F&C Investment Trust LON: FCIT used a shareholder update to outline portfolio positioning, recent performance, and key market themes, with fund manager Paul Nevin emphasizing a long-term, globally diversified approach spanning listed equities and private equity.

Trust overview and portfolio structure

Nevin described the trust as a growth-focused vehicle primarily invested in listed equity and private equity, with an objective to grow capital and income. He said the trust’s market capitalization is around £6 billion and framed it as a “cost-effective solution” for diversified equity exposure.

He highlighted the trust’s dividend history, noting it has paid a dividend every year since launch in 1868 and that the board’s aspiration remains to deliver dividend increases ahead of inflation. Nevin also pointed to the trust’s low-cost, fixed-rate borrowing structure, stating it has a blended average interest rate of about 2.4% on £580 million of nominal debt outstanding. He said this fixed-rate debt has “immunized” the trust from the rise in market rates and can be accretive to NAV returns if portfolio returns exceed the cost of debt.

On implementation, Nevin said the trust uses both in-house capabilities at Columbia Threadneedle Investments and third-party managers. He cited J.P. Morgan for large-cap growth, Barrow Hanley for value, and noted that the trust moved its emerging markets allocation to Invesco about a year ago, describing a value-based approach with an emphasis on business quality and low leverage. Nevin said Invesco had “got off to a good start” in absolute and relative terms for that portfolio sleeve.

Performance and peer comparisons

Nevin reiterated that the trust’s decision to “globalize” the portfolio in early 2013—reducing UK bias—had been beneficial over the long run, given global equities’ material outperformance versus UK equities since that time. However, he also acknowledged that UK equities, and UK value stocks in particular, had performed strongly in more recent periods.

He cited the MSCI UK Value Index as being up about 30% over the last year and 54% over three years, compared with the trust’s returns of 9% and 52% over those same periods. He also noted that over a 10-year period global markets have delivered roughly twice the return of the FTSE 100 Index.

Discussing relative results, Nevin said the trust’s primary peer group is the global investment trust sector rather than UK-constrained trusts. Using year-end figures referenced in the presentation, he said shareholder return was 14.6% last year versus 14.2% for the benchmark, placing the trust in the second quartile for that year. He added that over longer periods, the trust is “typically first quartile” in shareholder return terms, and that over five years it had the strongest NAV return among peers as of the end of 2025 (noting full-year results had not yet been released at the time of the update).

Positioning: U.S. exposure, technology concentration, and the dollar

Nevin said the trust’s top 10 listed holdings included many familiar U.S. names and that NVIDIA was the largest single holding at the end of the year. He described the trust as “moderately long” NVIDIA relative to market indices, while typically underweight several other “Magnificent Seven” stocks, “notably Apple.”

In Q&A, Nevin addressed shareholder concerns about whether U.S. technology valuations imply bubble risk and whether the trust is overexposed. He differentiated between a “bubble” and a “correction,” arguing that bubbles are associated with very large drawdowns such as the Nasdaq’s roughly 80% decline in the early 2000s. While he said valuations in the U.S. and tech are “relatively rich,” he did not view current conditions as “nosebleed territory” driven by valuation alone.

He also said the trust was a net seller of U.S. equities last year, while adding that he still expects the U.S. to remain the majority of assets for now given growth opportunities and the strength of leading companies. At the same time, he said there is a case for market “broadening,” with other regions performing better even if the U.S. does not necessarily “dive.”

Nevin noted currency as a meaningful driver for sterling investors, saying the U.S. dollar underperformed in 2025 and remained weak into 2026. He cited GBP/USD moving from around 1.25 at the start of 2025 to around 1.35 by year-end and approximately 1.38 at the time of the call, adding that President Trump had appeared “not overly concerned” by dollar weakness. Asked about hedging, Nevin said the trust has considered and has periodically hedged U.S. dollar exposure historically, but had no hedge in place at present.

Market outlook: growth, rates, geopolitics, and AI

Nevin characterized the global fundamental backdrop as “reasonably constructive,” while acknowledging multiple risks. He said global growth remained resilient and that the cycle “extends,” though he highlighted uncertainty around U.S. trade policy and the legality of tariffs. He suggested that even if tariffs were deemed illegal, the administration could use other powers to impose them, referencing potential use of other tariff authorities.

On monetary policy, he said inflation remained slightly above target but expected further rate cuts in the U.S. and U.K., while suggesting policy may be “on hold” in Japan and Europe. He also pointed to tight credit spreads as a sign investors are relatively sanguine about corporate risk, but flagged unease in government bond markets related to fiscal deficits and debt levels, referencing recent volatility in Japanese government bonds and UK gilts.

Artificial intelligence remained a major theme, in Nevin’s view, with markets becoming more discriminating between “winners and losers.” He discussed the scale of capital expenditure tied to AI and data center buildouts, citing an annualized run rate of roughly $400 billion in second quarter CapEx and an expectation of around $450 billion in CapEx from the “Magnificent Seven” this year. He said this investment is influencing U.S. growth and benefiting other sectors such as telecoms, miners, and energy. He also highlighted that these large technology companies appear to be shifting from capital-light models toward more capital-intensive ones, and noted that headcount growth across much of the group has flattened in recent years.

On geopolitics, Nevin said uncertainty is high and could raise volatility, but argued geopolitical events “generally tend not to have a lasting impact on markets,” while acknowledging there are exceptions.

UK allocation, private equity, and passive investing

Asked whether UK equity exposure should increase, Nevin said the UK is a small part of global markets and that the trust allocates on a pan-European basis, combining UK and Europe. He said there may be scope for a medium-term increase in that allocation and for a reduction in U.S. exposure, but added he would “rather allocate capital to other areas like emerging markets than the UK.”

On private equity, Nevin said it has been a laggard over the last three years versus strong listed equity returns. He cited industry-wide challenges including elevated valuations—particularly in large buyouts—heavy capital flows into private markets, and fewer distributions than desired, alongside increased use of continuation vehicles. He said he would provide more detailed breakdowns of the private equity portfolio composition after the webinar rather than cite figures without them to hand. He added that, in his view, better private-market value tends to be found “down the size scale” in mid-market opportunities, while venture and growth investing can involve more speculation and subjective valuation.

Finally, asked whether passive investing is “pumping valuations,” Nevin said he is not a big believer that passive investing is driving valuations to extremes, describing markets as relatively efficient in how they assign valuations at a given point in time, even if those valuations later prove incorrect.

About F&C Investment Trust LON: FCIT

F&C Investment Trust was founded in 1868 to bring the benefits of investing to a wider audience, we’re the oldest investment trust in the world.
F&C aims to provide a reliable foundation to deliver steady, long-term capital growth and a health dividend income. F&C has delivered increasing dividends for 54 years and is classified by the Association of Investment Companies (AIC) as a Dividend Hero.
The value of investments and any income from them can go down as well as up and you may not get back the original amount invested.

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