Mid Wynd "deeply regrets" latest year's "very disappointing" return

Mid Wynd International Investment Trust PLC on Thursday reported that its total return underperformed against its benchmark, although the annual dividend increased.

Mid Wynd's NAV per share was 767.55 pence at June 30, up from 760.96p one year prior.

Shares in the company were 0.8% higher at 783.97p on Thursday in London.

The Edinburgh-based investment firm, which measures itself against the MSCI All Country World Index, reported a plus 2.0% net asset value total return for the year ended June 30, improved from minus 5.1% the year before. The benchmark delivered a plus 27.7% return for the period, up year-on-year from plus 7.2%.

"The board deeply regrets this very disappointing investment performance," Chair David Kidd commented, explaining that "market conditions have been challenging for the company's strategy since Lazard assumed management of the portfolio.

"Equity market returns have been driven by passive investment flows and concentrated enthusiasm for AI-related stocks, while quality companies have fallen out of favour. These conditions have continued into the current period."

He continued: "Our investee companies have consistently produced better operating statistics than the comparator index over the last three years and beyond, but despite respectable earnings growth many of these companies have seen significant downgrades in their valuations."

Mid Wynd declared a final dividend of 4.75p per share, up 5.6% on-year from 4.50p. This brings the total dividend to 8.60p per share, up 3.0% from 8.35p.

It said it would draw on revenue reserves to support the dividend this year, despite net revenue return per share increasing 9.2% to 6.05p from 5.54p, but Kidd said this "should not continue for a prolonged period," noting: "Over the last 10 years, Lazard's Global Quality Growth Strategy, managed by the same team responsible for Mid Wynd, has produced an average annual growth rate of investee company dividends of 10.8%."

Looking ahead, Kidd commented: "Whilst the company is managed with a long-term investment horizon, the most striking feature of markets today is the degree to which returns have become concentrated in a small number of sectors and companies. History tells us that such periods can persist for longer than seems reasonable but also that these periods do not endure indefinitely. At the heart of this concentration sits the AI investment cycle where unprecedented levels of capital expenditure have occurred.

"There remains an outstanding question about the extent to which this spending can translate into durable profits...The investment manager's approach is designed to generate good returns for shareholders over the long term, and the board is encouraged that the investment manager has maintained its investment style and focus."

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