The inside story on a top-quality trust

Our sister magazine Moneywise's handpicked First 50 Funds list offered 20 active funds, 20 passive funds and 10 investment trusts for new investors to consider in building their portfolio. Digging further into the world of collective investment, Helen Knapman went to meet Job Curtis, the manager of City of London Investment Trust.

What is the City of London Investment Trust?

The City of London Investment Trust predominantly invests in larger companies [68% in FTSE 100 companies, 19% in mid-cap (medium sized) companies, and 13% in overseas companies as at 30 June 2016]. The fund invests to provide income and growth.

Income is paid to shareholders in the form of dividends; this is a bit like interest paid by banks, although what you get depends on the profit the company makes. We have grown the dividend every year over the past 50 years, which is a record among investment trusts. Growth, meanwhile, comes from the company's share price growing.

Do you invest in the fund yourself?

I have two big holdings; Henderson shares through my company scheme [Henderson manages the trust] and the City of London Investment Trust. I had 107,395 shares in the fund in the trust's last financial year.

What companies have you recently bought?

I've bought Inchcape - a global motor retailing company. It is in the FTSE 250 and got dragged down after Brexit so I got it at quite a good price. I've also added to our holding in property developer Berkeley Group, as while it was hit hard following Brexit, it has a few riverside developments planned and has a deal with National Grid to redevelop old gas holders into flats. It's also yielding 8%.

What companies have you sold recently?

In June, I sold Premier Farnell - a distributor of electronic components - it hadn't been performing well, so when a takeover bid for the company came along it seemed to be a good "get out of jail free card".

Has there been a Brexit impact on the fund?

The fund isn't particularly exposed to the UK domestic market, so there hasn't been too much of an impact following Brexit. Global companies in the fund will also benefit, as the worth of their business in sterling will improve due to the pound falling against the dollar and the euro.

How do you protect the fund from market falls?

One saying is that the market is like a manic-depressive; one day it's incredibly excited and the next it isn't. So you do need to be able to stand back from the noise. The market is governed by fear and greed, but you've got to balance those emotions.

In fact, the world's greatest investor, Warren Buffet, said that the time to be greedy is when others are fearful and vice versa.

What's the best company you've ever bought?

You often find good companies in surprising places. The best company I've bought is British American Tobacco.

You wouldn't think it would do well given smoking is in decline, but during the technology bubble in January 2000, the share price got down to below £3, and it's now about £48.

So it's a phenomenal stock and it's paid very good dividends throughout too. However, I would strongly urge investors to build up a diverse portfolio. To bet it all on one horse is a huge mistake.

What was your worst investment?

The one that was particularly annoying was Lloyds Banking Group. I'd held the company for a while, but then in the run-up to the financial crisis it bought HBOS and almost bankrupted itself, so I sold my holdings. However, about a year ago I bought back into it, as now its balance sheet is strong and it's started paying dividends again.

What's your top tip for investors?

If you're investing in the stockmarket without an adviser, I'd recommend a lot of reading first, as you are dealing with your savings. People need to be aware of the risks as well as the returns.

This interview was conducted on 22 July 2016.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.