London, UK, 8 April 2022

Edison issues review on Lowland Investment Company (LWI)

Lowland Investment Company's (LWI's) managers, James Henderson and Laura Foll, run this UK equity income portfolio with a 'growth first' mentality, believing that companies with strong market positions and pricing power are best placed to grow their earnings, and consequently their dividends, over time. They cast their net across the market cap spectrum, aiming to own a diversified set of attractively valued - mainly UK - stocks spread across six 'buckets', from small-cap income to large-cap growth. Currently, the portfolio is tilted towards financial and industrial stocks, so the recent performance has somewhat lagged a volatile market where gains have been driven in large part by commodity producers. However, the managers are confident in the longer-term prospects of the 100+ companies they own, and with a c 4.8% dividend yield, investors in LWI are arguably being 'paid to wait' for value to be realised.

LWI is one of Janus Henderson's flagship UK equity income trusts, yet it may be overlooked by investors in favour of the higher-profile City of London IT (CTY) or Henderson and Foll's other portfolios, The Law Debenture Corporation (LWDB) and Henderson Opportunities Trust (HOT). We believe LWI deserves closer attention. It combines some of the multi-cap growth attributes of HOT and the core income characteristics of CTY and LWDB, with a lower P/E and a higher yield, and is currently trading at a wider discount to NAV than its UK Equity Income peer group. Although the trust's performance since the Brexit vote in 2016 has been somewhat patchy, LWI's managers are patient investors - average portfolio turnover suggests a holding period of six to seven years - and we would argue that investors with a similar mindset could be well rewarded in both capital and income growth terms.

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