New City High Yield Fund Ltd : Interim Manageme...
To: THOMSON REUTERS
Date: 19 November 2013
From: New City High Yield Fund Limited
Interim Management Statement
For the Three Month Period from 1 July 2013 to 30 September 2013
Investment Objective
The investment objective of the Company is to provide investors with a high dividend yield and the potential for capital growth by investing mainly in high yielding fixed interest securities.
Performance Summary
| Total Return | For the three month period ended 30 September 2013 |
| Net asset value per share | +1.3% |
| Ordinary share price | +3.8% |
| Capital Values | As at 30 September 2013 | As at 30 June 2013 | % Change |
| Net assets | £146.6 million | £147.8 million | |
| Net asset value per share | 60.01p | 60.53p | -0.9% |
| Share price | 62.13p | 61.25p | +1.4% |
| Premium | 3.5% | 1.2% | |
| Gearing (100 = nil geared position) * | 110 | 110 |
Gearing = Total assets ÷ Equity Shareholders' Funds
Review for the Period:
The first half of the period was pretty quiet with the underlying theme being that rates were not going up anytime soon with comments to this effect by the new Bank of England Governor, Mark Carney, and Mario Draghi the head of the ECB. In the USA the probability that tapering of quantitative easing (QE) was going to start in September increased; however, the slow improvement in the US job market still implied that rates were not going up there in the short-term either.
The Australian dollar had a difficult time in July and August on the continuing fears over lower growth in the Chinese economy. Sterling had a strong August on the back of improved GDP data and "forward guidance" from Mark Carney stating that "rates will remain low until unemployment falls" it will be interesting how markets in the UK react to this type of strategy as this was not a feature of the previous Governor's weaponry when dealing with markets.
Away from the economic influences, the Syrian conflict had a part to play in giving markets volatility in August and September. The return from the holiday period in early September was met by some very positive figures from the August Markit/CIPS UK services purchasing managers' index implying that the UK economy was growing at its fastest rate for over six years. In the US it was all eyes on the non farm payroll number which was supposed to be the trigger for tapering of QE; as this figure only showed marginal improvement it was not going to be pulled just yet!
How did markets take all of this? In the first week both the ten year US treasury and 10 year US treasury yields pushed above 3%, with investors believing in the reality of recovery. Come the third week in September it was all change with Larry Summers the more hawkish candidate for the Chairmanship of the Federal Reserve Bank pulling out of the race leaving the way clear for the more doveish Janet Yellen who has been vice chairman to Ben Bernanke since 2010. This may have been the reasoning behind the announcement on the 18th that the current QE was to be extended, giving a push to global equity and government bond markets.
The Company paid its fourth interim dividend of 1.4p/share at the end of August making 4.1p/share for the year up 2.24%
Top Ten Holdings as at 30 September 2013
| Company | Sector | Percentage of total assets |
| Phoenix Life 7.25% 2049 | Insurance | 3.2 |
| REA Finance 9.5% 2017 | Food products | 3.0 |
| Brit Insurance 6.625% 2030 | Insurance | 2.9 |
| Antares Energy 10% 2013 | Oil and Gas | 2.8 |
| Cable & Wireless 8.625% 2019 | Telecommunications | 2.8 |
| Balfour Beatty 10.75% Pref | Construction | 2.8 |
| General Accident 8.875% | Financial | 2.5 |
| Moto Finance 10.25% | Retail | 2.4 |
| House of Fraser 8.875% | Retail | 2.0 |
| Skipton 10% 2018 | Financial | 1.9 |
| Total | 26.3 |
Analysis of Investments by Currency as at 30 September 2013
| Percentage of total investments | |
| Sterling | 65 |
| US Dollar | 15 |
| Australian Dollar | 6 |
| Euro | 4 |
| Norwegian Krone | 4 |
| Swedish Krone | 4 |
| Canadian Dollar | 2 |
| Total | 100 |
Analysis of Investments by Asset Class as at 30 September 2013
| Percentage of total investments | |
| Bonds | 82 |
| Convertibles | 5 |
| Preference shares | 7 |
| Equities | 3 |
| Cash | 3 |
| Total | 100 |
Analysis of Investments by Quotation as at 30 September 2013
| Percentage of total investments | |
| Listed/Quoted on a recognised investment exchange | 98 |
| Unquoted (convertible into a security quoted on a recognised exchange) | 1 |
| Unquoted | 1 |
| Total | 100 |
Significant Events or Transactions since 30 September 2013
On 24 October 2013 a first interim dividend for the year to 30 June 2014 of 0.92p per share was declared, an increase of 2.2% on the first interim dividend paid last year. This dividend is payable to shareholders on the register on 1 November 2013 and will be paid on 29 November 2013.
On 31 October 2013 the Company published its annual report.
On 12 November 2013 the Company gave notice of its Annual General Meeting ("AGM") to be held on 5 December 2013. In accordance with Listing Rule 9.6.3, a copy of the Annual Report and Accounts (which includes the Notice of AGM) has been submitted to the National Storage Mechanism.
On 12 November 2013 the Company gave notice of an Extraordinary General Meeting ("EGM") to be held on 5 December 2013. In accordance with listing rule 9.6.3, a copy of the circular explaining the background to and reasons for holding the EGM has been submitted to the National Storage Mechanism.
The Board is not aware of any other significant events or transactions which have occurred since 30 September 2013 and the date of publication of this statement which would have a material impact on the financial position of the Company.
Daily and Key Information
Further information regarding the Company including the share price and the recent monthly fact sheet, can be found at the Investment Manager's website www.ncim.co.uk
Disclaimer
This interim management statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.
For further information please contact:
Ian Francis, New City Investment Managers
020 7201 5366
Martin Cassels, R&H Fund Services Limited
0131 524 6140
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: New City High Yield Fund Ltd via Thomson Reuters ONE
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