Athelney Trust PLC

Legal Entity Identifier:

213800ON67TJC7F4DL05

The unaudited net asset value of Athelney Trust was 211.7p at 31 March 2023.

Fund Manager's comment for March 2023

The US economy expanded by an annualised rate of 2.6% in the final quarter in 2022, slightly below the initial estimates of 2.7%, which represents an overall increase of 2.1% for year. The UK economy on the other hand only managed a slight improvement of 0.1% in the fourth quarter of 2022 which was also a stronger performance than previously anticipated and which meant that the UK had avoided a recession.  While global economic activity has been curbed to some extend by the central bank interest rate increases, the real impact has been on regional banks in the US where inappropriate balance sheet management has led to a renewed round of bank collapses. Fortunately for the financial markets, wider contagion was prevented by the swift action on the part of the Federal Reserve to ensure that the banking system remained stable and it is unlikely that there will be a repeat of the global financial crisis which followed the collapse of Lehman Brothers in 2008. 

Earlier in the month, in his first full budget speech, the UK Chancellor set out what was described as a budget for growth, aimed at achieving long-term, sustainable economic growth for the UK. Its main objectives were to remove barriers to employment, encourage business investment, and address labour shortages in some industries.  Subsequent economic data that was released, showed an unexpected increase in inflation for February, from 10.1% to 10.4% which prompted the BoE to raise its baseline interest rate for the 11th consecutive time, from 4.0% to 4.25%. Clearly the elephant in the room remains the eventual impact that the interest rate increases will have on the property market where post COVID office occupancy rates still have not picked up to any material extent, mortgage rates for homeowners that have remained elevated and global credit markets which remain tight. 

Equity markets on the other hand were volatile during the month, initially declining in response to the regional bank failures in the US and then recovering as the situation was ameliorated by the Federal Reserve. The net result was that the Nasdaq Composite was up by 6.7%, the S&P500 improved by 3.5% and the MSCI increased by 2.8%.  In the UK, the large cap segment of the market bucked the global trend with the FTSE 100 down by 3.1% over the month while the broader FTSE 250 Index declined even further, by 4.9%.  Smaller company valuations were under even more pressure with the AIM All-Share Index declining by 5.8% and the Small Cap Index down by a slightly lesser 5.3%.  By comparison, the Athelney portfolio with its focus on quality growth companies was more resilient, declining by only 2.9% during the month and, after providing for the 7.5p dividend and ongoing expenses, the NAV declined by 6.5% to end the month at 211.7p.

During the month we reduced our exposure to the Target Healthcare REIT and Liontrust Asset Management and used the cash to increase our holdings in Paypoint, NWF and LondonMetric.  Our cash holding at month end comprised 2.7% of the portfolio.

Fact Sheet

An accompanying fact sheet which includes the information above as well as wider details on the portfolio can be found on the Fund's website www.athelneytrust.co.uk under "About" then select "Latest Monthly Fact Sheet".

Background Information

Dr. Emmanuel (Manny) Pohl AM

Manny is Chairman and Chief Investment Officer of E C Pohl & Co ("ECP"), an investment management company and has been a major shareholder in Athelney trust for many years.

E C Pohl & co is licensed by the Australian Financial services (licence no.421704).

www.ecpohl.com

www.ecpam.com

Manny Pohl and the ECP group has AUD2.7bn (£1.5 billion) under its management including four listed investment companies, three listed in Australia and one in the UK:

·    Flagship Investments (ASX code:FSI)

AUD95m https://flagshipinvestments.com.au

·    Barrack St Investments (ASX code: BST)

AUD37m www.barrackst.com

·    Global Masters Fund Limited (ASX code: GFL)

AUD33m www.globalmastersfund.com.au

·    Athelney Trust plc (LSE code: ATY)

GBP6m www.athelneytrust.co.uk           

Athelney Trust plc Investment Policy

 The investment objective of the Trust is to provide shareholders with prospects of long-term capital growth with the risks inherent in small cap investment minimised through a spread of holdings in quality small cap companies that operate in various industries and sectors. The Fund Manager also considers that it is important to maintain a progressive dividend record.

The assets of the Trust are allocated predominantly to companies with either a full listing on the London Stock Exchange or a trading facility on AIM or ISDX. The assets of the Trust have been allocated in two main ways: first, to the shares of those companies which have grown steadily over the years in terms of profits and dividends but, despite this progress, the market rating is favourable when compared to future earnings and dividends; second, to those companies whose shares are standing at a favourable level compared with the value of land, buildings or cash in the balance sheet.

Athelney Trust was founded in 1994. In 1996 it was one of the ten pioneer members of the Alternative Investment Market ("AIM"). In 2008 the shares became fully listed on the main market of the London Stock Exchange. Athelney Trust has a successful progressive dividend growth record and the dividend has grown every year since 2004. According to the Association of Investment Companies (AIC) Athelney Trust is one of only "22 investment companies that have increased their dividend every year between 10 and 20 years - the next generation of dividend heroes" (as at 20/03/2018). See link

https://www.theaic.co.uk/income-finder/dividend-heroes

Website

www.athelneytrust.co.uk