New Star net asset value falls but expects growth in US
New Star Investment Trust PLC on Monday said investments in shorter-dated bonds should provide a measure of protection, as it posted a decline in net asset value amid a flat dividend.
The investment trust said net asset value fell 13% to 169.19 pence each as at December 31, from 194.11p at June 30.
Total return was 0.41% in the six months to December 31, down from 3.38% a year ago and underperforming against the IA Mixed Investments 40-85% shares, which had a return of 2.89%.
‘The total return figure for the company represents the revenue and capital return shown in the statement of comprehensive income before dividends paid, the B Share redemption payment and after deducting B Share issue costs,’ New Star explained.
The company kept an unchanged interim dividend of 1.70p per share.
Looking ahead, Chair Geoffrey Howard-Spink said: ‘President Trump’s policies of deregulation, tax cuts and import tariffs should generate economic growth in the US and provide an element of support for US stocks in the short term but may stoke inflation. If overall equity markets weaken in response to renewed inflation fears, lowly-rated equities in the UK and in emerging markets may prove defensive.
‘US and UK inflation is already proving more persistent than previously expected, with the result that the Federal Reserve and the Bank of England may keep their official interest rates higher for longer. In such circumstances, investments in shorter-dated bonds should provide a measure of protection while your company’s significant allocation to cash will generate income.’
New Star shares rose 2.7% to 111.90 pence each on Monday afternoon in London, giving it a market capitalisation of £79.5 million.
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