Interim Management Statement - Blue Planet International Financials Investment Trust plc
Quarter ended 31st January 2014
Fund Manager's Review
January proved to be a very volatile month for financial markets. By the third
week of January the Fund's NAV had risen by more than 4%. By the end of the
fourth week, these gains had been wiped out, and the Fund's NAV had fallen by
1.8% to 52.22p. This was, however, considerably better than our benchmark
index, the FTSE 100, which fell by 3.5% in January. Over the last three months
the Fund's NAV fell by 0.2%. The FTSE 100 fell by 2.8% over the same period.
The share price over the period was unchanged at 38p.
Equity markets rose steadily in 2013. Against this background, bouts of
volatility like the one seen in January are to be expected. However they will
pass and markets will head higher. January's volatility was triggered by
concerns regarding tapering, slowing economic growth in China and weakness in
emerging market currencies. These emerging market problems have arisen as a
consequence of overseas investors withdrawing funds from them and reinvested
them into developed economies. While this is detrimental for those markets it
is beneficial for the Fund as it has all of its investments in developed
markets.
Within the portfolio, Ford Motors Co and Banco Santander reported their
earnings for the 4th quarter of 2013 in January. Ford's net income rose by
90.2% in the quarter and as we had anticipated in last month's factsheet, they
have hiked their dividend by 25%. Banco Santander also reported exceptionally
good results with a 151.1% increase in its 4th quarter net income. Santander is
expecting loan growth in Spain to increase in 2014 and provision levels to fall
as macro conditions in the country continue to improve. This will drive its
share price higher.
During the month we accepted Rosneft's offer for our preference shares in
TNK-BP Holdings. The offer of RUB55 per share seriously undervalues TNK-BP
Holdings preference shares in our opinion. However given the lack of investor
protection that exists in Russia we were left with no option but to accept
Rosneft's offer. This is yet another example of minority shareholder abuse in
Russia. The treatment of TNK-BP minority shareholders by Rosneft has done
extraordinary damage to Russia's and Rosneft's reputation within the investor
community and must surely be the final nail in the coffin so far as foreign
investment in the country is concerned.
There is plenty of scope for the economies in which we are invested to continue
to recover. Furthermore, this rate of recovery will accelerate once bank
lending increases to more normal levels. The US and UK recoveries are gathering
pace, and while this will inevitably lead to tighter monetary policy and higher
interest rates we believe that they can withstand it.
Cumulative Performance (%) as of 31st January 2014
Current 1 month 3 months 6 months 1 year 3 years 5 years
(p)
NAV 52.22 -1.8% -0.2% 9.7% 21.4% 2.9% 7.9%
Share Price - 38.00 -2.6% 0.0% 8.6% 36.2% 5.3% 82.1%
Total Return
Benchmark -3.5% -2.8% -0.1% 7.5% 23.9% 88.7%
Discount / + -27.2 -26.7 -27.4 -26.5 -34.5 -28.1 -56.0
Premium (%)
Source: Blue Planet, share price bid to bid, net income reinvested
Portfolio Information as of 31st January 2014
Security Security Country Valuation % of NAV
Type Name £
856,629 Equity Henderson Group United 1,884,584 7.3
plc Kingdom
1,976,190 Equity Lloyds Banking United 1,646,166 6.4
Group plc Kingdom
6,436,500 Equity Bank Of Ireland Eire 1,557,899 6.0
49,280 Equity NXP United 1,447,351 5.6
Semiconductors NV States
83,800 Equity ETRACS 2x United 1,446,478 5.6
Leveraged Long States
Wells Fargo
Business
Development
Company Index ETN
159,200 Equity Och-Ziff Capital United 1,352,218 5.2
Management Group States
LLC
241,930 Equity Banco Santander Spain 1,266,421 4.9
S.A.
60,000 Equity EDF S.A. France 1,239,088 4.8
95,502 Equity CNP Assurances France 1,138,141 4.4
6,250 Equity Zurich Insurance Switzerland 1,104,397 4.3
Group AG
120,850 Equity Ford Motor United 1,097,702 4.2
Company States
108,471 Equity Genel Energy plc United 1,065,728 4.1
Kingdom
32,700 Equity Rio Tinto plc United 1,060,298 4.1
Kingdom
74,550 Equity GDF Suez S.A. France 1,001,911 3.9
Other Equity Other Other 13,206,739 51.1
31,515,121 122.0
Security Security Country Valuation % of NAV
Type Name £
711,000 Bonds Aviva plc 6.875% United 803,622 3.1
20/05/58 Kingdom
620,000 Bonds LloydsTSB plc United 751,043 2.9
7.625% 22/04/25 Kingdom
832,000 Bonds BNP Paribas France 663,470 2.6
4.875% 29/10/49
769,000 Bonds Royal Bank of United 528,211 2.0
Scotland plc Kingdom
5.25% 29/06/49
350,000 Bonds Santander UK United 413,525 1.6
10.0625% 29/10/49 Kingdom
459,000 Bonds ING Groep 8% 29/ Netherlands 389,035 1.5
04/49
600,000 Bonds Societe Generale France 384,592 1.5
8.75% Perpetual
551,000 Bonds Credit Agricole France 334,366 1.3
S.A. Preference
Fund 7% 29/01/49
237,000 Bonds Friends Life United 311,579 1.2
Group 12% 21/05/ Kingdom
21
250,000 Bonds Credit Agricole France 301,115 1.2
S.A. 7.375% 18/12
/23
391,000 Bonds Royal Bank of United 275,198 1.1
Scotland plc 5.5% Kingdom
29/11/49
5,155,756 20.0
Security Security Country Valuation % of NAV
Type Name £
793,000 Preference Lloyds Banking United 991,250 3.8
shares Group 9.25% Kingdom
500,000 Preference Natwest Bank 9% United 620,000 2.4
shares Kingdom
300,000 Preference Standard United 387,000 1.5
shares Chartered 8.25% Kingdom
284,000 Preference Santander UK plc United 360,680 1.4
shares 10.375% Kingdom
200,000 Preference Santander UK plc United 220,000 0.9
shares 8.625% Kingdom
50,000 Preference RSA Insurance United 52,500 0.2
shares 7.375% Cumulative Kingdom
Preference Share
2,631,430 10.2
Security Cash Security Country Valuation % of NAV
Type Name £
Liquid Near Cash Assets GBP 0 0.0
Assets
Liquid Cash GBP 10,617 0.0
Assets
Liquid Cash Other 0 0.0
Assets Currency
10,617 0.0
39,312,924 152.2
For more information, please visit www.blueplanet.eu
You can also contact the Company on 0845 527 7588 or by emailing
info@blueplanet.eu