Investment policies

Portfolio Restrictions

Yield target

  • 120-140% of the FTSE All-Share Index. Please note that this performance target may not necessarily be achieved and losses may be made.

Number of holdings

  • The portfolio will normally contain 70-80 holdings but it may be more or less concentrated from time to time as circumstances require

Turnover

  • Annual turnover will normally be limited to 50% of the portfolio (average of purchases and sales during the year)

Stock and sector limits

  • There will be an absolute limit of 10% on individual stocks and 25% on a specific sector irrespective of their weighting in the benchmark

International investment

  • Up to 20% of the portfolio can be invested in listed international equities in developed economies

Cash limits

  • A level of 10% of shareholder funds is regarded as a guideline maximum holding in cash, although this is dependent on market conditions

Fixed interest

  • From time to time fixed interest holdings or non-equity interests may be held on an opportunistic basis

Derivative instruments

  • Derivative instruments are not normally used but in certain circumstances, and with the prior approval of the Board, their use might be considered either for hedging purposes or to exploit a specific investment opportunity

Gearing

This is the ability of the Company to borrow money to magnify the potential returns on its portfolio, and relies on the fact that stock market returns have exceeded the cost of borrowing over the longer term. The Company currently has a 5.5% debenture stock 2021 in issue for £38m together with a 4.05% private placement note for £50m, for repayment in September 2028 and a 2.99% private placement loan for £25m, for repayment in October 2047.

Liquidity and borrowings are managed with the aim of increasing returns to shareholders. The Company’s gearing range may fluctuate between 0% and 30%, based on the current balance sheet structure, with an absolute limit of 50%.

Borrowing/leverage risk
Please note that while the Company can borrow additional money to invest, known as leverage, this increases the exposure of the Company to markets above and beyond its total Net Asset Value. This can help to increase the rate of growth of the fund but also cause losses to be magnified.

Discount Management Policy

The Board of Directors attach considerable importance to any premium or discount to Net Asset Value (NAV) at which the shares trade, both in absolute terms and relative to the average rating at which the UK Equity Income sector of Investment Trusts as a whole is trading. Premiums judged to be excessive will be addressed by repeated share issues, either new or from Treasury. Discounts judged to be excessive will be addressed by repeated share buybacks, for Treasury or cancellation. The Directors are prepared to be proactive in premium / discount management to minimise potential disadvantages to shareholders.

In order to avoid substantial oversupply or shortages of shares in the market the Board asks shareholders to approve resolutions which allow for the buyback of shares and their issuance which can assist in the management of the discount. Regular demand generated by monthly investment in the Savings Scheme and the use of marketing and promotional activity also assist in keeping the discount at an acceptable level. However, market sentiment is beyond the absolute control of the Portfolio Manager and Board.

Fees

Annual Charges

Management Fee Summary

For investment management services provided pursuant to the Alternative Investment Fund Managers Directive (AIFMD), including associated risk management monitoring, a fee of 0.35% p.a, payable quarterly, based on the value of the investments (including cash) of the Company together with a fee of £125,000 p.a, plus or minus 0.005% of the value of the investments of the Company, above or below £750 million. Under a Secretarial Services agreement, the manager also receives an annual fee of £45,450. There is no performance fee.

Ongoing Charge (2017) including stated management fee

0.49%

Charges to capital risk
Please note that a portion (60%) of the Company’s expenses are charged to its capital account rather than to its income, which has the effect of increasing income (which may be taxable) whilst reducing its capital to an equivalent extent. This could constrain future capital and income growth.

Latest updates from Temple Bar

Use this simple form to let us know the type of updates you would like to receive.

We will email you when your selected updates become available.

By providing us with your contact details you are opting to receive the materials you have requested. We will handle your personal data in accordance with our privacy policy.

Step 1 of 2

50%