Why invest with CT UK Capital and Income Trust

Q: What is CT UK Capital and Income Investment Trust?

A: CT UK Capital and Income Investment Trust is a UK-based investment trust that aims to generate both capital growth and income for its investors. It primarily invests in a diversified portfolio of UK-listed companies, focusing on achieving a balance between long-term growth (capital appreciation) and providing regular income through dividends. The trust seeks to offer investors exposure to the UK stock market, with a strategy that combines both income generation and capital appreciation, making it suitable for those looking for a steady income stream along with potential for capital gains.

Q: What is the investment objective of CT UK Capital and Income Investment Trust?

A: CT UK Capital and Income Investment Trust has offered a consistent income while at the same time seeking to grow the size of your investment. We have been searching out UK’s large and medium-sized businesses with growth potential since 1992 to give our investors access to a range of quality UK stocks in one place. 

We carefully identify companies that are growing and profitable today and have the strong, sustainable foundations believed to be able to continue that growth into the future. 

We choose to invest in companies we strongly believe in. Most of them generate much of their revenues outside the UK which means you benefit from international growth and diversification.

Q: Who is Julian Cane, and how has he shaped the CT UK Capital and Income Investment Trust?

A: Julian Cane has been the portfolio manager of the CT UK Capital and Income Investment Trust since 1997, making him one of the longest-serving managers in the sector. Over nearly three decades, he has followed a disciplined and selective investment approach, focusing on companies he believes have strong fundamentals, capable management, and attractive valuations. His strategy has resulted in consistent dividend growth for the trust, which has increased its payouts every year since its inception in 1992*.

Q: How does the trust’s investment approach differ from the FTSE All-Share Index?

A: Unlike many funds that track the FTSE All-Share Index closely, Julian takes a more selective approach. He invests in relatively few of the largest companies in the index, preferring mid-sized companies where he sees greater growth potential. The trust’s portfolio includes only 8% in companies valued over £100bn, compared to the index’s 20% weighting. Instead, the trust has a significant 40% allocation to smaller companies valued between £0-5bn, while the index only allocates just over 20% to these businesses. This deliberate positioning allows the trust to focus on high-quality businesses that may be undervalued or overlooked by the broader market.

Q: Why is the trust recognized as an AIC Dividend Hero and how does its dividend performance compare to other investments?

A: The CT UK Capital and Income Investment Trust has increased its dividend every one of its 30 plus years, earning it the AIC Dividend Hero title from the Association of Investment Companies (AIC). The AIC award dividend hero status to investment companies that have been able to increase their annual dividends for 20 years in a row. In the case of the CT UK Capital and Income Investment Trust, if you had invested £1,000 in the trust at its launch in 1992, you would have received £2,376 in total dividends. In contrast, the FTSE All-Share Index would have paid £1,076 in dividends over the same period, and a savings account matching the Bank of England base rate would have paid £1,132. This track record highlights the trust’s ability to provide consistent income growth, even through market downturns. It’s a record Julian is proud of. “Dividends from the stock market chop and change but our own dividends to our shareholders have gone up each and every year,” he explains. “Think back over time through the crisis of the 2000 TMT (telecom, media and tech) boom, dividends from the market fell; they also fell in 2008 with the financial crisis; and then they fell in Covid-19 as well.”

Q: How have dividends contributed to the trust’s overall performance?

A: Over the past five years, the trust’s net asset value has risen by 31.55%, with more than two-thirds of that growth coming from dividends. This steady income stream has helped stabilize returns, particularly during periods of market volatility, such as the Covid-19 pandemic and the Ukraine war. While capital values fluctuate due to market conditions, the trust’s strong dividend performance has provided investors with a reliable source of returns. Recent dividend data shows continued growth, with total dividends increasing from 11.40 pence per share in 2019 to 12.15 pence per share in 2023.

Q: What is Julian Cane’s outlook for UK equities, and what advice does he give investors?

A: While UK equities have been performing well in the first half of 2024, Julian believes it is difficult to predict how long this momentum will last. Instead of trying to time the market, he advocates for a long-term investment approach. His philosophy is ‘time in the market rather than trying to time the market’ ultimately should lead to potentially strong returns. This means investors in the trust should focus on the bigger picture and stay invested through market cycles to take advantage of Julian’s steady, disciplined investment strategy.