‍

I was delighted to see that the Temple Bar Investment Trust won Citywire’s “Best UK Equity Income Investment Trust” award last week. Managed by Nick Purves and Ian Lance of Redwheel, Temple Bar is a mainstay of EXE Capital’s Income and Growth strategies for clients.

‍

The management team focus on value investing, seeking to buy shares in companies that are trading below their underlying intrinsic value. The trust holdings are currently trading at a price to earnings ratio of around 9 compared to the market average of 14.

‍

In a recent seminar Nick highlighted the extraordinary “total return yields” being generated by undervalued UK stocks when they buy back their own cheap shares. With a reduced number of shares in circulation, the dividend yield to shareholders increases.  Add on the ability to buy into Temple Bar’s own shares at the current discount of 6% and this yield to investors rises further.

‍

The pair also manage the Redwheel UK Equity Income fund, an open-ended unit trust with similar holdings. However, over that time Temple Bar has returned +82%*, whilst the unit trust has grown by +72%*. The outperformance of the closed-end investment trust will be a combination of not having to sell down holdings to meet redemptions, the narrowing discount and a small element of gearing. Both have outperformed the FTSE All Share return of +43%*.

‍

*(FE Analytics 11/11/20 -11/11/24)

‍

Comments from James Scott-Hopkins, Founder, EXE Capital Management

The views are those of the author only. The above does not constitute a recommendation to buy the fund and advice should be sought from your financial advisor as to the appropriateness of this fund in your portfolio. The value of investments can fall as well as rise. Past performance is no guarantee of future returns.‍

‍