Dunedin Income Growth has confirmed that Georgina Cooper will become co-manager of the investment trust supporting lead manager Ben Ritchie as Louise Kernohan prepares to leave for BNY Mellon Investment Management.
Cooper’s appointment was revealed in Thursday’s Dunedin Income Growth H1 2020 update, which revealed net asset value falls of 11.4% and share price falls of 13.8% compared to a loss of 17.8% on the FTSE All Share over the period.
Cooper (pictured) had already been promoted on the £417.9m Aberdeen Standard Investments UK Equity fund when Kernohan’s departure was announced earlier this month.
Cooper joined ASI in 2014 and has been a member of the UK equities team for five years. She has already been involved in the management of the Dunedin Income Growth portfolio before her promotion.
The management change at Dunedin Income Growth comes as her predecessor is revealed to be joining BNY Mellon IM from November. Kernohan will manage the BNY Mellon UK Equity and UK Opportunities funds, alongside Simon Nichols and Ben Smith.
Alongside Dunedin Income Growth, she also used to manage the ASI UK Equity fund. She has been replaced by head of UK equities Andrew Millington.
Dunedin Income Growth sticks by its dividend growth policy despite Covid hit
The board of Dunedin Income Growth is sticking by its policy of increasing dividends despite the hit Covid-19 has had on portfolio income. Like fellow ASI investment trust, Murray Income, Dunedin Income Growth is tapping into its reserves to fund dividends.
Revenue earnings per share declined by 8.6% during the six-month period, although chairman David Barron noted the investment trust had benefited from its sale of Royal Dutch Shell during the period as well as the absence of stocks like HSBC and BP, which feature in many rival UK equity income trusts.
In their investment managers report, Ritchie and Kernohan described the mid-term outlook for Royal Dutch Shell as challenging and said that the rationale for holding it has weakened following its dividend cut. Other disposals included storage company Big Yellow, Italian hearing aid retailer Amplify and Swiss testing company SGS, but these were due to “full valuations”.
The managers initiated new positions in Coca Cola Hellenic, Hannover Re, Intermediate Capital Group, Pets at Home, Prosus and SSE.
An option writing strategy helps the team supplement income and Ritchie and Kernohan said volatility had presented opportunities to generate increased option premiums.
Amid the Covid-19 sell-off, gearing was notched up a percentage point to fund the purchases of SSE and Coca Cola Hellenic as their share prices dropped. It was also used to top up Euromoney, Ashmore and Weir Group.
Net gearing increased from 5.1% to 9.1% over the period with an extra £3m taken from the revolving credit facility meaning a total of £14.1m had been drawn down from the facility at the end of the period. The facility has a limit of £15m, although the board has the option to double this.
The discount widened from 3.6% to 6.4% over the period, which Barron said was in line with the wider UK Equity Income sector.
