Questions for the 2022 AGM on 14 December

In this note, we ask the questions we would ask the FSV board at the forthcoming AGM, on 14 December 2022. To offer a perspective, we also give the answers that we would give if we were asked the same questions. We believe the questions fall into three key areas: i) why the trust has outperformed over the long term, (which has a bearing on how it may perform in the future), ii) how the recent economic news has affected the manager’s perspective and positioning, and iii) how the trust is managed in terms of its discount/buyback, the large dividend increase and its approach to gearing.

• Annual results: With FSV giving a daily NAV update, there was no news on performance, other than the manager’s commentary. The company declared a total FY2022 dividend of 7.75p per share, a 16.2% increase on the 6.67p paid in FY2021. The final dividend of 5.45p will be paid on 11 January 2023.
• Continuation vote: Following good corporate governance practice, there will be a continuation vote at the forthcoming AGM. The board expects the vote to pass, and we concur; with good performance, discount management and fee reduction since the last vote, shareholders have much to be pleased about.
• Valuation: With quoted investments, there are no valuation issues. FSV aims to keep a single-digit discount in normal market conditions. It has mostly done this, aided by an active discount management policy. The company has both bought back and sold shares, adding a small amount to investor returns.
• Risks: With a value-based investment philosophy, value being out of favour has constituted a headwind, although one that the manager’s stock-picking has largely overcome to date. The UK market has been a long-term underperformer relative to global markets, and there is a risk that it will remain out of favour.
• Investment summary: While FSV currently trades in the middle of its discount range, this is better than that of most of its peers. Meanwhile, the stability of the team and the investment process suggest that this performance is built on solid ground. The dividend yield is higher than the average of its peers, suggesting that it should be attractive to investors looking for income alongside capital growth.