Investment objective and policy Portfolio activity

OCTOBER 2014
Miton
THE DIVERSE INCOME TRUST PLC
Factsheet as at 30 September 2014
Investment objective and policy
Portfolio activity
The Company’s investment objective is to provide shareholders with an
attractive level of dividends in businesses with the prospect of dividend
growth. This trend should also be reflected in some capital growth over
the long term. It will invest primarily in quoted or traded UK companies
with a wide range of market capitalisations and a long-term bias toward
small and mid cap equities. It may also invest in large cap companies,
including FTSE 100 constituents, where it is believed that this may
increase shareholder value.
Equities market trends have been increasingly uncomfortable over the
period. In September the FTSE 100 Index fell -2.8%, with the FTSE Small
Cap (ex ITs) Index was down -2.6%, and the FTSE AIM Index -3.8% although this result was impacted by ASOS again which was down a
further 20% in September. The Diverse Income Trust fell -3.2% in the
month. It seems that as Quantitative Easing (QE) has been phased out
in the US investors are coming under renewed pressure. At times like this
it is really helpful to have a really simple objective of investing in regular
stocks that pay good and growing dividends.
Portfolio risk will be mitigated by investing in a diversified spread of
investments. The portfolio is expected to be made up of 80 to 140
investments, most of which will represent no more than 1.5 per cent of
the value of the portfolio as at the time of acquisition.
The Company intends to pay dividends on a quarterly basis. The
Company delivered a dividend yield of 4% in its first year and plans to
maintain and grow the dividend in terms of pence per share going
forward. Potential investors should note that the targeted annualised
dividend is a target only and not a profit forecast.
Top 20 holdings
Holding
%
1.
SQS Software Quality Systems
2.0
2.
Charles Taylor Plc
2.0
3.
Shoe Zone Plc
2.0
4.
Fairpoint Group Plc
1.9
5.
Powerflute
1.8
6.
Saftestyle UK Plc
1.7
7.
Bioventix Plc
1.6
8.
Randall & Quilter
1.6
9.
Convivality Retail
1.4
10.
St Ives Plc
1.4
11.
Stobart Group Ltd
1.3
12.
Provident Financial Plc
1.3
13.
Secure Trust Bank Plc
1.3
14.
Go-Ahead Group
1.3
15.
Personal Group Holdings Plc
1.3
16.
Direct Line Insurance
1.2
17.
Huntsworth Plc
1.2
18.
4Imprint Group
1.2
19.
Bloomsbury Publishing
1.2
20.
Juridica Investment
1.2
Dividend growth has generally moderated considerably over recent
quarters. With lesser Earnings Per Share (EPS) growth as international
economies slow, and many of the best dividend payers are already
distributing 60 or 70% of their earnings, there is precious little
headroom for some corporates to push dividends much higher.
Whilst these economic conditions are difficult for all companies, the
smallest have the advantage that they can often find ways to sustain
growth in spite of the wider conditions. There are numerous smaller
companies that do generate EPS growth - even at times of economic
stagnation. And with higher dividend cover, and often little debt or
sometimes net cash balances, most smaller companies have much
greater headroom on their dividend payments too. If smaller companies
are able to continue to generate faster dividend growth than the majors,
it is something of a game changer for the markets. The period of
substantial outperformance of the smaller company sector in the 1960’s
and 1970’s, was associated with better dividend growth in spite of
frequent recessions and the oil price shock at those times.
The best performers in the month were Powerflute which did a stunning
deal in the month that greatly enhanced their EPS growth, SQS which
had strong figures in September, and Victoria plc, a carpet manufacture
which distributed a huge special dividend to shareholders. Although
markets are unsettled there was still good demand for shares in these
kinds of stocks. They are relatively straightforward to research, with
good prospects within their markets, and look well set to grow their
dividends by decent percentages over the coming periods even if the
economic background doesn’t improve from here.
Despite the troubled market background, many smaller companies are
continuing to present opportunities to improve their market positions
and enhance their growth rates with additional capital. So although
growth in the UK economy may peak out towards the end of the year, we
remain upbeat regarding the prospects for a multi cap portfolio to
continue to outperform over the coming periods.
Source: Miton. Top 20 holdings represent 29.9% of the portfolio.
Broker desk 020 3714 1525
www.mitongroup.com
brokersupport@mitongroup.com
OCTOBER 2014
Miton
THE DIVERSE INCOME TRUST PLC
Factsheet as at 30 September 2014
Performance since inception (price in pence)
Financial calendar
90
Year end:
31 May
80
Annual report:
September/October
70
Final results announced:
May
60
50
40
May 11
Sep 11
Jan 12
May 12
Sep 12
Jan 13
May 13
The Diverse Income IT Share Price
Sep 13
Jan 14
May 14
Sep 14
The Diverse Income IT NAV
Source: FE Analytics, Miton & Capita, Trust share price and NAV with income from 28.04.2011 (inception).
Interim results announced:
November
Dividends paid in:
Feb, May, Aug, Nov
Next dividend:
First interim
Ex date:
June 2014
Payable:
August 2014
Asset allocation (ex cash)
Cumulative performance
%
1 month
3 months
6 months
1 year
Since launch
FTSE AIM
39.1
19.8
Trust NAV1, 2
-1.8
-2.4
-6.2
+7.4
+57.7
FTSE Small Cap
Trust Share Price (Bid)1
-3.2
-2.9
-7.1
+9.7
+72.0
FTSE 250
19.3
FTSE 100
10.9
Discrete annual performance - year ending
30.09.2014
30.09.2013
30.09.2012
FTSE Fledgling
5.7
30.09.2011
30.09.2010
Other
2.0
Trust NAV1, 2
+7.4
+36.1
+16.4
n/a
n/a
Bond
1.4
Trust Share Price (Bid)1
+9.7
+36.8
+22.9
n/a
n/a
Cash
1.3
FTSE 100 Put Option
0.5
Sources: 1. FE Analytics. Net income reinvested GBP. 2. Based on initial NAV of 48.75p (after launch expenses).
Fund launch date: 28.04.2011.
Source: Miton as at 30.09.2014.
Key facts
Share
class
Market
capitalisation
Total net
assets
Gearing
Historic
net yield
NAV ex.
income
NAV with
income
Share price
(mid)
Premium
(Discount)
AMC
on market cap
Ord. class
£254.2m
£251.7m
up to 15%
3.13%
76.90p
77.60p
78.38p
1.0%
C share
£49.3m
£48.4m
up to 15%
n/a
48.10p
48.36p
49.25p
1.84%
1.0% up to £300m
market cap 0.8% on
market cap above
£300m
Company information
Contact details
The Company was launched on 28 April 2011.
Shares in issue
Fund managers
t: 020 3714 1516/1517
324,377,450 Ordinary Shares
Gervais Williams
gervais.williams@mitongroup.com
100,000,000 C shares
Martin Turner
martin.turner@mitongroup.com
Address:
Miton Group plc
51 Moorgate,
London, EC2R 6BH
1
Ongoing charges:
1.29%
AGM date:
October 2014
Bloomberg:
DIVI LN
Fax:
0203 714 1501
SEDOL:
B65TLW2
Website:
www.mitongroup.com/dit
Financial Times:
(Investment Companies)
Company secretary:
Capita Sinclair Henderson Limited
AIC Sector:
IT UK Equity Income
Broker to company:
Chris Lunn
Cenkos Securities plc
e: clunn@cenkos.com
t: 020 7397 1912
Benchmark:
None
Directors:
Michael Wrobel (Chairman), Paul Craig,
Lucinda Riches, Jane Tufnell, Tom Bartlam
1. As at 30.11.2013.
Important information
Past performance should not be seen as an indication of future performance. The information on this factsheet is as at 30.09.2014 unless stated otherwise. The value of
investments and any income may fluctuate and investors may not get back the full amount invested. The views expressed are those of the fund manager at the time of
writing and are subject to change without notice. They are not necessarily the views of Miton and do not constitute investment advice. Whilst Miton has used all reasonable
efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.
Investment in the securities of smaller and/or medium sized companies can involve greater risk than may be associated with investment in larger, more established
companies. The market for securities in smaller companies may be less liquid than securities in larger companies. This can mean that the Investment Manager may not
always be able to buy and sell securities in smaller and/or medium size companies. This document is provided for the purpose of information only and if you are unsure of
the suitability of this investment you should take independent advice. Before investing you should read the Trust’s listing particulars which will exclusively form the basis of
any investment. Net Asset Value (NAV) performance is not linked to share price performance, and shareholders may realise returns that are lower or higher in performance.
The annual investment management charge and other charges are deducted from income and capital.
Miton is a trading name of Miton Asset Management Limited. Miton Asset Management Limited is authorised and regulated by the Financial Conduct Authority and is
registered in England No. 1949322 with its registered office at 51 Moorgate London, EC2R 6BH. MFP 14/376
Broker desk 020 3714 1525
www.mitongroup.com
brokersupport@mitongroup.com