Lowland Investment Company (LSE:LWI) co-fund manager James Henderson talked with Proactive's Stephen Gunnion about the trust’s investment strategy, performance, and approach to balancing income with long-term capital growth. Henderson explained how the fund differentiates itself by blending large, medium, and small-cap companies to reduce volatility while capturing higher growth potential.
Henderson highlighted that smaller companies have historically delivered stronger returns, noting: “Over that period the smaller companies have given the best returns, both in capital and income.” However, he emphasised that diversification across company sizes helps smooth performance and manage risk.
He also outlined the trust’s value-driven approach, focusing on out-of-favour companies with strong underlying businesses. He pointed to examples such as Rolls-Royce, where the fund invested before operational improvements materialised. The strategy centres on identifying companies with strong turnover potential that can improve margins over time.
Discussing income, Henderson made clear that capital growth is the priority, stating that dividends are a natural outcome of growing businesses rather than the primary target. The trust currently offers a yield of 3.6% as at 28 February, 2026.
Henderson also addressed the trust’s discount to NAV and recent performance, noting strong longer-term returns driven by takeover activity and recovery in undervalued UK stocks. Henderson expects improving sentiment toward UK equities and smaller companies to support future growth.
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