FCIT’s discount may provide an attractive entry point…by Nicholas Todd




F&C Investment Trust (FCIT) is managed by Paul Niven, who aims to provide investors with a highly diversified portfolio of global equities. The strategy takes a multi-manager approach, and Paul aims to identify best-in-class, specialist bottom-up-focused stock selectors, which he allocates to according to his tactical and strategic asset allocation views. Over the course of 2023, Paul has gradually shifted the portfolio away from the more value-orientated strategies he favoured last year, providing what he hopes to be a more balanced and more cautious exposure – also demonstrated through the relatively low level of Gearing. The trust also provides a significant allocation to private equity – an allocation that has proven to generate alpha over the long term.

FCIT’s long term performance characteristics have been strong, with it displaying superior risk and downside protection characteristics while delivering a NAV total return of 55% over a particularly volatile five-year period. This compares to the typically more stylistically driven strategies within the global sector, which generated an average return of 29% over the same period (see Performance).

Year-to-date performance has been more challenging, with Paul’s more balanced approach lagging the benchmark, due to a low allocation to the ‘magnificent seven’, US technology companies that have driven equity market returns. However, a greater focus on value and income continues to bolster the contribution from revenues and the board expects to provide a 53rd consecutive year of dividend increases – cementing its spot as one of the longest-standing AIC ‘dividend heroes’ (see Dividend).

FCIT’s Discount is currently 9.9%, which is significantly wider than its five-year average of 5.7%.



Kepler View


We believe FCIT’s highly diversified portfolio is a strong core global equity holding. Paul’s active approach to portfolio management ensures FCIT is not overly exposed to any individual risk factors, which can be particularly advantageous in more uncertain economic environments. Furthermore, Paul’s ability to shift the tactical allocations allows him to respond to the ever-changing market conditions. His rotation away from high-growth strategies into more value and quality income-focused strategies in 2022 dampened the impact of the sharp rise in interest rates compared to some all-out growth focused strategies within the global and specialist sectors. Moreover, we believe Paul’s gradual shift to a more balanced exposure over 2023 could enhance FCIT’s long-term risk, downside protection and performance characteristics.

Despite the recent underperformance of the private equity allocation this year to date, the exposure to high-quality, early-stage private equity offers an additional opportunity to generate alpha. Although structural Gearing remains a core feature of the portfolio, we believe Paul’s more cautious stance is sensible in the current environment. Moreover, the well-timed refinancing of the trust’s long-term debt facilities, which reduced the blended rate from 7.1% to 2.4%, should positively contribute to future returns.

However, as shown over the first half of 2023, this approach can leave FCIT prone to periods of short-term underperformance, particularly in stylistically driven markets. That said, if investors agree with Paul’s view that valuations are looking elevated in the dominating mega-cap tech names, casting the net across a broader range of equites is likely to be more beneficial, and the recent widening of the Discount may present a good entry point for long-term investors.




  • Strong, long-term performance characteristics, particularly risk and downside protection, relative to peers
  • Discount significantly wider than five-year average
  • All-weather investment vehicle, which offers an exposure to hard-to-access private equity




  • Performance can lag during stylistically driven markets
  • Highly diverse strategy limits diversification benefits relative to more specialist strategies
  • Gearing can exaggerate losses on the downside

See the full research on FCIT here >
investment trusts income

This is a non-independent marketing communication commissioned by Columbia Threadneedle Investments. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

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