Edinburgh Investment Trust has released its annual results for the year ending 31 March 2026, recording a net asset value (NAV) total return of 7.2% and a share price total return of 8.5%.
This was a relative underperformance compared with the FTSE All Share, which climbed roughly 21.5% over the period.
Elisabeth Stheeman, chair of Edinburgh Investment Trust, said: “The company’s financial year to 31 March 2026 marks the second consecutive year in which the UK equity index has outperformed both the US equity index and broader global equity indices, with the FTSE All-Share Index recording double-digit returns over the two years.
“In this context, while positive in absolute terms, the company’s investment returns over the last 12 months have been disappointing relative to the Index.”
Poor returns over the past 12 months have dragged on medium-term results, causing the strategy to slide into the third quartile of the IT UK Equity Income sector over the past three years, according to FE fundinfo data.
Stheeman attributed this short-term underperformance to holding stocks perceived as losers from the advance of AI, operational underperformance in a handful of holdings and underweighting some strong value companies.
“While we accept that short-term returns for an actively managed portfolio will be volatile, the board is focused on ensuring that the trust’s returns improve after this challenging 12-month period,” the chair said.
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Portfolio manager Imran Sattar agreed with the chair, adding the bias to quality growth stocks over the past year was a drag on results.
“There was, however, a notable derating in several portfolio holdings which the market has, we believe erroneously, characterised as ‘Artificial Intelligence losers,” he said.
During the past 12 months, Sattar and his team added to de-rated data and analytics companies that they believed would be winners from the AI trend, including the London Stock Exchange Group and RELX.
“Second, additions to positions in Renishaw and Oxford Instruments, the specialised instrumentation companies are experiencing short-term cyclical weakness in end markets.
“Finally, new purchases of Marshalls and Ibstock: cyclically depressed and lower valuation stocks that present attractively skewed risk-reward profiles,” Sattar said.
Despite the poor short-term results, there were some bright spots in Edinburgh Investment Trust’s report.
The share price discount to NAV slid to 8.6%, down from 9.4% this time last year, and the financial dividend for the year came in at 32p per share, a 11.1% increase from the prior year.
Additionally, while the short- and medium-term performance is disappointing, since Liontrust took over the mandate in March 2020, annualised NAV total return is 15% and 13.9% on a share price basis, compared with a 13.6% reward from the FTSE All Share.
Stheeman said: “Of the 17 peer investment trusts in the UK equity income sector over the same period, Edinburgh ranks fourth.
“There is well-founded optimism that the company’s diversified portfolio of stocks will drive attractive returns in the years ahead.”
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