The City of London Investment Trust looks to increase the value of shareholders’ investments and provide an income by investing mainly in well-known UK companies across sectors and industries.

What does it do?

The Trust mainly invests in the shares of large UK companies. It aims to grow the value of your investment (or capital) as well as providing an income (or dividends) over a time frame of at least 5 years.

How does it do it?

Job Curtis, who has managed the Trust since 1991, has developed his investment process over many years. There are two key areas he focuses on:

• How much cash the company generates, which indicates its ability to pay dividends; and
• How expensive he thinks the company’s shares are, relative to the price they’ve traded at in the past and in comparison to its competitors.

Job then creates a diversified portfolio of companies, usually of over 100 investments, across a range of sectors and industries, aiming to reduce investors’ risk as much as possible.

Why does Job do it?

‘I feel a real sense of responsibility to my shareholders, who I know rely on the investment returns that I generate. I am aware that many of my shareholders are pensioners whose daily income needs are in part, met by a consistently rising dividend from the trust and that growing the capital allows people to achieve the financial goals they have set themselves.

I believe in a steady, consistent approach. I expect to be judged over the long term, not by the latest performance charts. The tortoise gets there just the same as the hare but in a manner that can be relied upon. I believe in being reliable, consistent and dependable. Many of my colleagues invest their own money in the trust, as do I.

Meeting my responsibilities is important to me. I am not about to let any of my shareholders, or myself down.’

“I believe in the UK’s companies – many have been around for centuries and are likely to continue for many more, competing at the highest level and reaching customers all over the world.

I believe that my investment process identifies solid, successful, well-run companies, at attractive prices, that should continue to provide returns to investors over the long term.”

What are the Risks?

Share prices go up and down. If you sell your shares at a lower price than you bought them, you will have lost money. You should be comfortable with this risk before investing. See Step 2 for more information on risk, if you haven’t already.

Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.

This Trust is suitable to be used as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this Trust.

The return on your investment is directly related to the prevailing market price of the Trust’s shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Trust. As a result losses (or gains) may be higher or lower than those of the Trust’s assets.

Where the Trust invests in assets which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise.

The Trust may borrow money (gearing) as part of its investment strategy. If the trust utilises its ability to gear, the profits and losses incured by the Trust can be greater than those of a trust that does not use gearing.

All or part of the Trust's management fee is taken from its capital. While this allows more income to be paid, it may also restrict capital growth or even result in capital erosion over time.

Source: Morningstar