Caledonia not inclined to gear up

25th Nov 2009 08:16

Investment trust Caledonia Investments is maintaining a cautious investment approach despite the strong recovery in equity markets since March.‘In many cases equity prices are not at present looking particularly attractive when analysed against the fundamental financial outlook for the companies themselves. We are therefore continuing to be cautious and, at least in the shorter term, are now planning to utilise only a small part of our £100m bank facilities,’ said chief executive Tim Ingram.The trust saw a 24.8% increase in its diluted net asset value (NAV) per share in the six months to 30 September, compared to a 32.8% on the FTSE All Share, the index against which the trust’s portfolio performance is measured.The company attributed its sub-par performance relative to its benchmark index to its strategy of building ‘a robust and defensive portfolio of long-term stakes in sound businesses.’The company, which invested just over £63m in the six month period, said almost all of its investments were in companies in which it was already invested. The £63m is just over 50% higher than the amount invested in the corresponding period of 2008, reflecting increasing confidence in the strength of equity markets, as governments continue to provide fiscal stimuli.The gap between the NAV per share and the company’s share price narrowed over the period to 14.3% from 17.3% at the end of March.The interim dividend has been increased by 2.9% to 10.6p.