The Bankers Investment Trust (BIT) might seem a curious home for some of your money in the current climate of hostility towards the profession.
The name relates only to the fact that the majority of the original founding directors in 1888 were bankers.
The trust currently has gross assets of more than £500million.
BIT aims to provide long-term asset growth in excess of the FTSE All Share index and regular dividend growth in excess of the increase in the retail prices index.
The company has the commendable record of having increased its dividend in each of the past 42 years.
Manager Alex Crooke expects this trend to be continued because of the retained reserves, which mean that the current dividend is covered 2.4 times. He said: “One of the features that differentiate us from the rest of the sector is our focus on income. Dividends provide around half the total return from shares over the long term, so we think this is a sensible approach.”
Mr Crooke believed the company was more defensive than many others in the global growth sector.
He said: “We have a heavy ‘value tilt’, meaning that we invest in undervalued companies which have the potential to rise in price significantly. We’ll miss out on some growth in a strong bull market, but will be safer in difficult times.”
Over the past five years, the company’s net asset value (NAV) has increased by 48.3%, compared with an increase of 36.3% in the FTSE All Share index and 38.6% from the FTSE World ex-UK index, against which the company is benchmarked.
Despite the company name, Mr Crooke is negative on banks in general because of the need for further capital raising, however, HSBC is included as a result of its strong presence in the manager’s favoured Asia-Pacific region.
Investors can buy shares in BIT at an attractive 15% discount to NAV. The company has been buying back shares recently and the directors have also invested, both of which are a strong signal that the discount to NAV may be unwarranted.
For more information, call 0800 856 5656 or visit www.itshenderson.com
Barry O’Neill is a chartered financial planner with Thomson Shepherd. Contact him on 01224 619215