TEMPLE BAR INVESTMENT TRUST: Managers raise the Bar

Temple Bar Mutual Fund has been under new management since October 2020 and so far it is going well.

The £840m fund is back with a growing dividend after a pandemic-induced swing in 2020 and overall performance numbers are encouraging.

According to Ian Lance, co-manager alongside Nick Purves, the UK equity income-focused trust has delivered a total return to shareholders of 76 percent under their leadership.

This compares to a return of the FTSE AllShare Index of 42 percent.

Over the past year and two years, the fund has also outperformed the FTSE All-Share Index. The returns confirm the investment fund board’s decision to appoint the pair to lead the fund after the previous managers, Ninety One, fell short of expectations.

All investment funds have the authority to attract new asset managers if they feel that the interests of the shareholders are not served.

“It was a bold decision,” says Lance, “especially given that the investment style we follow is very much based on the search for value rather than focusing on growth companies.

At that time, growth was a real investment frenzy. Now, thanks to higher interest rates and raging inflation, that’s not the case.” Lance and Purves cut their teeth as asset managers at Schroders before joining RWC Asset Management in 2010. Now that RWC has been renamed Redwheel, the duo forms the heart of one of seven investment teams that operate separately – and with great autonomy – under the auspices.

Together they manage assets of approximately £4.5bn, including the Temple Bar portfolio and £2bn for clients of asset manager St James’s Place, assisted by three team members. Temple Bar has 31 positions, most of which are UK-listed, and the managers are happy to take big bets.

“We get paid to be active managers,” says Lance. “We’re not sitting on our hands.”

The big “bets” currently fall into three broad camps: energy companies, financial services and retailers, all of which Lance says offer great investment potential, albeit not without risk.

The trust’s two largest holdings are in oil giants BP and Shell, accounting for nearly 16 percent of the portfolio. Lance believes the companies will continue to generate a rich stream of dividends from strong revenues – on the back of high energy prices – and an unwillingness to divert much of this revenue to capital expenditures due to windfall taxes imposed by both the UK as and US governments.

“The statistics are overwhelming,” says Lance.

In 2013, the world’s largest oil companies spent $600 billion a year on capital expenditures. Today it is $250 billion.

The companies generate mountains of cash and much of it ends up in the pockets of shareholders through dividends and share buybacks. That will only change if governments come to their senses and encourage them to invest in the future energy supply.’ Banks NatWest and Barclays are key positions – and Lance is confident they will benefit from increased margins if interest rates remain high.

Retailer Marks & Spencer, he says, has been revitalized under new management, while International Distributions Services (the owner of Royal Mail) could be a smart investment if Royal Mail’s industry problems are resolved – or become the largest shareholder in the company. company, Vesa Equity (controlled by Czech billionaire Daniel Kretinsky), is demanding a restructuring of the company.

“A lot of ifs,” admits Lance, “but a lot of potential value for shareholders like Temple Bar.” The trust’s dividends are equal to 3.6 percent per annum. The exchange ID code is BMV92D6 and ticker TMPL. The annual costs are just under 0.5 percent.

jeff.prestridge@mailonsunday.co.uk