Rights & Issues Investment Trust underperforms benchmark despite NAV increase

(Sharecast News) - Rights and Issues Investment Trust reported a modest increase in net asset value for 2025 on Thursday, although it significantly underperformed its benchmark as a widening discount weighed on shareholder returns, while the board proposed a higher final dividend. For the year ended 31 December, net asset value per share rose 2.4% to 2,603.7p from 2,543.4p.

However, the share price generated a total return of -12.4% including dividends, reflecting a sharp widening in the discount to NAV to 23.6% at the year end from 6.4% a year earlier.

The discount averaged 19.5% over the period.

By comparison, the FTSE All-Share Capital Index rose 19.8% and the FTSE All-Share Total Return Index returned 24%.

"The company's shares yielded a negative return of -12.4%, including dividends," said chairman Dr Andrew J Hosty.

"This is a disappointing result, even more so, when compared to our chosen benchmark the FTSE All Share Capital Return Index which yielded a positive return of 19.8%

"The most significant driver of these numbers is the widening discount to NAV."

On an investment basis, defined as the change in NAV plus dividends paid, shareholders achieved a positive return of 4.2% for the year, though still behind the benchmark.

Smaller companies underperformed larger stocks during the period, with the Deutsche Numis Smaller Companies ex-Investment Trusts Index returning 12.7%, compared with 24% from the FTSE All-Share Total Return Index.

Revenue return per share rose to 49.2p from 42.1p, while capital return per share fell to 49.9p from 181.2p, resulting in total earnings per share of 99.1p, down from 223.3p in 2024.

Profit before tax was £4.7m, compared with £11.8m the previous year, reflecting lower gains on investments of £2.4m against £9.7m in 2024.

Ongoing charges increased to 1.0% from 0.9%.

Net assets rose to £124.5m from £123.1m.

During the year, 61,160 shares were bought back and cancelled at a cost of £1.3m, compared with £17.7m in 2024, after shareholder authority to repurchase shares lapsed in March and was subsequently defeated at a general meeting in May.

The board said it intended to propose a renewed buyback authority at the 2026 annual general meeting as both a special and ordinary resolution.

It said its portfolio ended the year with 25 holdings.

Among positive contributors were takeover targets Renold, Alpha Group and JTC, while OSB also performed strongly.

Detractors included Telecom Plus, GB Group and Gamma Communications, as well as Macfarlane and Treatt, which was sold before a takeover approach fell away.

The board recommended a final dividend of 32.75p per share, subject to shareholder approval at the AGM on 26 March.

If approved, total dividends for the year would amount to 45p per share, up 2.3% from 44p in 2024.

The final dividend would be paid on 2 April to shareholders on the register on 6 March, with an ex-dividend date of 5 March.

At 0933 GMT, shares in Rights and Issues Investment Trust were up 1.09% at 2,244.25p.

Reporting by Josh White for Sharecast.com.