Edinburgh Inv Trust benefits from market weakness

11th Nov 2010 15:54

The Edinburgh Investment Trust increased net asset value (NAV) by 3.7% over the six months to September, outperforming the FTSE All Share which fell 1.5%.It also narrowed the discount to NAV from 6.2% to 4.8% and traded at an average premium of 2% when valuing debt at market value."The company's defensive portfolio tends to out-perform when confidence is weak and the Index falls; the converse is also true," the trust explained. "Overall, the result was satisfactory."Neil Woodford, the star investment manager at Invesco, which has prime responsibility for the company's investments, believes the prospects for the UK economy remain challenging. "The UK has seen a muted recovery so far despite the scale of monetary and fiscal support it has received and with the process of bank crisis resolution still far from over we expect growth to be minimal in the years ahead," he warns."The spending cuts required to address the UK's deficit will be severe and have negative implications for the employment market."But Woodford thinks the businesses that the company has exposure to can continue to grow revenues, profits and dividends despite the current economic headwinds. "A number of these companies, including pharmaceuticals and tobacco, are insulated from weakness in discretionary consumer spending and are benefiting from expansion in faster growing overseas markets. Companies in the utility, aerospace and telecom sectors can also provide sustainable earnings growth."