Fund focus: British Assets Trust
Each week, Financial Mail focuses on a top-performing fund and whether it's right for you: British Assets Trust.
Don't be fooled by the name. British Assets Trust has just reported impressive results for the year to the end of September, but its share price gain of almost 16% has more to do with its exposure to emerging markets than the UK.
British Assets is one of a select band of investment trusts that aims to generate a mix of income and capital growth by investing internationally.
And while more than 60% of its assets are in top UK firms, it is its 10% exposure to emerging markets that gives it the potential to deliver eye-catching returns.
Though fund manager Julie Dent remains cautious over prospects for stock markets, she is buoyed by the 'wall of cash' growing as a result of the low interest rates available on deposits.
If this money continues to find its way into equities, it will help sustain share prices.
'There will be periods of market softness, but the corporate outlook is better than it was,' she says.
'I will continue to buy on red days - when the market is falling.'
British Assets is one of 16 investment trusts run by fund manager Foreign & Colonial.
In recent years it has worked hard at delivering dividend growth - in addition to any growth in the capital value of their shares.
Dividend payments for the accounting year just ended totalled 6.1p per share, a three per cent rise on 2008, and the board hopes to at least maintain this for the year ahead.
One feature of the trust is the low annual management fee it pays to F&C. This is capped at 0.6 per cent and if the trust doesn't beat its benchmarks, it falls to 0.3 per cent. By contrast, most unit trusts levy charges of 1.75% with no scope for a cut.
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