Foreign and Colonial AGM

[LooseCannon101]

I spent a few pleasant hours yesterday at the AGM of Foreign and Colonial Investment Trust (FRCL). The trust is the oldest in the world and will be celebrating its 150th anniversary next year.

Paul Niven, the fund manager, gave a presentation highlighting the volatility/reward chart of FRCL as regards its peers e.g. Alliance, Witan, Scottish Mortgage and Bankers. FRCL was near the top of the reward axis whilst being near the bottom of the volatility axis. He also said that the share buyback strategy is used to dampen volatility whilst adding value for long-term shareholders.

Paul laid out the facts clearly as regards the relative lack of performance compared to the benchmark (MSCI World Equity Index). FRCL has third party managers running portions of the portfolio e.g. T. Rowe in the USA. Most did not hit their targets. Paul emphasised that these managers have good long-term track records and should do better than passive index trackers - time will tell!

Private equity - forming about 10% of the trust, was mentioned. This will be managed in-house in the future, so reducing the high fees normally paid in this sector. The trust has recently taken advantage of low interest rates to secure10 year borrowings at historically low rates e.g. 3%.

A fully covered dividend was mentioned as was the intention to increase the dividend in real terms for 2017 and beyond. Currently, shares bought back are held in treasury. We were told by Simon Fraser, the chairman, that these will only be relisted if they trade at a premium. The ultimate aim is for the shares to trade at par value.

After the formal meeting ended, we were able to talk to the directors who were keen to know how the trust could be marketed to the general public. I suggested that a campaign could be launched in mainstream newspapers and online educating the average man or woman the benefits of investing in the trust - effectively a ready-made equity portfolio for the long term e.g. 20+ years which compounds at 8.8% per annum on average. I also mentioned using plain language and highlighting the perverse incentives of financial advisors e.g. to churn portfolios to earn fees.

[nmdhqbc]

What's the deal with AGM's for IT's? Can any shareholders go to them?

[LooseCannon101]

What's the deal with AGM's for IT's? Can any shareholders go to them?

Yes. Anyone who owns shares in an investment trust can go to its AGM.

Foreign and Colonial Investment Trust holds its AGM at the extremely grand Merchant Taylor Hall in central London, where private investors can talk to directors and the fund manager about the performance of their savings. Catering is provided including tea/coffee before the formal presentation, and wine/canapes afterwards. I would thoroughly recommend the experience!

[mc2fool]

What's the deal with AGM's for IT's? Can any shareholders go to them?

Yes. Anyone who owns shares in an investment trust can go to its AGM.

Indeed, however for very many investors nowadays it's their brokers' nominee that holds the shares, so while the investor is the beneficial owner of them, the nominee is the registered owner on the IT's books.

Some nominee brokers will, if you request it, issue you with a Letter of Representation appointing you as a Proxy, which enables you to attend (and vote at) the meetings, but not all offer that service. I know that Halifax, IWeb & TD do, and ATS doesn't. Dunno about others....

[nmdhqbc]

Cheers both, I might look into going to a few.

[GJHarney]

Paul laid out the facts clearly as regards the relative lack of performance compared to the benchmark (MSCI World Equity Index). FRCL has third party managers running portions of the portfolio e.g. T. Rowe in the USA. Most did not hit their targets. Paul emphasised that these managers have good long-term track records and should do better than passive index trackers - time will tell!

The US always seems to me to be very rare for an active manager to beat the index. In fact. are there any IT's with active share US holdings that have any real and consistent success against an index tracker/ETF I wonder?

[tjh290633]

I spent a few pleasant hours yesterday at the AGM of Foreign and Colonial Investment Trust (FRCL). The trust is the oldest in the world and will be celebrating its 150th anniversary next year.

I was there too, and I felt that one of Niven's main points was their deliberate move away from UK shares, which meant that they had benefitted from the weakness of sterling.

Witan's AGM tomorrow will be interesting to compare.

If the sun shines, the courtyard is a good place to have one's discussions.

TJH

[tjh290633]

What's the deal with AGM's for IT's? Can any shareholders go to them?

Yes. Anyone who owns shares in an investment trust can go to its AGM.

Foreign and Colonial Investment Trust holds its AGM at the extremely grand Merchant Taylor Hall in central London, where private investors can talk to directors and the fund manager about the performance of their savings. Catering is provided including tea/coffee before the formal presentation, and wine/canapes afterwards. I would thoroughly recommend the experience!

You don't have to own shares, as you can be there as a guest. Blue cards rather than red cards.

My shares are held in their Children's Savings scheme for the benefit of my grandchildren, and the voting forms come out as for anyone else. Witan have a different sytem where you need a "Letter of Representation". A couple of years ago mine arrived the day after the meeting. A few choice words seem to have sorted that out.

TJH

[Kidman]

In 1987 our children inherited a small sum of money from my late aunt. Half of each pot was invested in Foreign and Colonial, of which I had already been a shareholder for several years.

A few years later I took two of the children to a F&C AGM and the Chairman opened the meeting by welcoming the young shareholders. They could not vote as the shares were held in bare trust for them until age 18 but at least they got an early introduction to shareholder democracy and they enjoyed the sandwiches.