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Announcement from Columbia Threadneedle Investments and BMO Asset Management
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View on Russian invasion of Ukraine and exposure of F&C Investment Trust
The Russian invasion of Ukraine is causing significant volatility in markets and is exerting a terrible toll on the Ukrainian people. Commodity prices, including oil & gas as well as numerous other key commodities such as wheat have risen sharply and this will place further pressure on inflation rates globally. The immediate impact of Ukraine, beyond the unfolding humanitarian crisis, is to dent an economic recovery that was underway as the impact of the omicron variant of Covid 19 receded. It will also raise inflation in the near-term via the direct impact on food and energy prices and by exacerbating supply shortages. Expectations for global growth have also been cut, with Europe particularly exposed and there is now some greater uncertainty with respect to the near-term outlook for central bank policy. It may well be that interest rate rises are more modest than had previously been assumed as policymakers weigh risks to growth.
The longer-term ramifications of the Russian action are subject to great uncertainty but we should expect a lasting impact in several areas as a result of President Putin’s actions to reshape the European security order. Amongst other areas, the conflict will likely accelerate a re-orientation of political and economic links and lead to some fragmentation of the global economy and financial system. Such moves would further push against globalisation – one of the factors which had reduced inflation in recent decades. Control of energy supplies and expansion of alternative supply sources in the West will likely be given greater prominence and defence spending will rise while there will be a greater focus on onshoring of some productive capacity from the corporate sector.
F&C Investment Trust holds very limited exposure to two Russian securities. The combined weight of these two holdings was approximately 0.3% of total assets as at the end of January and our holding in these stocks was reduced after the conflict began. The local market exchange has, however, been closed and trading in Russian securities has been suspended. The Board have made the decision to write down the value of these holdings to zero for the time being and, once liquidity permits, to seek to divest all direct exposure to Russian equities. Index providers, including FTSE Russell, will remove Russian securities from market benchmarks in coming days.
Paul Niven
Paul Niven is Managing Director and Head of Multi-Asset Portfolio Management. He is also Fund Manager for the Foreign and Colonial Investment Trust. Paul joined the firm in 1996 and has worked in Asset Allocation and Investment Strategy since 1999, after undertaking a fund management position in Pacific Basin Equities. Paul has had responsibility for the management of Multi-Asset mandates within the group since 2002 (including large portfolios for insurance clients) and is Chair of the Investment Policy Group. He is responsible for strategic and tactical portfolio construction as well as manager selection across a variety of institutional mandates. Paul graduated from the University of Strathclyde with a BA (Hons) in Accounting and Economics, obtained an MPhil in Finance, and is a member of the UK CFA Institute.
Aims of the Investment Trust
- are looking for their first investment (or for a building block for their portfolio),
- are looking to invest their money over many years,
- are interested in regular dividends
Aims of the Investment Trust
Launched in 1868, the Trust is the world’s oldest collective investment scheme and has since gone on to amass an impressive track record and grow into one of the largest of its kind. Its aim is to generate long-term growth and income by investing primarily in an international portfolio of listed equities. The Trust is highly diversified and cautiously managed, with exposure to over 450 individual companies from around the world.
Investment Risks
F&C Investment Trust Update - April 2021
Chairman – Beatrice Hollond and Lead Manager – Paul Niven discuss the recent performance of the Trust, Sustainability & ESG, and the outlook for F&C Investment Trust moving forwards. Download the full presentation here.
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