman of the Seneca Global Income & Growth Trust plc, says:

‘The Trust’s five year record is a testament to the merits of its Investment Policy and the effective execution of this policy by the Manager.’

 


 

Periodic performance, volatility and sharp ratios to 18th January 2017 (%)**

Cumulative performance**

SIGT 5th Anniversary press release - Table 1

Discrete performance**

SIGT 5th Anniversary press release - Table 2

Annualised volatility (standard deviation of returns), and Sharpe Ratio, five years to 18th January 2017**

SIGT 5th Anniversary press release - Table 3

*Seneca Income & Growth Trust plc won Overseas Income Company of the year at the 2015 Investment Week Investment Company of the Year Awards, is a Money Observer rated fund 2016 and is on the WhichInvestmentTrust.com buy list.

**All return, sharp ratio and volatility data source, Cantor Fitzgerald. All figures shown total return. AIC Sector data represents average unweighted figures for the peer group.  Source for Net Assets, Personal Assets Trust Administration Company.  Source for current yield, Bloomberg and RNS of 16/11/2016. Source for revenue reserve account, SIGT reports and accounts.  Sharpe ratio is defined as: (the average rate of return – the risk free rate of return/standard deviation of returns).  Risk free rate taken as 2.5%.

Important Information

Past performance should not be seen as an indication of future performance. The information on this email is as at 19.01.2017 unless otherwise stated. The value of investments and any income may fluctuate and investors may not get back the full amount invested. Whilst Seneca Investment Managers has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.

This press release is provided for the purpose of information only and if you are unsure of the suitability of this investment you should take independent advice. Before investing you should refer to the latest Annual Report for details of the principle risks and information on the trust’s fees and expenses. Net Asset Value (NAV) performance may not be linked to share price performance, and shareholders could realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital. Seneca Investment Managers Limited is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at Tenth Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. FP17 / 18

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Seneca Global Income & Growth Trust plc joins AIC Flexible Investment Sector from January 2017

5 January 2017

Following consideration by the Board of the Trust, the Manager and the AIC (the Association of Investment Companies), as of 1st January 2017, the Seneca Global Income & Growth Trust plc (SIGT) has moved from the AIC Global Equity Income Sector to the AIC Flexible Investment Sector.

SIGT is a multi-asset Trust, which aims to deliver a combination of income and growth with low volatility.  On balance, we believe that the combination of these objectives sits most suitably in the Flexible Investment Sector, which has become the home of SIGT’s most relevant peers.  With the sector having formed almost a year ago, and established itself in investors’ minds, we believe now is an appropriate time to move.

There has been no change to the way in which SIGT will be managed.

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Seneca Global Income & Growth Trust plc announces 2016 interim results

2 December 2016

Seneca Global Income & Growth Trust plc (the Trust) with total assets of £70.4 million, announces its interim results for the six months ended 31 October 2016.

  • Net Asset Value total return +10.1%
  • Share Price total return +9.8%
  • Quarterly Dividend increased by 3.4% to 1.52p
  • Annualised volatility 12.6% compared with 15.5% for the FTSE All-Share Index
  • Multi-Asset value investment policy – coherent and transparent
  • Discount Control Mechanism effective since 1 August
  • Shares have traded in a very narrow range around Net Asset Value

The Trust has a distinctive multi-asset value approach to investing, focusing on quality and price. This has contributed to a good six months for the share price, increasing from 147.8 pence to 159.0 pence and providing a total return of 9.8% for the period.
Reflecting the period of strong returns, the Trust has again been successful in meeting its income and volatility objectives. The dividend for the quarter increased 3.4% to 1.52p, extending further the Trust’s record of growing its dividend whilst adding to its revenue reserves. Unlike many Trusts, SIGT draws its income from a very wide range of sources, providing a strong platform from which to generate dividends. In addition, despite the market disruption caused by the Brexit vote, the Trust maintained a level of volatility significantly below that of a pure equity portfolio.
During the period, the Trust enhanced its commitment to shareholders with the introduction of a Discount Control Mechanism. The Board believes this policy will provide the comfort that Shareholders can invest without taking material discount risk. This initiative is complementary to the transparent approach to portfolio management espoused by Seneca Investment Managers, both in regard to the generation of income and of capital growth.
Richard Ramsay, Chairman, said: ‘Following this successful period, we will seek to further develop the good investment track record achieved since 2012, when the Trust’s investment policy changed. We believe the Manager’s multi-asset value style of investing is well suited to the current environment, and forms a strong basis for the future growth of the Trust as conditions allow’.

The detailed interim results announcement follows.

Unaudited results for the six months ended 31 October 2016

Highlights for the period

  • Net Asset Value total return +10.1%
  • Share Price total return +9.8%
  • Quarterly Dividend increased by 3.4% to 1.52p
  • Annualised volatility 12.6% compared with 15.5% for the FTSE All-Share Index
  • Multi-Asset value investment policy – coherent and transparent
  • Discount Control Mechanism effective since 1 August
  • Shares have traded in a very narrow range around Net Asset Value

Performance

Seneca Global Income & Growth Trust plc (‘SIGT’), your Company, generated a net asset value per share (‘NAV’) total return of +10.1% for the six months to 31st October 2016, which was better than the benchmark return of +1.8%, being 3-month LIBOR plus 3%. While a strong absolute performance, SIGT’s NAV return was less than the main equity only comparator indices, particularly those that benefited from the weak performance of Sterling since the 23 June Brexit Referendum result. Your Manager’s Review provides more details on performance. It is clear that investment markets did not expect the outcomes of the Referendum and, since the period end, the USA Presidential Election. The lasting effects of these outcomes remain to be seen but, your Board believes, they reinforce the worth of the Multi-Asset value investment policy of your Company providing, as it does, transparent and straight-forward exposure to a range of assets, which together provide lower volatility (i.e. lower risk) returns than equity only portfolios.

Dividends

Your Company paid two interim dividends of 1.52p per share for the period, an increase of 3.4% on the equivalent dividends last year. It is your Board’s intention, barring unforeseen circumstances, that it will at least maintain the quarterly rate of 1.52p per share for the full year to 30 April 2017.

Gearing

During the period, SIGT announced an increase of its rolling debt facility from £7m to £11m on similar commercial terms. The actual gearing level through-out the period was around 10% which was achieved using a little less than £7m of net debt. The extra £4m has been put in place largely to assist with the operation of the Discount Control Mechanism (‘DCM’). This will enable gearing levels to be maintained should the DCM result in the issuance of new shares, or will provide short term working capital should shares be bought-in.

Discount Control Mechanism (‘DCM’)

At the Company’s Annual General Meeting in July, all the resolutions proposed were passed by a majority of over 99% of shares voted. These resolutions included SIGT’s continuation as well as the authority to buy-in up to 14.99% of the outstanding shares and to issue new shares equivalent to up to 20% of the outstanding issued shares. These buy-in and issuance authorities are essential to enable the DCM to operate, and your Board appreciates Shareholders’ support. The DCM has been effective since 1 August since when buyers of shares in the ordinary course, have been able to do so with the comfort of knowing they are not taking any material discount risk. Since the shares have traded consistently in a very narrow range around NAV, there has been no call on the Company to buy-in any shares though your Board stands ready and very willing to do so. In due course, your Board hopes to see sufficient demand for SIGT’s shares such that new ones will be issued, but meantime is content to see matched buying and selling of shares by investors at very close to NAV, supported by the presence of the DCM.

Investment Outlook

As already mentioned, there have been at least two significant and unexpected political events of late. What will their impact be on economies and investment markets? Will there be more political change elsewhere? Is the unexpected now to be expected? Will fiscal stimulus usurp monetary stimulus as the weapon of choice from policy makers? Anyone who thinks they know the answers to all these questions is probably delusional! Of course we all have an opinion on these issues and will make investment decisions accordingly, but the great strength of SIGT’s Multi-Asset value investment policy is that it provides investors with diversification in a manner that should both reduce any negative impacts from unexpected outcomes and provide an attractive risk adjusted return over the medium to long term.

Richard Ramsay
Chairman
1 December 2016

 

Source

All data as at 31st October 2016
Sources: PATAC Limited, Bloomberg, Seneca IM

 


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Important information

Past performance is not a guide to future returns. The value of investments and any income may fluctuate and investors may not get back the full amount invested. This document is provided for the purpose of information only and if you are unsure of the suitability of these investments you should take independent advice.

Before investing you should read the Trust’s listing particulars which will exclusively form the basis of any investment. Net Asset Value (NAV) performance is not linked to share price performance, and shareholders may realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital. The prospective yield calculation is based on the next four dividends anticipated, compared against the month end share price.

Seneca Investment Managers Limited is the Investment Manager of the Funds (0151 906 2450) and is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at Tenth Floor, Horton House, Exchange Flags, Liverpool, L2 3YL.

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