Temple Bar Investment Trust confident after solid year

(Sharecast News) - Temple Bar Investment Trust reported a strong set of annual results for 2025, with both net asset value and share price returns comfortably outperforming the FTSE All-Share Index, as gains were driven primarily by stock selection. The FTSE 250 trust delivered a net asset value total return with debt at fair value of 33.9% for the year ended 31 December 2025, ahead of the benchmark's 24.0% return.

Shareholders saw an even stronger share price total return of 45.3%, while the shares moved to a 1.4% premium to net asset value from a 6.6% discount a year earlier.

"2025 was another strong year for the company's performance, both in absolute terms and relative to the FTSE All-Share Index, the company's benchmark," said chair Charles Cade.

"The net asset value total return with debt at fair value was +33.9% and the share price total return was +45.3%, compared with a total return of +24.0% for the benchmark."

He added that performance was largely driven by stock-specific factors rather than broader market moves, noting that "returns were primarily driven by stock selection rather than broader market movements, reflecting the portfolio manager's focus on company fundamentals, valuation discipline and active engagement with investee companies."

The trust increased its dividend by 33.3% to 15p per share, equivalent to a 4% yield, and said it intended to maintain a progressive dividend policy.

Cade said the board expected to continue raising payouts, adding: "It is the board's current intention to increase the quarterly dividends to 3.9p per share in 2026, an increase of 4.0% on 2025, representing an annualised dividend yield of 4.3%, based on the share price at the time of writing."

Strong performance and investor demand helped lift the company's market capitalisation to £1.1bn from £776m at the start of 2025, while the shift to a premium enabled the reissue of shares from treasury, raising more than £50m since October.

Cade highlighted continued demand from retail platforms, stating: "The combination of strong performance, a rising dividend and increased marketing has led to significant demand for the company's shares, particularly from retail investment platforms such as Interactive Investor and Hargreaves Lansdown."

Since Redwheel assumed portfolio management in late 2020, the trust had delivered a net asset value total return of 199.8%, compared with 103.7% for the benchmark, representing annualised outperformance of 8.9%.

Portfolio managers Ian Lance and Nick Purves said the portfolio benefited from strong gains across financials and industrials, with several holdings including NatWest, Barclays, Standard Chartered, Aviva, NN Group and Johnson Matthey rising more than 50% during the year.

They noted that valuations remained attractive despite recent gains, adding: "Accordingly, we believe the company is still priced to deliver meaningful excess return, and shareholders can look forward to the future with optimism."

Looking ahead, the board said it remained mindful of a shrinking UK equity universe due to takeovers and delistings, and may consider expanding its overseas investment limit beyond the current 30% if opportunities in domestic markets continued to narrow.

Cade cautioned that the macroeconomic and geopolitical backdrop remains uncertain, but emphasised that the trust's performance is not closely tied to UK economic conditions.

"It would be easy for investors to take fright given the uncertain macro-economic and geopolitical outlook," he said, adding that the board believed the company was "well-placed to continue delivering attractive long-term returns for shareholders through a combination of capital growth and income."

At 0956 GMT, shares in Temple Bar Investment Trust were down 0.43% at 363.93p.

Reporting by Josh White for Sharecast.com.

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