Could thrive across different market environments: F&C Investment Trust

FCIT’s well-diversified portfolio could thrive across different market environments…by Jean-Baptiste Andrieux

Overview

 
F&C Investment Trust (FCIT) aims to offer a well-diversified global Portfolio, with manager Paul Niven overseeing strategic and tactical allocations, adjusting the portfolio based on his market outlook. Stock selection is delegated to managers from within Columbia Threadneedle Investments and selected from across the market, each operating under tailored mandates designed to meet specific risk and return targets. This approach has historically delivered outperformance relative to both the benchmark and sector peers across multiple time frames.

Since the beginning of the year, Paul has only slightly reduced the overall allocation to US equities ahead of ‘Liberation Day’ (02/04/2025). While tariffs and inconsistent US policy are causing uncertainty, he remains constructive on equities at this juncture, as the economic environment still points to positive growth and inflation continuing to remain relatively benign. He also sees developments that could be supportive of global equities, such as increased fiscal spending in the eurozone and a potential acceleration in the adoption of artificial intelligence, which may boost corporate productivity. There was also a change in manager for the emerging markets strategy, with Paul replacing the in-house managed strategy with Invesco in an effort to improve returns. This change also represents a shift in investment style—from Columbia Threadneedle Investments’ quality–growth bias to Invesco’s approach, which retains a focus on quality but has a greater emphasis on longer-term value opportunities.

FCIT raised its Dividend for the 54th consecutive year in its 2024 financial year, reinforcing its status among the AIC’s dividend heroes. Nonetheless, FCIT is trading at an 8.7% Discount to NAV at the time of writing—wider than both the AIC Global sector’s simple average and its own five-year average. Finally, FCIT has an OCF of 0.45% (as of 31/12/2025), making it one of the most cost-competitive investment trusts in the AIC Global sector, with Charges having trended lower over the past ten years.
 

Analyst’s View

 
In our view, FCIT is a compelling core holding, offering strong diversification with exposure to all major regions, as well as a meaningful allocation to private equity, with stock selection overseen by carefully chosen specialists. These characteristics could be particularly valuable at this juncture, as US exceptionalism may be waning and market returns could continue to broaden beyond the US—something that, in our opinion, reinforces the importance of maintaining exposure to a wide range of opportunities globally.

We also believe that Paul’s ability to tactically adjust the portfolio’s allocation is another strength of FCIT, arguably making it one of the nimblest strategies in the AIC Global sector. For instance, timely rotations into value and quality-income strategies ahead of the 2022 bear market, and a shift into growth strategies in early 2024, enabled the trust to navigate very different market conditions effectively. In contrast, many of FCIT’s sector peers have a growth bias and struggled during periods when this factor was not in favour.

In addition, FCIT benefits from highly attractive debt terms, having secured long-term borrowings in 2021 and early 2022 when interest rates were at historic lows. This allows Paul to deploy gearing at a lower cost than many sector peers, giving FCIT a competitive advantage and adding to the attractions as a core, long-term equity holding. Finally, we believe FCIT’s dividend is an attractive part of the investment proposition, with the trust’s substantial reserves putting it in a strong position to expand its 54-year track record of annual dividend increases.

Bull